Trading Giants Want to Sell Venezuela Oil to Big Asia Buyers
(Bloomberg) -- Vitol Group and Trafigura Group are in talks with large Indian and Chinese refiners over potential sales of Venezuelan crude, days after they obtained a preliminary green light from the US to market the oil.
The traders contacted leading Asian buyers over the weekend, according to people familiar with the matter, who asked not to be identified because they are not authorized to speak publicly. Conversations are at an early stage and no formal offers have been made, they added.
Indicative price levels for the touted Venezuelan volumes, for arrival to Asia in March, were pegged at about an $8 a barrel discount to the Brent benchmark, said traders in the spot market who track regional crude flows.
The global oil market is on alert for a redirection of exports from Venezuela following the US intervention earlier this month, when forces seized leader Nicolás Maduro and President Donald Trump asserted control over the nation’s energy industry. The country has the world’s largest proven crude reserves.
The two trading houses, among the world’s largest, are also in talks with US refiners to gauge interest. Vitol and Trafigura declined to comment.
Asia has been a vital market for Venezuela’s Merey crude through years of US sanctions and restrictions. China took the lion’s share, usually sold at a discount. After Washington’s move, Energy Secretary Chris Wright told Fox News that the US would not cut the country off from accessing Venezuelan oil.
India’s Reliance Industries Ltd., meanwhile, has taken cargoes after securing a waiver, only to pause purchases last year when US President Donald Trump announced a 25% tariff on nations buying from the Latin American producer.
Processors in India and China are now eager to explore renewed access to Venezuelan crude, potentially another source of supply in an already plentiful market.
State-owned giant Indian Oil Corp. is among those awaiting confirmation it has been cleared by Washington to step back into the market for Merey, people familiar with the matter said. IOC didn’t respond to a request for comment.
Reliance said last week that it was awaiting clarity on access to Venezuelan crude for non-US buyers, and “would consider buying the oil in a compliant manner.” It did not respond to further queries from Bloomberg.
It is not yet clear how much oil Vitol and Trafigura would be selling and whether the volume would be limited to the first tranche touted by Trump of up to 50 million barrels. Still, sales would represent an opportunity for trading houses with a long history of Venezuelan oil deals.
In recent years, Vitol has operated under licenses from the US Treasury to lift the country’s crude. Trafigura’s chief executive officer, meanwhile, said on Friday that the company was working with the US administration to bring the oil to the US, and that the first shipment would load this week.
Any proceeds from oil sales are set to be deposited into US-controlled bank accounts for the benefit of both Venezuela and America, according to a fact sheet published by the White House.
(Updates with preliminary offer levels in third paragraph.)
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