Venezuelan crude prices to Chinese independent refineries surge as Western traders emerge

The price of Venezuelan Merey crude to China's independent refineries has surged as Western trading houses entered the market with US sanctions exemption, despite available cargoes for the sector expected to sustain for three-four months of consumption, Shandong-based refining and trade sources told Platts, part of S&P Global Energy, Jan. 27.

The Merey crude barrels, which come with Malaysia-origin certificates, were offered at discounts of about $6-$7/b against ICE Brent futures on a DES Shandong basis, according to the sources.

The discount almost halved from about $12-$13/b Jan. 12, when Vitol and Trafigura started marketing Venezuelan heavy crude to China and India with the US permission.

Western companies were offering Merey at discounts of about $4-$5/b on the same basis, the sources added.

The cargoes with Malaysia-origin certificates were usually offered at deep discounts to Chinese independent refineries after ship-to-ship arrangements to skirt around the US sanctions on Venezuelan oil.

However, two Shandong-based trade sources said there were almost no offers in the market, as suppliers wanted to keep their barrels because the cheap supplies will end with the US taking control of all Venezuelan crude sales.

One of the trade sources said a few Venezuelan Merey crude cargoes were floating in Chinese waters and more in Malaysia, which were meant for those independent refineries. Those cargoes would likely be able to help sustain operations at China's independent refineries for producing asphalt until March, he added.

S&P Global Commodities at Sea showed that about 1.9 million barrels of Venezuelan crude were floating in Chinese waters for more than seven days and the volume in Southeast Asia waters stood at about 7.8 million barrels as of Jan. 27, totaling 9.7 million barrels.

At least 14 VLCCs, five Suezmaxes, an LR2 and an MR tanker carrying about 31.33 million barrels of Venezuelan crude were in transit to Asia, the CAS data showed.

China's independent refineries, led by five plants in Shandong and others located in Hebei, Liaoning, Zhejiang and Hainan provinces, use Venezuela's heavy crude to produce asphalt. They imported 19.95 million metric tons (126.68 million barrels) of Venezuelan crude in 2025, data collected by Platts showed.

Due to the rising feedstock cost, an independent asphalt producer was considering to shut its 2 million metric tons/year plant to reconfigure the facility and diversify production, according to two sources close to the matter.