Oil tanker traffic to Venezuela declines following seizure, sanctions

The number of oil tankers heading to Venezuela has decreased following a recent escalation by the US to oust Venezuelan President Nicolás Maduro, according to S&P Global Commodities at Sea data as of Dec. 16.

The US will blockade sanctioned oil tankers to and from Venezuela, US President Donald Trump said late Dec. 16, the latest move in a pressure campaign to remove Maduro.

The low number of tankers heading to Venezuela is a potential indicator of how ship operators are refraining from lifting oil from, or delivering petroleum products to, the country.

For the week starting Dec. 14, 17 tankers are sailing to Venezuela or in Venezuelan waters, unchanged week over week but down from 24 vessels in mid-November, CAS data shows.

Of those 17 tankers, just two are laden, both carrying naphtha from Russia: the Premier and the Hyperion. The Premier is currently off the coast of Barcelona, Venezuela, while the Hyperion is currently off the coast of Trinidad and Tobago.

Russia regularly exports naphtha to Venezuela as a diluent for heavy crude, having delivered 1.3 million barrels in November, CAS data shows.

Three vessels are currently en route to Venezuela from the US, likely to load Venezuelan crude. The US has given a waiver to Chevron to produce oil in Venezuela.

"Chevron's operations in Venezuela continue without disruption and in full compliance with laws and regulations applicable to its business, as well as the sanctions frameworks provided for by the US government," Chevron spokesman Bill Turenne said Dec. 16.

Skipper headed Northwest

The crude tanker Skipper, which the US seized off the coast of Venezuela Dec. 10, can now be seen passing between Jamaica and Cuba headed Northwest, possibly to the US, CAS data shows.

Vessel tracking relies on Automatic Identification Systems that broadcast a ship's identity and position, among other technical specifications, but AIS manipulation has obscured the ability to track some sanctioned vessels.

Since 2020, there have been cases where ships used fake IMO numbers, went dark, or signaled they were in other locations when trading in Venezuela. Given US President Donald Trump's escalation to oust Maduro, it is likely that AIS manipulation will continue in an effort to counter US sanctions.

Year to date, Venezuela's crude exports have averaged 756,000 b/d despite ongoing limitations, supported by a "shadow fleet" of tankers that utilize AIS manipulation to sustain their operations.

Several sanctioned vessels currently appear to be turning away from Venezuelan waters and the broader Caribbean Sea following the US seizure of the Dec. 10 tanker and subsequent sanction announcements.

On Dec. 11, the US sanctioned two individuals, six shipping companies and six tankers for operating in Venezuela's oil sector.

Sanctioned crude oil tanker Bella 1 has been observed turning around from its initial route and indicated destination of Curacao, according to CAS. The vessel can now be seen headed towards the Northern Atlantic Ocean, without a destination.

Similarly, sanctioned crude tanker Star Twinkle 6 appears to have pivoted away from Venezuela shortly after reaching the Caribbean.

Azure Voyager, another sanctioned crude carrier, was seen in Venezuelan waters before departing Northwest without a confirmed indication of docking at a Venezuelan port.

Congressional push back

Some members of Congress are pushing back on Trump's actions in Venezuela.

US Representative Thomas Massie, Republican-Kentucky, said there would be a vote this week on a measure to keep US forces out of Venezuela.

"Regime change abroad isn't America First and it won't Make America Great Again," he said in a Dec. 16 post on X.

Massie, along with Democratic Representatives Jim McGovern from Massachusetts and Joaquin Castro from Texas, introduced a War Powers Resolution Dec. 1, directing the removal of US armed forces from hostilities within or against Venezuela that have not been authorized by Congress.

In the US Senate, a similar resolution was introduced Dec. 4 by Democratic Senators Jeff Merkley from Oregon, Tim Kaine from Virginia and Chris Van Hollen from Maryland. The measure now has eight cosponsors, but none of them are Republican.

The measure would prevent Trump from spending money to attack Venezuela, Van Hollen said Dec. 8 during a webinar hosted by the Carnegie Endowment for International Peace. "But we do not have anywhere near a majority at this point to do that," he said.

However, McGovern said on Dec. 14 that there is growing support for the bill. "I believe there is a bipartisan majority that will vote to tell him we do not want to go to war in Venezuela," he said during an interview on MS NOW.

The House measure has 42 cosponsors, including three Republicans.

Even a negotiated exit of Maduro could disrupt oil production and put existing Venezuelan barrels at risk in the intermediate term, ClearView Energy Partners said in a Dec. 15 note.

But falling crude prices could give Trump some latitude to act, ClearView said. A back-of-the-envelope estimate suggests that a full shutdown of Venezuelan production may only boost crude prices by $1.75-$6/b and increase gasoline prices by 4-14 cents/gal, the note said.

Market reactions

The mounting pressure on sanctioned barrels is already spreading to competing grades such as heavy Colombian crude, a main competitor to Venezuelan crude for supplying the US.

If seized Venezuelan crude is sold at wider discounts in the market, it could weaken the price of competing Colombian barrels being sold into the US, according to a trader familiar with the grades.

"If the [US seizure of ships carrying Venezuelan crude] becomes a common thing, it will totally displace Colombian crudes from the US Gulf Coast ... if the US can use the crude in [the vessels]. If they don't use it, no major changes."

When the US seized the vessel carrying Venezuelan crude on Dec. 10, Colombian differentials widened by 25 cents/b day over day against ICE Brent, bringing Colombia's Vasconia and Castilla crudes to their weakest since Jan. 13.

Platts assessed Vasconia and Castilla at minus $4.10/b and minus $7.40/b, respectively, to the Latin American Brent Futures on Dec. 10.

Nearly a week later, Platts assessed Vasconia and Castilla 20 cents/b narrower Dec. 16, bringing the grades to discounts of $3.85/b and $7.15/b, respectively, against the Latin American Brent Futures strip. This suggests the market is now pricing in the potential absence of a consistent flow of Venezuelan crude to the US Gulf Coast as tensions rise in the region.