China’s Largest Oil Producer Suspends Purchases of Venezuela Oil
PetroChina, Asia’s largest oil and gas producer, has announced that it will not be purchasing oil from Venezuela, despite the US lifting sanctions on the country’s oil sector. The Chinese state-owned giant has told traders not to buy or trade Venezuela’s oil, citing concerns over US control and uncompetitive pricing.
According to Reuters, PetroChina stopped importing Venezuelan crude in 2019, when the US imposed sanctions on Venezuela’s oil sector. Before the sanctions, PetroChina was the largest buyer of crude from Venezuela. Now, the company is refraining from buying crude marketed by top oil trading houses, including Vitol, the world’s biggest independent oil trader.
The decision comes as the US has authorized global traders to market crude from Venezuela, which holds the world’s largest oil reserves. However, PetroChina is assessing the situation and has expressed concerns over the US control of Venezuela’s oil. Additionally, the company has noted that the offers from Venezuela are not competitive compared to other supplies of heavy crude, including from Canada.
The discount of Venezuela’s flagship crude grade, Merey, relative to Brent, has narrowed by about $10 per barrel since the ousting of Nicolas Maduro. Vitol has recently offered cargoes of Merey heavy sour crude grade to China at a discount of $5 per barrel to ICE Brent, according to Bloomberg. This compares with a discount as wide as $15 a barrel to ICE Brent on a delivered basis before the US blockade.
Chinese independent refiners, which have previously imported sanctioned Venezuelan oil, are likely to welcome what could be their last imports of sanctioned Venezuelan oil, which loaded before the US blockade. The development is a significant shift in the global oil market, and its impact on the industry will be closely watched.
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Key Takeaways:
* PetroChina, Asia’s largest oil and gas producer, has suspended purchases of Venezuela oil.
* The company has expressed concerns over US control and uncompetitive pricing.
* The discount of Venezuela’s flagship crude grade, Merey, relative to Brent, has narrowed by about $10 per barrel.
* Chinese independent refiners are likely to welcome what could be their last imports of sanctioned Venezuelan oil.
Related Articles:
* China’s Largest Oil Producer Suspends Purchases Of Venezuela Oil
* Reuters: Energy and Oil News
* Bloomberg: Energy News
