China officially buys Venezuelan oil after US sanctions end
Chinese state oil and chemicals giant Sinochem has bought a rare cargo of Venezuelan crude , trade sources told Reuters on Tuesday, as Chinese state firms look to buy cheaper crude. This has now been possible because the United States has eased restrictions on Venezuela.
The temporary relief of US sanctions from October 2023 to April 2024 now allows the production, lifting, sale and export of oil or gas from Venezuela and the provision of related goods and services, as well as the payment of invoices for goods or services related to oil or gas operations in Venezuela. As a result, major international oil companies have returned to trading in Venezuelan oil.
Refiners wanting to take advantage of sanctions relief have arranged spot purchases of Venezuelan heavy crude, which is cheaper than international benchmarks, although the discount is not as wide as a few months ago, when the South American country was still under sanctions.
In China, independent refiners were the largest customers of Venezuelan crude before the easing of U.S. sanctions. But now these refiners, the so-called “teapots”, are reportedly holding back new purchases of oil from Venezuela due to unpredictable discounts on cargoes after the international majors returned to trading in Venezuela.
As independent refiners weigh the implications of easing sanctions and reducing discounts on their refining margins, state-owned Chinese companies have begun to consider buying Venezuelan crude now that concern about secondary sanctions has faded.
Sinochem has agreed to buy a 1 million barrel cargo of Venezuelan Merey crude arriving this month, at a discount of $11 a barrel to Brent crude dated on a delivered ex-ship (DES) basis, according to trade sources of Reuters aware of the purchase.
Before the easing of sanctions, the discount on Merey was estimated at around 20 dollars per barrel, but it was a sanctioned product whose trade was problematic both for transport and for payment, which could lead to heavy sanctions for shipowners and insurers.
Since the United States eased sanctions, demand for Venezuelan crude outside China has increased. India, for example, said last week that it would buy oil from Venezuela for the first time since 2020.
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The article China officially buys Venezuelan oil after the end of US sanctions comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-cina-compra-ufficialmente-il-petrolio-venezuelano-dopo-la-fine-delle-sanzioni-usa/ on Tue, 19 Dec 2023 13:37:49 +0000.