PetroChina Halts Venezuelan Crude Purchases Following U.S. Actions
PetroChina, the state oil company of China, has reportedly advised its partners to refrain from purchasing or trading Venezuelan crude oil since the U.S. gained control over Venezuelan oil exports earlier this month, as stated by Reuters on Tuesday.
According to two trading executives familiar with the situation, this move signals that Venezuela’s oil supplies to China are expected to remain tight, forcing Chinese buyers to seek oil from Canadian, Iranian, or Russian sources instead.
PetroChina is a subsidiary of the China National Petroleum Corporation (CNPC). The traders chose to remain anonymous due to the sensitivity of the matter. Notably, CNPC was the largest buyer of Venezuelan oil until 2019, when President Trump imposed sanctions on the Venezuelan state-owned oil company PDVSA in response to serious human rights violations committed by the Venezuelan regime against its own populace.
This month, President Trump indicated that Venezuela’s government, led by “acting president” Delcy Rodriguez, would start collaborating with the U.S. to boost oil production and sell it in the U.S. market, along with allowing American oil companies to operate within Venezuela. Rodriguez has been nominally leading the country since a U.S. law enforcement operation in Caracas led to the arrest of dictator Nicolás Maduro and his wife, Cilia Flores.
Before the January 3 operation, Venezuela had been selling sanctioned oil to China at heavily discounted rates. For years, the Venezuelan regime offloaded much of its oil to China through an oil financing plan, which helped it evade U.S. sanctions. While the Venezuelan government does not disclose its debt to China, Bloomberg estimates it to be between $10 billion and $20 billion. In contrast, Venezuelan debt is reported to be around $60 billion. Following Maduro’s ousting, China is reportedly pressuring Venezuela to settle its debts.
In a separate report, Reuters, citing unnamed U.S. officials, suggested that the Trump administration may permit China to purchase Venezuelan oil, but only at standard international rates, rather than the much lower prices that the Venezuelan regime had offered prior to Maduro’s arrest.
One of the unnamed trading executives revealed that PetroChina was instructed not to engage with crude oil until further notice from headquarters. Alongside the concerns regarding U.S. control over Venezuelan oil, some traders noted that offers for Venezuelan crude are less competitive compared to other sources, like Canadian oil. The price for shipments of Venezuelan Meley crude to China has decreased by about $10 per barrel since December.
Reports suggest that oil trader Vitol has provided a $5 per barrel discount on ICE Brent for April deliveries of Venezuelan crude, a drop from the $15 per barrel discount it offered in December, before the Trump administration’s full blockade of sanctioned oil tankers to and from Venezuela.
Analysts expect that China’s imports of Venezuelan crude will be “sluggish” from February onward, following the U.S. takeover of Venezuelan oil exports, which is likely to result in fewer tankers heading to China.
During his recent return from the World Economic Forum in Davos, President Trump told reporters that American companies would soon begin drilling for Venezuelan oil, noting, “We’re going to start drilling very soon. We have the biggest companies in the world engaged right now.” He expressed optimism that this cooperation would be financially beneficial for both the U.S. and Venezuela while also leading to a reduction in U.S. oil prices.
