Over the past year, traders have disguised more than $1 billion in Venezuelan oil shipments to China as Brazilian crude to circumvent U.S. sanctions, according to reports.
Two tanker tracking companies, along with documents from traders, revealed that independent Chinese refiners are sourcing oil from sanctioned nations like Venezuela.
In 2019, President Trump enacted sanctions against Venezuela’s state-owned oil company, PDVSA, due to numerous human rights violations by Nicolás Maduro’s administration. Later, in the second half of 2023, former President Biden lifted some oil sanctions temporarily, hoping for a vague commitment to a “free and fair” presidential election in 2024.
However, no such elections occurred. Maduro instead intensified his crackdown, declaring himself the winner of fraud-laden elections held on July 28, 2024.
In March, Trump announced that nations buying Venezuelan oil would face a 25% “secondary tariff,” a move that was condemned by China, which called for an end to U.S. interference.
Reports indicate that in July 2024, traders began the practice of rebranding Venezuelan oil as Brazilian. One anonymous trader noted it not only reduces travel time but also facilitates better financing for operations.
Since sanctions began, oil has been transferred between vessels to obscure its Venezuelan origins prior to shipment to China—the world’s largest crude consumer. Evidence suggests traders alter location signals, using Brazil as a decoy.
While Chinese refiners typically purchase Brazilian crude oil, Brazil doesn’t regularly export bitumen blends. The crude labeled as “Brazilian bitumen” is often Venezuelan oil mixed to look legitimate.
Internal documents show that some cargoes entering China, misidentified as Brazilian, are sourced from Venezuelan crude. This practice allows Chinese refiners to import oil without it counting against the government’s crude import limits.
To effect the switch, brokers issue shipment documents declaring a Brazilian origin, even without physically sending vessels to Brazil. Vessels utilized by Venezuelan crude broker Hangzhou Energy have been reportedly “spoofing” to give the impression of being docked in Brazil, according to tracking data.
Responses from Chinese customs, PDVSA, and authorities in Venezuela and Brazil were not available. Additionally, Hangzhou Energy’s contacts could not be traced.
During an April visit to China, Venezuelan Vice President Del Si Rodriguez reportedly urged officials to increase oil purchases before the expiration of a license allowing Chevron to resume oil production in Venezuela, which allows for exports to the U.S. This license is set to expire on May 27, 2025.
Despite declaring a halt in Venezuelan oil purchases in August 2019 to comply with U.S. sanctions, China has reportedly continued to aid PDVSA, facilitating sanctions evasion since at least November 2020, with evidence of significant shipments through tankers linked to state defense companies.
