The U.S. administration has authorized China to buy Venezuelan crude but forbids the deeply discounted 'undercut' prices Caracas reportedly used to service debts. Washington says the majority of shipments must be sold to the United States and that it will control Venezuela's oil sales after the January 3 developments involving President Nicolás Maduro. Trading houses Trafigura and Vitol have already moved about 11 million barrels as part of an initial $2 billion arrangement, and analysts expect China's imports to fall from February.
U.S. Allows China To Buy Venezuelan Oil — But Bans 'Undercut' Prices, Official Says
An oil pump jack is seen in an oil field near Lake Maracaibo, in Cabimas, Venezuela October 14, 2022. REUTERS/Issac Urrutia
The Trump administration is permitting China to purchase Venezuelan crude but is prohibiting the deeply discounted, or "undercut," prices that Caracas reportedly used to service debts, a U.S. official said on Thursday.
Key Details
According to a U.S. official speaking on condition of anonymity, Venezuelan oil will be sold on the global market but the administration has required that the bulk of shipments be sold to the United States. The official also said the U.S. will control Venezuela's oil sales indefinitely after what it has described as the removal of President Nicolas Maduro on January 3.
'Thanks to President (Donald) Trump's decisive and successful law enforcement operation, the people of Venezuela will collect a fair price for their oil from China and other nations rather than a corrupt, cheap price,' the official said.
The official emphasized that China may buy Venezuelan crude only at fair market prices, not the discounted rates Maduro allegedly used to repay debt-for-oil loans to Beijing. China has been Venezuela's largest oil buyer for years, using purchases to help Caracas repay large loans under such arrangements.
U.S. Energy Secretary Chris Wright said last week the United States was receiving roughly $45 per barrel for Venezuelan oil, compared with about $31 per barrel before the U.S. asserted control over sales.
Trade Activity
Trading houses Trafigura and Vitol have moved about 11 million barrels of stranded Venezuelan crude in an initial supply arrangement with the United States — roughly a quarter of a reported $2 billion deal. Sources said Trafigura completed a sale to Spain's Repsol, while Vitol arranged cargoes to U.S. refiners including Valero and Phillips 66 and to a refinery in Italy.
Traders and analysts have warned China's imports of Venezuelan oil are likely to decline starting in February as fewer tankers have been able to depart since the U.S. asserted control over the OPEC producer's sales.
Reporting by Timothy Gardner in Washington; additional reporting by Nidhi Verma in New Delhi. Edited by Matthew Lewis and Andrea Ricci.
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