In a significant shift for global energy markets, Vitol, the world’s largest independent oil trader, has begun offering Venezuelan Merey heavy sour crude to Chinese refiners at a narrowed discount of approximately $5 per barrel to ICE Brent.
This move comes amid broader changes in Venezuela’s oil sector following the U.S.-led capture of former President Nicolás Maduro on January 3, 2026, and the subsequent easing of sanctions that has allowed major traders like Vitol and Trafigura to secure U.S. licenses for marketing Venezuelan oil.
The offers, targeted for delivery in the second half of April 2026, test Chinese buyers’ appetite for Venezuelan crude under these new, more formalized trade conditions.
Prior to Maduro’s ousting, Venezuelan oil flowed to China through opaque channels at steep discounts, often reflecting the risks associated with sanctions. Now, with legal pathways opening up, the pricing dynamics are evolving, potentially reshaping supply chains for heavy crude in Asia.
Historical Discounts and the Pre-Capture Era
Before Maduro’s capture, Venezuelan Merey crude was typically sold to China at discounts ranging from $13 to $15 per barrel below Brent, with some offers widening to as much as $21 per barrel in late 2025 due to an influx of competing sanctioned crudes from Russia and Iran.
This made Venezuelan oil an attractive option for China’s independent “teapot” refiners, who relied on these deep discounts to maintain thin margins.
China absorbed a significant portion of Venezuela’s exports—over half of the country’s 768,000 barrels per day (bpd) in 2025—accounting for about 3% of its total crude imports.
These discounts were driven by U.S. sanctions, quality issues with the crude, and the use of shadow fleets for transport, which added layers of risk and cost.
In practical terms, with Brent averaging around $60-65 per barrel in late 2025, Chinese buyers were effectively paying $40-50 per barrel for Venezuelan Merey, depending on the exact discount and market conditions at the time.
Current Pricing: What China Would Pay Now
Vitol’s latest offers mark a threefold narrowing of the discount compared to pre-capture levels.
As of January 19, 2026, Brent crude is trading at approximately $64 per barrel.
At a $5 discount, this translates to Chinese refiners paying around $59 per barrel for Venezuelan Merey— a substantial increase from the $45-50 per barrel effective price under previous arrangements (assuming similar Brent levels).
This higher price reflects the integration of Venezuelan supply into formal markets, reducing the “sanctions premium” that previously depressed values.
However, it could strain teapot refiners, who may need to pivot to alternatives like Iranian heavy crude, which can substitute for Merey but may not fully replace lost volumes at comparable costs.
Recent X posts highlight trader skepticism, with questions arising about whether Chinese buyers will accept the narrower discounts or seek cheaper options elsewhere.
Comparison to Canadian Crude Purchases
China’s shift comes at a time when Canadian heavy crude, such as Western Canadian Select (WCS), is emerging as a potential alternative.
Recent trade deals between Canada and China, including tariff reductions on canola and EVs, signal warming relations that could facilitate more energy flows.
However, Canadian crude lacks the deep sanctions-related discounts that made Venezuelan oil so appealing.WCS typically trades at a $12-15 discount to Brent when delivered to Asia, factoring in shipping costs from Canada’s Pacific coast.
At current Brent prices, this puts the effective cost for Chinese buyers at around $49-52 per barrel—cheaper than Vitol’s Venezuelan offers but still higher than the pre-capture Venezuelan deals.
Sources indicate that while Canadian grades like Cold Lake or WCS are suitable substitutes for Merey in complex refineries, they come at market rates without the bargain-basement pricing of sanctioned Venezuelan barrels.
The Trans Mountain Pipeline expansion has boosted Canada’s export capacity to Asia, potentially positioning it to fill gaps left by Venezuelan supply disruptions.
Yet, for price-sensitive Chinese independents, the loss of ultra-cheap Venezuelan oil represents a margin squeeze, with estimates suggesting import costs could rise by several dollars per barrel overall.
chinabusinessspotlight.substack.com
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Crude Type
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Typical Discount to Brent (Pre-2026)
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Current Discount to Brent (Jan 2026)
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Effective Price at $64 Brent
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|---|---|---|---|
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Venezuelan Merey (to China)
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$13-21/bbl
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$5/bbl
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$59/bbl
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Canadian WCS (to Asia)
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N/A (market rates)
|
$12-15/bbl
|
$49-52/bbl
|
Market Impact: Game-Changer or Mere Tease?
Venezuela’s oil exports plummeted 75% in the immediate aftermath of Maduro’s capture, dropping from around 768,000 bpd to about 166,000 bpd projected for February 2026.
The Trump administration has brokered deals to redirect 30-50 million barrels to the U.S., fetching 30% higher prices than Venezuela received pre-capture.
This has narrowed heavy crude differentials globally, with implications for competing suppliers like Canada and OPEC+ members.
However, Venezuela accounts for less than 1% of global oil supply, limiting its ability to significantly sway prices.
Analysts expect muted short-term effects, with any production ramp-up taking years due to infrastructure decay and investment needs.
In an oversupplied market—where global demand growth is projected at 750,000-1.25 million bpd in 2026—additional Venezuelan barrels (potentially 250,000-300,000 bpd marginally) are unlikely to crash prices.
That said, the narrower discounts signal a reintegration of Venezuelan oil into transparent markets, which could pressure heavy crude premiums and benefit U.S. Gulf refiners optimized for sour grades.
For global markets, this appears more as a tease than a transformative event: a glimpse of potential supply normalization without the volume to disrupt the status quo. Geopolitical risks, including U.S.-China tensions over Venezuelan influence, add uncertainty, but broader demand drivers like U.S. and Chinese economic rebounds will dominate price trajectories.
As Vitol and others expand offerings to India and beyond, the coming months will reveal whether this pricing shift sticks or if buyers push back, potentially forcing further adjustments in the evolving post-Maduro energy landscape.
Sources: blackrock.com, spglobal.com,
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