Venezuelan Oil Stored at Sea Shields China as US Pressure Rises

By Bloomberg News

Dec 16, 2025 (Bloomberg) –A hoard of Venezuelan crude on tankers at sea will provide a cushion for Chinese refiners — the biggest buyers — should the US escalate hostilities against the OPEC producer and disrupt exports.

The volume of oil stored on ships is just over 20 million barrels, the highest in more than three years and an increase from around 18 million barrels earlier this month, according to data compiled by Kpler. Many of the tankers are in Asian waters, making it easier for refiners to access.

The recent seizure of a supertanker off Venezuela by US forces has raised questions about the outlook for exports, though loading has continued via the use of so-called ghost ships. Officially, China hasn’t taken the South American country’s crude since March, but third-party and ship-tracking data indicate flows to the Asian nation have remained robust this year.

China’s independent refiners, known as teapots, are the key buyers of Merey oil from Venezuela, a heavy crude that’s typically used to make bitumen to pave roads. Merey is offered at a steep discount to comparable grades, making it attractive for the processors grappling with razor-thin margins.

A softer Chinese economy, which includes a prolonged property downturn, is also providing a buffer. Bitumen futures in Shanghai are at the lowest level in four years, a sign that physical demand remains weak.

“China is unlikely to face a supply crunch until February, or even March,” if the US squeezes Venezuela’s oil-export network following the tanker seizure last week, said Muyu Xu, senior crude analyst at Kpler. Still, it will be difficult for Chinese refiners to fully replace Venezuelan cargoes, Xu added.

Read More: Venezuela Says Oil Export System Down After Weekend Cyberattack

There are alternatives, just at a higher cost. Canadian Access Western Blend is a suitable substitute but at least $10 a barrel more expensive, according to Kpler, which cited Argus Media data. Iranian grades are slightly cheaper than the North American option, though not at the bargain rate of Merey.

Merey was offered to Chinese buyers at a $12 a barrel discount to ICE Brent on a delivered basis following the tanker seizure, according to traders familiar with the matter, asking not to be identified discussing confidential information. They were, though, unaware if any deals had been completed at that price.

Deals had been transacted prior to the seizure at rates as wide as a $15 discount prior to the US action, and the slight narrowing of the gap signals little concern from the market at this stage.

Venezuelan oil takes an unconventional route to end-users in China. Transport typically takes more than two months and involves multiple ship-to-ship transfers to mask the origin of the cargo. Close to half of the tankers storing Merey are sitting in waters off China and Southeast Asia, according to ship-tracking data compiled by Bloomberg.

© 2025 Bloomberg L.P.

Updated: December 18, 2025 (Originally published December 16, 2025)

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