By Mariana Parraga and Shariq Khan
HOUSTON/NEW YORK, Feb 3 (Reuters) – U.S. Gulf Coast refiners are struggling to absorb a sharp increase in Venezuela’s crude shipments after a major $2 billion supply deal between Caracas and Washington last month, keeping prices under pressure and some volumes unsold, according to trade data.
The soft U.S. demand represents an early setback to President Donald Trump’s hopes of sending most of the South American country’s oil to the United States after U.S. forces raided Venezuelan President Nicolas Maduro in Caracas last month.
Trading houses Vitol and Trafigura were granted US licenses to market and sell millions of barrels of Venezuela’s oil following a US operation and supply agreement with interim President Delsy Rodriguez.
Trading houses that have joined energy major Chevron in agreeing to export Venezuelan oil have struck preliminary deals to sell some cargo to refiners in the US and Europe. However, as Chevron also ramps up exports, trading companies are now finding it difficult to secure enough buyers among Gulf Coast refiners, traders said.
“We’re all facing this issue where there are too many places and not enough takers,” said one of the traders, citing reluctance from U.S. refiners to buy Venezuelan crude. Some refiners are complaining that prices, although declining, remain high compared to competing Canadian heavy grades.
Venezuelan heavy oil cargoes for delivery to the Gulf Coast are being offered at $9.50 a barrel, below benchmark Brent, which is off between $6 and $7.50 a barrel in mid-January.
Last month, total Venezuelan oil exports to the US nearly tripled to 284,000 barrels per day (bpd), according to data based on tanker movements.
The US was absorbing about 500,000 bpd of Venezuelan oil before Washington imposed sanctions on the country in 2019. But exports to the U.S. will drop to zero in mid-2025 after Trump revoked all trade and shipping licenses.
It will take time for U.S. refiners to reach maximum capacity again, one trader said, in part because some facilities need adjustments to process heavy oil.
Mark Lasheer, chief executive of refiner Phillips 66, said on Tuesday that the company could process about 250,000 bpd of Venezuelan crude, but that prices would have to be competitive for Venezuelan grades to displace other sources of heavy oil.
Chevron and Trafigura declined to comment. Venezuela’s state oil firms PDVSA and Vitol did not respond to requests for comment.
Increased competition
Chevron, whose current Venezuelan license allows it to export only to the US, increased exports to 220,000 bpd in January from 99,000 bpd in December.
Chevron CEO Mike Wirth told investors on Friday that the company’s refining network can process up to 150,000 bpd of Venezuela’s heavy grade, meaning it must store or market the rest among other refiners.
The only US oil major operating in Venezuela is producing about 250,000 bpd there. Wirth said the company sees the potential for a 50% production increase over the next 18 to 24 months, if the U.S. authorizes it to expand operations.
Vessel monitoring data this week showed several Chevron-chartered tankers loaded with Venezuelan crude were waiting days to discharge or slowing navigation at U.S. ports.
A person familiar with Chevron’s operations said the company had to negotiate new discharge dates with customers because the U.S. embargo on Venezuela caused shipment delays between December and January. But all the cargoes were sold before departure, the person added.
Meanwhile, Vitol and Trafigura exported about 12 million barrels — equivalent to about 392,000 bpd — from Venezuelan ports in January to storage terminals in the Caribbean, the data showed.
Much of it remains unsold, sources said.
Venezuela’s total oil exports jumped to about 800,000 bpd last month from 498,000 bpd in December.
China used to be the top destination for Venezuela’s oil, but none has been shipped there since Maduro took over in early January, according to the data. After the capture of Maduro, the United States has said that it will control Venezuela’s oil sales indefinitely.
Even if China is allowed to buy oil, it should not be at the “unfair, low” price at which Caracas previously sold crude, a U.S. official said last month.
Beijing has rejected a US seizure of Venezuela’s oil exports.
China’s state-owned PetroChina, previously the biggest receiver of Venezuelan crude, has told traders not to buy or trade Venezuelan oil while it assesses the situation, separate sources told Reuters last week.
A possible relief valve for Venezuelan oil could come from India.
On Monday, Trump announced a trade deal with India that would see India lower trade barriers, stop buying Russian oil and reduce US tariffs on Indian goods in exchange for buying oil from the US and potentially Venezuela.
India’s Reliance Industries said last month it was considering importing Venezuelan oil.
(Series ing and Marina Assembly Houston Sharik Khan reports in New York Reporter McCartney or McCartney or
