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U.S. Refiners Snap Up Venezuelan Crude at Steep Discounts
Valero and Phillips 66 have bought two cargoes of Venezuelan crude that are part of the 50 million barrels that the Trump administration said Venezuela would supply to the United States after the ousting of President Nicolas Maduro earlier this month.
Reuters reported the news, citing unnamed sources, who added that the seller of the cargos was Vitol and that the price of the crude was set at a discount to Brent crude of $8.50 to $9.50 per barrel. Brent is currently trading at over $65 per barrel. That compares to a discount of $15 per barrel to Brent, which was the price at which Vitol and Trafigura bought the Venezuelan barrels, again according to the Reuters sources.
Earlier this month, U.S. Energy Secretary Chris Wright said that the first sales of Venezuelan crude have been calculated to bring in some $500 million at a price $15 below Brent crude.
Vitol and Trafigura got special licenses to market Venezuelan crude from the U.S. federal government earlier this month and started offering cargos to China and India, for delivery in March. Vitol, the world’s biggest independent oil trader, has approached Indian state-controlled refiners to offer the crude at a discount of $8-$8.50 per barrel versus ICE Brent on a delivered basis, one of the sources told Reuters.
Vitol and Trafigura have also contacted PetroChina about potential interest in Venezuela’s flagship heavy sour crude Merey, which was a staple with the Chinese state oil giant before the U.S. sanctioned Venezuela’s exports during President Trump’s first term in office.
Valero and Phillips 66, on the other hand, used to source their Venezuelan heavy crude from Chevron as the only U.S. energy major with a license to operate in the country. According to the Reuters sources, offers of Venezuelan crude to U.S. refiners started last week, at a discount of $6 and $7.50 per barrel to Brent, but weak interest forced the traders to deepen the discount.
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