Valero, Phillips 66 Buy Venezuelan Oil After US Deal

Key Refiners Resume Venezuelan Crude Purchases

US refiners Valero and Phillips 66 have purchased cargoes of Venezuelan crude oil from trading house Vitol. This marks one of the first direct deals involving trading houses since Washington authorized the trade as part of an agreement with Caracas. The crude was traded for delivery to the U.S. Gulf Coast at a significant discount to the Brent benchmark.

Overview of the Trade Agreement

The sales are a result of licenses granted by the U.S. government to trading firms Vitol and Trafigura to market Venezuelan crude. This development follows a political agreement involving President Nicolas Maduro's government. Before sanctions were imposed in 2019, U.S. Gulf Coast refineries were major consumers of Venezuelan heavy oil, processing up to 800,000 barrels per day.

Impact on the Energy Market

The Venezuelan crude was reportedly acquired by the trading houses at a $15 per barrel discount to Brent and resold to U.S. refiners at a discount of $8.50 to $9.50. After accounting for shipping costs, this provides a profitable margin for the traders. The re-entry of Venezuelan heavy crude offers a valuable supply opportunity for Gulf Coast refineries, which are configured to process this type of oil.

Summary and Outlook

The resumption of Venezuelan oil sales to the U.S. through authorized trading channels signifies a notable shift in energy flows. Market participants will be closely watching the volume of these trades and their impact on regional crude pricing. The availability of heavy crude is a key economic factor for specialized U.S. refineries.

FAQ

Q: Which U.S. companies bought Venezuelan oil?
A: Valero and Phillips 66 were the first refiners to purchase cargoes from trading houses under the new U.S. authorization.

Q: What was the price for the crude oil?
A: The oil was sold to the U.S. refiners at a discount of approximately $8.50 to $9.50 per barrel compared to Brent crude.

Q: Why are these sales happening now?
A: The transactions are part of an agreement between Washington and Caracas that allows licensed trading companies to market Venezuelan oil.

Source: Investing.com