Why are Chinese refiners looking at Canadian crude instead of Venezuelan?

Recent US actions have disrupted Venezuelan crude supplies, prompting Chinese refiners to seek alternatives like Canadian crude due to logistical advantages.

How much more expensive is Canadian crude than Venezuelan crude?

Canadian crude is currently estimated to cost around $8 to $9 per barrel more than Venezuelan Merey crude.

How long will China's existing Venezuelan oil stockpiles last?

China's current floating stockpiles of Venezuelan oil are estimated to provide feedstock for up to two months.

Home / Business and Economy / Venezuela Oil Cutoff? China Eyes Canadian Crude

Venezuela Oil Cutoff? China Eyes Canadian Crude

8 Jan

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Summary

China may turn to costlier Canadian crude due to Venezuela supply disruptions.
Canadian oil offers shorter shipping times and more freight options to China.
Existing Venezuelan oil stockpiles may only last China up to two months.

Venezuela Oil Cutoff? China Eyes Canadian Crude

China's refiners are increasingly looking towards Canadian crude as a potential replacement for Venezuelan oil following recent geopolitical events impacting supply. The disruption, stemming from intensified US pressure on Venezuela, has led Chinese buyers to investigate Canadian grades, which share similar heavy-sour characteristics with Venezuelan crude.

While Canadian crude currently costs between $8 to $9 per barrel more than Venezuela's Merey, its logistical advantages are compelling. A voyage from Vancouver to China takes approximately 17 days, significantly shorter than the 57-day journey from Venezuela, offering greater flexibility in tanker choices and reducing transit risks.

This potential shift follows increased Canadian oil exports to Asia, boosted by pipeline expansions. Although China holds about 22 million barrels of Venezuelan oil, providing a buffer of up to two months, securing alternative supplies like Canadian crude will be crucial from the second quarter onwards.