Refiners gain share in Venezuela oil as traders' grip loosens
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Refiners and oil producers are signing direct contracts with Venezuela's PDVSA, eroding the dominant market share held by trading houses Vitol and Trafigura. Phillips 66 and Reliance Industries resumed direct crude purchases in May after a seven-year pause. The shift could secure better prices for PDVSA while diversifying its customer base.
Direct Deals Resumed
U.S. refiner Phillips 66 in May began buying spot cargoes from PDVSA after a seven-year pause, and in July was allocated three cargoes of Merey 16 heavy crude for delivery at Jose port, shipping documents show. India's Reliance Industries also started direct purchases in May, complementing volumes bought from Vitol, Trafigura and Chevron. Valero Energy and Thailand's Tipco Asphalt are expected to begin direct purchases in the coming months, though as of mid-July they had not been assigned loading windows.
Traders' Dominance Challenged
Trading houses Vitol and Trafigura currently control the lion's share of Venezuela's oil exports through agreements signed in January, allowing them to take more than 100 million barrels for resale over six months. PDVSA is reverting to its pre-2019 business model that prioritizes supply contracts with joint-venture partners and refineries over intermediaries. The state company aims to secure long-term pacts for heavy grades that are otherwise difficult to market, a company source said.
Market Diversification
The U.S. Energy Department in May said Venezuela's overall oil sales represent $2 billion to $3 billion per month, with about half bound for the U.S. Importers this year include TotalEnergies, Aramco, Chevron, Citgo Petroleum, ExxonMobil, Marathon Petroleum, Pemex, PBF Energy, Phillips 66, Trafigura, Valero and Vitol. PDVSA wants to diversify destinations and prices by bringing back former customers that had supply contracts until early 2019, when U.S. sanctions cut exports to the U.S., Europe and some Asian countries.
What's Next
Valero and Tipco are expected to finalize direct purchases in the coming months, though no loading windows have been assigned. It remains unclear whether the shift will significantly reduce traders' market share or how the U.S. will adjust sanctions oversight as PDVSA expands its customer base.
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Refiners gain share in Venezuela oil as traders' grip loosens
