United States Assumes Control Over Venezuelan Oil Trade, Ending Discounted Supplies to China

The United States has effectively seized control of the Venezuelan crude oil trade, a move that follows the significant geopolitical shift marked by the capture of Nicolas Maduro on January 3, 2026. In the wake of this event, Washington has asserted its authority to regulate all export flows, redirecting them to serve American strategic interests and a select group of authorized global commodity traders. This decisive action has essentially terminated China's long-standing access to Venezuelan petroleum, which had previously been acquired through favorable, high-discount arrangements.

The final shipments of Venezuelan crude destined for Asian markets were loaded immediately prior to the implementation of stricter American sanctions and the subsequent arrest of Maduro. Industry analysts estimate that these remaining volumes will only sustain Chinese independent refineries, often referred to as "teapots," for approximately one to two months. Future shipments are now strictly curtailed by US enforcement measures, including a naval blockade that was first announced in December. The market has already reacted to this shift in pricing policy; discounts for Venezuelan Merey grade oil for Chinese buyers have plummeted from $15 per barrel to roughly $5 relative to the ICE Brent benchmark.

Central to this transition are the United States Armed Forces, the Chinese government, and major commodity trading houses such as Vitol Group and Trafigura Group. These specific firms have been granted special licenses by the US government to market Venezuelan oil, signaling a highly centralized management of new supply routes. Notably, Vitol Group, led by senior trader John Addison, has been at the forefront of these initial transactions. This involvement has raised scrutiny regarding potential conflicts of interest, particularly concerning Addison's history of political donations. The first cargo acquired by Vitol was recently delivered to the Bullen Bay terminal located in Curacao.

Washington's maneuvers are significantly disrupting established global energy supply chains and placing Beijing's multi-billion dollar energy investments in Venezuela at risk. China, which for years operated as the primary purchaser through a "loans-for-oil" mechanism, is now compelled to seek alternative crude sources. Market traders anticipate that Chinese refineries will be forced to transition to more expensive grades, such as Canadian heavy oil or Russian Urals, as early as the second quarter of 2026. Conversely, the United States is prioritizing heavy Venezuelan crude for its own refineries along the Gulf Coast, as this feedstock remains more cost-effective than Canadian alternatives.

The international response to these developments has been sharply divided. While the United States has officially declared its control over the trade, China has condemned Washington's actions as a blatant violation of international law. According to the US Department of Energy, the revenue generated from the initial sales—estimated to involve between 30 and 50 million barrels—will be deposited into accounts managed by the US government. Meanwhile, the human rights organization Amnesty International has voiced its concerns regarding the operation, characterizing the move as a potential violation of the United Nations Charter.

This restructuring of the global energy landscape underscores a broader shift in how energy resources are utilized as tools of foreign policy. The transition from a Chinese-dominated market to one overseen by US-licensed entities like Trafigura and Vitol marks a new era for South American energy exports. As the second quarter of 2026 approaches, the global market will be watching closely to see how these new regulatory frameworks impact long-term pricing and the stability of energy flows to both the East and the West.