Commodity traders are having the rug pulled out from under one of their biggest paydays yet as refiners start bypassing oil and traders and buying Venezuelan crude directly, according to Reuters. Refiners and major oil-producing firms are rapidly gaining market share in Venezuelan crude by locking in direct supply contracts with state-run Petróleos de Venezuela, S.A. (PDVSA), bypassing the global middlemen and commodity trading houses such as Trafigura and Vitol that previously dominated the ***** e.
Six months after traders reopened Venezuela's oil market, Phillips 66 (NYSE:PSX) and India's Reliance Industries have already signed direct supply agreements, with Valero (NYSE:VLO) and Thailand's Tipco expected to follow.
Previously, Vitol and Trafigura enjoyed first-mover advantage, managing to become dominant in Venezuelan crude marketing because of their exclusive U.S. government licenses, pre-existing logistical infrastructure and historical ties to PDVSA. Following major political shifts in Venezuela in January, the U.S. administration brokered a deal to manage and sell the country's oil. The U.S. Department of the Treasury issued special, long-term licenses specifically to Vitol and Trafigura until June 2027, effectively giving the traders a temporary monopoly. The pair collectively moved more than 100 million barrels of crude over a six-month period while other global firms remained legally locked out.
Their unmatched logistics also gave them a clear upper hand. After all, global trading houses have the fleet capacity and global reach to quickly deploy tankers and reroute large volumes of crude. They could absorb massive storage and shipping costs in a difficult market, using floating storage facilities in places like Malaysia to break up bulk shipments. When the ongoing war in Iran disrupted Middle Eastern supply chains, Vitol and Trafigura quickly diverted heavy Venezuelan grades like Merey 16 to major Asian refining hubs in India, South Korea, and Malaysia at narrower discounts.
Related: Equinor CEO: Europe May Miss Winter Gas Storage Goal
#venezuelan #crude #storage
Six months after traders reopened Venezuela's oil market, Phillips 66 (NYSE:PSX) and India's Reliance Industries have already signed direct supply agreements, with Valero (NYSE:VLO) and Thailand's Tipco expected to follow.
Previously, Vitol and Trafigura enjoyed first-mover advantage, managing to become dominant in Venezuelan crude marketing because of their exclusive U.S. government licenses, pre-existing logistical infrastructure and historical ties to PDVSA. Following major political shifts in Venezuela in January, the U.S. administration brokered a deal to manage and sell the country's oil. The U.S. Department of the Treasury issued special, long-term licenses specifically to Vitol and Trafigura until June 2027, effectively giving the traders a temporary monopoly. The pair collectively moved more than 100 million barrels of crude over a six-month period while other global firms remained legally locked out.
Their unmatched logistics also gave them a clear upper hand. After all, global trading houses have the fleet capacity and global reach to quickly deploy tankers and reroute large volumes of crude. They could absorb massive storage and shipping costs in a difficult market, using floating storage facilities in places like Malaysia to break up bulk shipments. When the ongoing war in Iran disrupted Middle Eastern supply chains, Vitol and Trafigura quickly diverted heavy Venezuelan grades like Merey 16 to major Asian refining hubs in India, South Korea, and Malaysia at narrower discounts.
Related: Equinor CEO: Europe May Miss Winter Gas Storage Goal
#venezuelan #crude #storage
4 days ago
