China and India have to regularly shift their oil purchases due to US sanctions on major crude exporters
News Desk - The Cradle
“The drawdown of Iranian oil held in storage is making up for the drop in Venezuelan supply to the world's largest crude importer,” the news agency wrote, citing two people with knowledge of the matter.
Venezuelan oil shipments to China have fallen drastically since US President Donald Trump imposed a blockade on Venezuelan oil tankers attempting to leave the country in December.
On 3 January, US forces bombed the Venezuelan capital, abducted Venezuelan President Nicholas Maduro, and took control of the country's oil.
Washington announced it was placing Venezuela's oil revenues in accounts in Qatar under White House control.
Trump has allowed global trading firms Vitol and Trafigura to sell up to 50 million barrels of Venezuelan oil. However, Beijing-owned firm PetroChina has halted its oil purchases from Caracas amid the uncertainty.
Beijing's independent refiners have responded by stepping up purchases of Iranian heavy crude stored in bonded storage tanks in China and on ships at steep discounts, the sources told Reuters.
Additional Chinese purchases of Iranian Heavy and Pars crude grades are expected in February and March, one of the two sources added.
The refiners can purchase Iranian Heavy crude at discounts of about $12 per barrel, as Iran is faced with few willing buyers due to US sanctions.
Russian Urals trade at a discount of $11 to $12 per barrel, also due to US sanctions.
With Washington's permission, Vitol is offering Chinese buyers discounts of roughly $5 per barrel for Venezuelan crude.
China's imports of Venezuelan crude averaged 394,000 barrels per day (bpd), around four percent of Beijing's total seaborne crude imports, before the US takeover.
On Saturday, Trump said India will begin buying Venezuelan oil, helping to replace the loss of Russian supplies amid US tariff threats.
“We've already made that deal, the concept of the deal,” Trump told reporters while traveling aboard Air Force One.
Last year, after Trump imposed a 25 percent tariff on countries buying Venezuelan oil, New Delhi stopped buying oil from Caracas.
India and China have been forced to shift their purchases of oil in recent years due to aggressive sanctions on Russia, Venezuela, and Iran.
New Delhi previously purchased large amounts of Iranian oil but halted the purchases in 2019 due to US sanctions over Tehran's nuclear program.
Indian refiners first responded by purchasing US oil, but then struck a deal to buy Russian crude at steep discounts after the US imposed sanctions on Moscow following its invasion of Ukraine in 2022.
However, in August, Trump imposed an additional 25 percent tariff on Indian goods to punish New Delhi for the purchases, accusing India of funding the Russian “war machine” in Ukraine.
US Treasury Secretary Scott Bessent said in January that the additional 25 percent tariff on Indian goods could be removed, given what he called a sharp reduction in Indian imports of Russian oil.
In addition to saying that India would buy more Venezuelan crude, Trump suggested on Saturday that China could make a deal with the US to resume purchases from the South American nation as well.
“China is welcome to come in and would make a great deal on oil,” Trump said, without providing any details.
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