Chinese independent refiners are anticipated to increasingly rely on heavy crude from Iran and Russia in the coming months, as Venezuelan oil exports to China stall, according to dealers and analysts.
According to a Reuters report, the revision comes after a US-Venezuela agreement that is expected to shift Venezuelan petroleum to the US, reducing access for Chinese importers who had relied on subsidised barrels.
Caracas and Washington agreed to allow up to $2 billion in Venezuelan crude exports to the United States, US President Donald Trump said on Tuesday, following the capture of Venezuelan President Nicolas Maduro over the weekend.
According to analysts, the agreement will reduce Venezuelan supplies to China, depriving independent refiners (known as teapots) of a crucial source of low-cost heavy crude oil.
China is the world’s largest crude importer and a significant buyer of inexpensive oil from sanctioned producers such as Russia, Iran, and Venezuela.
Impact on independent refiners
“The Venezuela drama hits China’s independent refineries the hardest, as they may lose access to discounted heavy barrels,” Sparta Commodities analyst June Goh told the news agency.
However, she stressed that there are several alternatives available. “As there are ample Russian and Iranian feedstocks available and Venezuelan barrels on water, we do not foresee the teapots needing to bid up for unsanctioned barrels as the economics would likely not make sense for them.”
According to Kpler data, China purchased 389,000 barrels per day of Venezuelan oil in 2025, or approximately 4% of its total seaborne crude imports.
According to shipping statistics, at least a dozen sanctioned tankers loaded approximately 12 million barrels of petroleum and fuel in December before departing Venezuelan ports in early January.
However, loadings bound for Asia at Venezuela’s principal ports have ceased since January 1, indicating that new supplies for Chinese purchasers are no longer moving.
Pricing pressures and stopped trade
As supply tightens, price dynamics for Venezuelan crude have evolved.
According to one trader, sellers of Venezuelan Merey oil for fast delivery have offered cargoes at a discount of roughly $10 per barrel to ICE Brent, compared to about $15 last month.
Another trader mentioned discount offers of $11 per barrel. Despite smaller discounts, trading has essentially stalled due to uncertainties about future flows.
The fact that Venezuelan crude is already afloat has mitigated the immediate damage.
According to Kpler senior analyst Xu Muyu, Venezuelan oil aboard Asian ships is adequate to satisfy approximately 75 days of Chinese demand, restricting near-term potential for alternative grades.
Turning toward Iran, Russia, and beyond
Analysts predict that in March and April, teapots that have previously processed Venezuelan oil will shift to Russian and Iranian supplies.
China can also source from non-sanctioned countries such as Canada, Brazil, Iraq, and Colombia.
Buyers have not yet aggressively sought alternatives, according to trade sources.
Iranian Heavy crude, provided at a discount of roughly $10 per barrel to ICE Brent, is regarded as the cheapest alternative and is in plentiful supply.
Some refiners may consider Middle Eastern grades, such as Iraqi Basrah.
Meanwhile, discounts on Canadian crudes like Cold Lake and Access Western Blend shipped via the Trans Mountain pipeline increased by more than $2 this week.
Traders said the grades are currently priced at $4 to $5 a barrel lower than ICE Brent for April delivery to China, suggesting weaker US demand.
As Venezuelan supplies to China decline, the availability of sanctioned Russian and Iranian oil, paired with floating storage, is expected to allow Chinese independent refiners to respond without dramatically raising prices for alternative sources.
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