With the Strait of Hormuz effectively sealed off by U.S. and Israeli airstrikes on Iran, raising fears of a sharp jump in oil prices, Venezuelan crude is emerging as an alternative supply source for U.S. oil companies.
On the 5th (local time), energy market intelligence firm Kpler said that since former President Nicolás Maduro was ousted in early January by a U.S. military operation, more than 20 tankers have shipped Venezuelan crude to the U.S. Gulf Coast. The volume they carried averaged 280,000 barrels per day last month, the highest level since December 2024.
The Wall Street Journal (WSJ) reported that "with the world's biggest oil shipping lane blocked, the global oil market is taking a major hit, and tankers are moving more oil from the unexpected source of Venezuela."
Since former Venezuelan President Nicolás Maduro was ousted, the United States has been pushing to boost output by rebuilding oil infrastructure. To that end, it has been pressuring U.S. oil corporations to invest $100 billion (about 147 trillion won) in Venezuela, and achieving that goal has become even more important after the Iran crisis. Rising oil prices quickly feed into inflation, and with U.S. midterm elections scheduled for Nov., keeping prices in check is crucial.
According to the WSJ, U.S. oil companies are quickly buying Venezuelan heavy crude that their own refineries can process. Mark Lashier, chief executive officer (CEO) of U.S. refiner Phillips 66, said the company's refineries can handle 250,000 barrels per day of Venezuelan crude. Maryann Mannen, CEO of Marathon Petroleum, also said, "If the economics work, we have the ability to pivot quickly to Venezuelan crude."
Venezuelan crude is seen as more profitable than the oil produced domestically by U.S. shale companies. John Auers, executive vice president of refined fuels analytics at energy consultancy RBN Energy, said, "Refiners will use more Venezuelan crude because it is profitable."
An increase in Venezuelan heavy crude supply is already helping stabilize prices. Last year, U.S. refiners bought Canadian heavy crude at an average discount of $4.27 per barrel to U.S. crude. As of the end of last year, U.S. crude was priced at $57.42 per barrel. According to refined fuels analytics, the average discount widened to $8.29 in January this year.
However, some analysts say expanded Venezuelan supply could weigh on the U.S. shale sector. More supply could increase downward pressure on prices. As a result, U.S. drillers are expected to seek overseas buyers more aggressively for oil produced domestically.
The recent decline in shipments to China, once a major export market for Venezuelan oil, is also reshaping the market. Some volumes are heading to Europe. Venezuela's exports to Spain hit 106,000 barrels per day in Feb., the highest in a year and a half, while shipments to Italy, which bought almost none last year, reached 18,000 barrels per day.
More Venezuelan oil is expected to hit the market going forward. Crude already stored in tanks totals 30 million to 50 million barrels. Denton Cinquegrana, chief oil analyst at Oil Price Information Service (OPIS), said the number of buyers for Venezuelan crude is still limited, so it will take months to work through those volumes, adding, "If you can import it at $10 to $15 per barrel under benchmark prices, you should bring in as much as possible."