Venezuela supply effect lagged due to pre-blockade cargo and ships running gauntlet

BACK in the day, a military attack by one crude producer against another would be a “stop the presses” moment for oil and tanker markets. America abducted Venezuelan President Nicolas Maduro and his wife on Saturday, and yet, crude oil and tanker markets have been sanguine.

The kneejerk reaction to geopolitical events in decades past would have been a spike in oil pricing and tanker rates.

Brent crude on Tuesday was virtually unchanged versus late Friday, and the Baltic Exchange’s global average for very large crude carrier spot rates was down 4% over the same period.

The reason for nonchalance: Nobody’s worried about falling short of crude supply in today’s market, and VLCCs serving Venezuela long ago transitioned to a separate parallel sanctioned market that doesn’t show up in the Baltic’s assessments.

“It’s really interesting to see such a historically major producer of crude with this massive geopolitical twist and it hasn’t had a huge impact on crude prices,” said Pamela Munger, head of Europe market analysis for Vortexa, during an online presentation on Tuesday.

Munger said the likely reason was that global seaborne liftings of crude and condensate have now aligned with global arrivals.

In Q425, liftings outpaced arrivals, leading to record-high oil on the water, boosting VLCC rates. Now that arrivals and liftings are aligned, VLCC rates have normalised.

“Liftings have come down since October, likely due to a drop in loadings out of Russia, Iran and Venezuela,” she explained. Mainstream crude liftings have been relatively flat, “but Atlantic crude loadings have also dropped since October, likely due to the return of refineries in Europe and the US, which have come back from a heavy and somewhat extended autumnal turnaround season”.

“On the arrival side, you see arrivals picking up well above seasonal norms, removing some of the overhang, which was expected. With most of the arrivals coming into China, and to some extent India, you can see stock builds.

“China is taking in more Middle Eastern grades, while India is taking more from the US, Brazil and to some extent the Middle East,” said Munger.

Venezuela crude supply effect

The supply effect of the US blockade on Venezuelan crude will come with a lag because a large volume of cargo was headed to Asia before it was put in place, and several vessels are slipping through the US blockade currently.

According to Claire Jungman, Vortexa’s director of maritime risk and intelligence, “Venezuela’s seaborne crude exports fell sharply month on month, from roughly 800,000 barrels per day in November to around 550,000 bpd in December, a drop around of 30%, due to increased interdictions and scrutiny, a higher risk of seizures, forced U-turns and growing uncertainty around whether cargoes could safety complete their voyages.

”But China’s imports [from Venezuela] remained elevated through November and December. Those barrels departed Venezuela months earlier. China’s high arrivals in late 2025 are the result of earlier liftings.

“There was also a strategic element. Against a deteriorating geopolitical backdrop, Chinese buyers had a strong incentive to secure and continue taking Venezuelan crude while they could, given uncertainty over whether future flows would remain available,” said Jungman.

Fresh crude cargoes are also coming out of Venezuela now, as a wave of tankers is running the blockade. The Achilles heel of the US oil blockade is that it can’t stop all the tankers if they come at once.

Echoing previous reports by the New York Times, Reuters and TankerTrackers.com, Vortexa reported that an exodus is now underway. The New York Times reported that at least 16 tankers departed this weekend.

“What we are seeing is that a lot of the oil that was effectively bottled up is now moving out,” said Jungman.

“We’ve confirmed that multiple tankers that loaded in December have departed. Despite not being able to see this on AIS [Automatic Identification System], Vortexa has confirmed these movements via satellite imagery.”

Among the tankers departing Saturday, said Vortexa, were Bertha (IMO: 9292163), Veronica III (IMO: 9326055), Aquila II (IMO: 9281152), Olina (IMO: 9282479), Min Hang (IMO: 9257137), Volans (IMO: 7389429) and Lillian (IMO: 9153525).

The New York Times also cited the departure of Vesna (IMO: 9233349), which was unladen.

“This appears to be a risk-mitigation strategy,” said Jungman. “Moving a large number of tanker cargoes at once reduces the likelihood of individual seizures, essentially overwhelming the system. Exports are still moving.”

As of late Tuesday, the US government had not announced any new tanker seizures off of the coast of Venezuela, although there were reports that the US was poised to board the newly Russia-flagged Marinera (IMO: 9230880), formerly Bella 1.

The US-sanctioned Marinera was first approached by the US Coast Guard in the Atlantic on December 21, when it was unladen and en route to Venezuela. It refused to allow a boarding, turned around and fled to the North Atlantic, reflagging to Russia while en route.

Reviving Venezuela’s crude exports

Venezuela’s interim president, Delcy Rodriguez, could send more exports to the US Gulf in the near term, in addition to those already flowing under the Chevron licence. This would be a positive for compliant aframax demand.

US President Donald Trump said in a social media on Tuesday that Venezuela “will be turning over between 30m-50m barrels of high-quality sanctioned oil...that will be brought directly to the unloading docks of the United States”.

But the big prize for the US, and for tanker markets, is a long-term reinvigoration of Venezuela’s oil complex that multiplies exports volumes.

Since Maduro’s abduction, social media has been flooded with ultracrepidarian commentary on the bounty of Venezuela’s oil reserves, which are the largest in the world. Experts have been quick to point out that this will be a long, tough slog.

“Any material production recovery would likely be incremental, capital-intensive and backloaded, reinforcing our view that near-term shipping impacts will remain limited,” said Marsoft.

“Any recovery towards historical production levels — the previous peak of around 3m bpd, 20-plus years ago — would be a multi-year process at best. Even under more favourable political and investment conditions, Venezuela should not be viewed as a source of rapid near-term supply growth.”

Jamie Brito, executive director of refining and oil products at Dow Jones Energy, explained during a Dow Jones Risk Journal online presentation on Tuesday, “The oil industry is a long-term process. Any company that could potentially participate is going to require that the social, regulatory and legal transition is completed. That’s the ‘starter’ that’s necessary.

“Let’s assume that happens. Then the clock begins for the energy sector,” said Brito. After that, potential participants will assess three main risks.

“One is operational. You have to assess the field and the status of machinery. Secondly, there’s the regulatory and rule-of-law risks. The companies are going to need the proper fiscal regime. The third risk is the human factor. A good percentage of the highly skilled people [in Venezuela] left years ago and are working in Mexico and Colombia. How interested are these skilled people going to be in returning to Venezuela?

“In a rosy scenario, we can talk about Venezuela returning to 3m bpd, or it could go to 4m bpd or 5m bpd. You could choose whatever production you want. You could have 6m bpd. It depends on the fiscal regime that the Venezuelan government offers.

“There are a number of international companies that are highly skilled with the kinds of specific reserves that Venezuela owns. They could apply their latest technologies for enhanced oil recovery and extract a sizeable amount of oil.”

The timeframe is highly dependent on what happens next, he continued.

“First, you need to define whether the new ministry of energy is going to be completely autonomous, or whether it is going to be under a US stewardship that says: you will not allow European or Canadian companies, only US companies.

“Next, we need to understand the number of blocks that will be awarded. Around 80% of Venezuela’s reserves are extra-heavy bitumen, but there are also opportunities for fracking companies and conventional oil companies. Is it going to be: open the doors and everyone comes in? Or will there be different phases, where they work blocks for conventional this year, then next year is going to be heavy and the third year is going to be fracking? What is the timing of the bidding process?

“Having said that, in a scenario where there is rule-of-law and regulatory certainty, and everybody is invited, you can look at the example of Guyana. The block was discovered in Guyana by ExxonMobil in 2015 and by 2019 they were producing oil. Almost 10 years later, they are producing 800,000 bpd.

“In Venezuela, the fields are there. You don’t need to discover the wells. You just need to revamp them and make them operational again. So, you can argue that the timeframe is between three to five years to start production, and after the fifth year you could reach 4m-5m bpd.

“Maybe that’s feasible, but you would need to assume that the new government is going to remain stable, and that there’s going to be certainty, even after this administration ends in the US,” said Brito.