China’s oil market is expected to remain largely insulated from recent disruptions in Venezuelan crude exports, at least in the near term, thanks to pre-arranged shipments, abundant floating storage, and subdued seasonal demand, analysts and traders say.
The disruption follows the U.S. seizure of a tanker off Venezuela’s coast last week, coupled with new sanctions targeting shipping firms and vessels doing business with the South American nation. Exports from Venezuela have fallen sharply, and the prospect of further seizures has deterred shipments.
However, China, the world’s largest oil importer and Venezuela’s biggest customer, may feel a limited impact because Venezuelan crude represents only around 4% of its total imports.
Traders note that Venezuelan oil arrivals to China are set to increase this month and next, due to a surge in exports over the past four months and the deep price discounts that incentivized independent Chinese refiners to buy in advance.
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Analysts at tanker tracker Vortexa estimate December arrivals of Merey crude Venezuela’s main export grade between 600,000 and 664,000 barrels per day, potentially a record. “The surge in Venezuela flow to China increased in anticipation of sanctions,” said Mukesh Sahdev, founder and CEO of energy consultancy XAnalysts. He added that the full impact of the tanker seizure and related sanctions may not be felt until February.
The influx of Venezuelan crude coincides with large supplies from other sanctioned producers such as Russia and Iran. Asian floating storage has risen sharply, from 33 million barrels in early September to 71 million barrels last week, according to Kpler data. Much of this crude remains unsold, with at least one-third of November’s Venezuelan deliveries in China still seeking end-buyers, Vortexa analysts noted.
While Venezuelan oil is a small slice of the overall Chinese market, it is crucial for independent “teapot” refiners who primarily purchase Merey crude. These small refiners may face costs in securing alternative supplies if shipments are disrupted. “It will take time to gauge the impact, but some companies are hedging by buying small amounts of Canadian TMX crude,” said a trading manager for a regular buyer.
Market conditions also help buffer China from immediate shocks. Seasonal demand for Merey crude is low, with the most-traded bitumen futures on the Shanghai Futures Exchange trending downward since late October. The extra-heavy Merey is much cheaper than similar grades such as Canada’s Access Western Blend and Colombia’s Castilla, further encouraging buyers to continue imports despite geopolitical uncertainty.
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Overall, while the U.S. seizure and sanctions underscore the risks facing Venezuela’s oil exports, China’s combination of pre-arranged cargoes, ample storage, and flexible sourcing from multiple producers provides a temporary cushion. Analysts caution that any sustained supply interruptions or escalation in sanctions could weigh more heavily on the market in early 2026.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
