Phillips 66 and Citgo Aim to Directly Purchase Venezuelan Crude

• Phillips 66 previously bought Venezuelan oil from Vitol at about $9 per barrel below Brent; Valero plans direct purchases later in 2025 after assessing loading infrastructure
• Venezuelan crude prices have eased to $10 per barrel below Brent as more oil shifts from China to the U.S. Gulf Coast, down from $6-$7.50 below Brent last month
• Direct purchases face hurdles as PDVSA requires individual licenses or OFAC clearance for cargo lifts, and many U.S. banks remain reluctant to finance Venezuelan oil transactions despite the general license

Summary: Phillips 66 and Citgo Aim to Directly Purchase Venezuelan Crude

Key Development: U.S. refiners Phillips 66 and Citgo Petroleum are seeking to purchase heavy crude directly from Venezuela's state oil company PDVSA starting in April, bypassing trading houses and Chevron to maximize profits. Valero plans similar direct purchases later in 2025.

Regulatory Context: The Trump administration issued a general license in late January authorizing broader Venezuelan oil exports, expected to boost trade to $5 billion over coming months. Previously, only Chevron, Trafigura, and Vitol held licenses to export Venezuelan crude.

Company-Specific Details:

• Phillips 66: Seeking internal compliance clearance; purchased Venezuelan oil from Vitol last month at $9/barrel below Brent
• Citgo: In talks for direct purchases but wants Gulf Coast delivery, challenging due to PDVSA's limited vessel capacity; imported first Venezuelan cargo since 2019 in January (500,000 barrels)
• Valero: Second-largest U.S. refiner planning direct purchases after assessing Venezuela's infrastructure; becoming top foreign refiner of Venezuelan oil with March shipments

Market Impact: Venezuelan crude prices have declined as more oil shifts from China to the U.S. Merey crude now trades at $10/barrel below Brent, down from $6-$7.50 below Brent last month. Initial trades by Trafigura and Vitol at $15/barrel below Brent generated approximately $500 million in revenue and up to $4/barrel profit after fees.

Challenges: Implementation faces regulatory hurdles as PDVSA requires individual licenses or Treasury clearance for cargo loading. U.S. banks remain hesitant to finance Venezuelan oil transactions despite sanctions easing.