Refiners elbow traders to take a larger slice of Venezuela's oil

• Trading houses Vitol and Trafigura currently control agreements for over 100 million barrels over six months, but their dominance is being challenged by direct refiner deals
• Phillips 66 resumed buying Venezuelan crude in May after a seven-year pause, while Reliance Industries also began direct purchases; Valero and Tipco Asphalt are expected to follow
• Chevron increased exports to 293,000 bpd in Q2 from 223,000 bpd in Q1, while Repsol and Eni have also expanded direct loading as Venezuela targets 1.37 million bpd output by year-end

Venezuela Oil Trade Summary

Key Developments

Venezuela's state oil company PDVSA is shifting its business model to prioritize direct sales contracts with refiners and joint-venture partners over trading intermediaries, marking a return to pre-2019 sanctions practices. This transition challenges the dominance of trading houses Vitol and Trafigura, which currently control agreements allowing them to resell over 100 million barrels in six months following sanctions relief agreements reached in January 2026.

Major Market Participants

New/Returning Direct Buyers:

• Phillips 66: Resumed purchases in May after seven-year hiatus; allocated three Merey 16 crude cargoes in July
• Reliance Industries (India): Began direct purchases in May, supplementing volumes from traders
• Valero Energy and Thailand's Tipco Asphalt: Expected to commence direct purchases soon

Expanding Partners:

• Chevron: Increased exports to 293,000 bpd in Q2 2026 from 223,000 bpd in Q1
• Repsol (Spain): Started direct loading of Merey 16 crude in July
• Eni (Italy): Allocated Europe-bound cargo

Production and Export Data

• Current Venezuelan oil/fuel exports: 1.2 million bpd (up from 847,000 bpd average in 2025)
• Target output by year-end: 1.37 million bpd
• Export value: $2-3 billion monthly, with approximately half destined for the U.S.
• June exports declined slightly to 1.2 million bpd due to power outages and earthquake-related delays

Market Implications

PDVSA's strategy aims to secure better pricing through longer-term contracts and diversify customer destinations. The expansion creates increased competition for trading firms, though both Vitol and Trafigura are establishing local presence in Caracas to maintain market position.