Despite Trump’s Crackdown, Venezuela Still Has Buyers
- President Donald Trump signed an executive order on March 24th imposing secondary tariffs on countries buying Venezuelan crude.
- The benchmark price for crude in Venezuela, Merey-16, did not plunge this week
- The regime in Caracas—like those of Tehran and Moscow—has learned over time how to export oil under sanctions.
It is 3 April, so any country buying Venezuelan oil must face a 25% tariff on all its trade with the United States. That is according to President Donald Trump’s executive order signed on 24 March. The White House has also ordered companies with sanctions waivers to quit Venezuela by 27 May, including Chevron, Repsol, and Maurel et Prom.
But it looks like some traders are undaunted by the U.S. government’s threats. Tankers are still sailing to Venezuela, contradicting Trump’s statement on 30 March: “Every ship just got out and they left, a lot of them left, they dropped the hoses right into the ocean. They didn’t want to be there for a minute because they didn’t want those tariffs to catch on, they didn’t want me to see them there.”
The U.S. president’s decisions have had an effect on who is buying Venezuelan oil, while any vessel tracker shows that there are still dozens of tankers arriving or mooring near the terminals of José, Amuay, and Puerto La Cruz.
Refiners in India and China have said that they will stop buying Venezuelan oil so as not to risk a punitive tariff on their entire economies. European governments have condemned Trump’s decision, but they are yet to declare if they will continue imports. So, is anyone buying Venezuelan oil?
The benchmark price for crude in Venezuela, Merey-16, did not plunge this week, despite the threat of secondary sanctions and the cancellation of oil licenses. At $64 per barrel on 1 April, it only had a $10 discount to Brent, a global reference. This differential has narrowed in the last year as there is a tighter market for heavy crudes, which Venezuela produces.
First, the handful of American and European companies with licenses from the Office of Foreign Assets Control are still able to export Venezuelan petroleum products during their wind-down period. But there are other, unrelated tankers docking at its Caribbean coast.
There are concrete reports that companies are requesting crude cargoes from Venezuela for Malaysia and Singapore. And in recent years, such oil exports have always meant re-exports to China, as a way to bypass U.S. sanctions on the South American country.
In 2019, after the first Trump administration introduced strict sanctions on Venezuelan oil, China cut its imports of the product—at least on paper. (Trade with Iran also fell at the same time.) But simultaneously, petroleum imports from Malaysia skyrocketed. From May 2020 to June 2021, the volume of so-called “Malaysian bitumen” shipments routed to China rose thirteenfold, according to the Atlantic Council.
Between 2023 and 2024, with the Biden administration’s introduction of licenses for Chevron and other companies, the share of exports to China, Malaysia, and Singapore fell, while shipments to India, Europe, and especially the U.S. went up. (Maybe I could add the shares here again, but I said them in my previous article.)
If, for a second time, Trump leads a strategy of “maximum pressure” against Venezuela, the result should not be surprising. The regime in Caracas—like those of Tehran and Moscow—has learned over time how to export oil under sanctions, with intermediaries, shadow fleets, ship-to-ship transfers, and offering discounts, among other tactics. But there is always a willing buyer for every barrel of oil.
Secretary of State Marco Rubio, who has the discretion to implement secondary tariffs, thus faces a dilemma. On “Liberation Day,” Trump raised the rate for Chinese imports, adding 34% to an existing 20%. Chinese exporters thus face a 54% tax on their exports to the U.S., with only a few exceptions. Then, if reports of the Venezuelan oil trade reach Washington, D.C., the rate should increase by 25 points to 79%. Or, at the very least, a couple of Southeast Asian countries would see extra tariffs if there is no willingness to damage trade with China any further.
The picture could change very quickly, however, if the Trump administration does one thing. Secondary tariffs would only apply to other countries, not to the U.S. itself. While the “reciprocal tariffs” set a 15% rate for Venezuela, energy products are exempt. The OFAC could therefore surprise us all by introducing licenses—or other sanctions waivers—for American buyers, while excluding the rest of the world with the threat of secondary tariffs. This administration has made plenty of unexpected moves, after all.
By Elias Ferrer via Orinoco Research
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