📈 US-Venezuela US$ 2 Bn Oil Deal: Shift in Global Supply

The US and Venezuela have reached an agreement to export up to US$ 2 billion worth of Venezuelan crude to the United States. This marks a significant pivot in global energy trade, diverting supplies originally bound for China to US ports. • Overall Figures: The deal involves "turning over" between 30 to 50 million barrels of sanctioned oil currently held in tankers and storage. At a market valuation of approximately US$ 22 below Brent per barrel, the transaction is valued at nearly US$ 1.9 billion. • Strategic Context: The move follows a mid-December blockade and recent political shifts in Caracas. The agreement aims to prevent deeper production cuts in Venezuela while providing US refineries on the Gulf Coast with essential heavy crude grades. • Market Impact: • US crude prices fell over 1.5% following the announcement. • Heavy oil differentials in the US Gulf slipped by US$ 0.50 per barrel. • Flow is currently managed via Chevron, the sole interrupted shipper during the recent blockade. • Sector & Financial Outlook: While the oil & gas sector anticipates increased volume, PDVSA remains excluded from the global financial system. Proceeds will be controlled by the US executive to ensure intended use, with future discussions potentially involving the US Strategic Petroleum Reserve.