Chinese independent oil refineries are preparing to replace Venezuelan crude with heavy grades from Iran and other suppliers after a sharp disruption to flows from Caracas, according to traders and analysts.
The shift would affect the so-called “teapot” refiners, which have relied on discounted barrels that fall under US sanctions to keep costs down.
The planned switch follows a US-Venezuela arrangement that President Donald Trump said would allow exports of Venezuelan crude to the United States worth up to $2bn. The announcement came after US forces detained Venezuelan President Nicolás Maduro at the weekend, an action that Venezuelan officials have condemned, and which has prompted a broader reset in trade flows.
Analysts expect the deal with Washington to constrain Venezuelan shipments to China by diverting oil towards US ports, reducing availability for Asian buyers. China is the world’s largest crude importer and has been a principal purchaser of sanctioned, discounted crude from countries including Russia, Iran and Venezuela. In the Venezuelan case, the appeal has been heavy crude grades suitable for certain Chinese refineries and priced below mainstream benchmarks.
Data cited by Reuters from the analytics firm Kpler show that in 2025 China imported an average of about 389,000 barrels per day of Venezuelan crude, around 4 per cent of its total seaborne crude imports. For many independent refiners, those volumes have been an important source of cheaper feedstock, particularly for plants configured to run heavier grades.
The immediate disruption appears to be concentrated in loading activity and shipping. Reuters reported that at least a dozen sanctioned vessels that loaded in December left Venezuelan waters in early January carrying roughly 12 million barrels of oil and fuel, suggesting some cargoes were already committed and in transit. However, shipping data indicated that from January 1 loadings destined for Asia stopped at Venezuela’s main ports.
Market participants cited by Reuters said Iranian heavy crude was emerging as a primary substitute because it offers similar characteristics and continues to trade at a steep discount. One estimate referenced in the report put Iranian Heavy at about $10 per barrel below ICE Brent, a differential that can outweigh the costs and risks associated with sanctioned supply chains. Traders also pointed to the availability of Russian heavy grades as an additional option.
The expected rebalancing could also pull in non-sanctioned supplies if pricing shifts. Reuters said refiners may consider grades from Canada, Brazil, Iraq and Colombia, with traders anticipating extra discounts as US demand absorbs more Venezuelan barrels and leaves alternative producers competing more aggressively for Asian buyers. Whether teapot refiners materially increase purchases of non-sanctioned crude will depend on freight, refinery economics and the size of price concessions available.
Despite the sudden loss of new Venezuelan loadings, analysts do not currently anticipate an immediate spike in costs for Chinese independents, largely because other discounted supply remains available and some Venezuelan cargoes are still on the water. Reuters cited estimates that existing inventories and storage could cover needs for roughly 75 days, giving refiners time to adjust procurement and run plans.
