Chinese independent refiners are expected to increasingly rely on Iranian and other sanctioned crude grades to replace Venezuelan oil supplies, following a shift in Venezuela’s export flows toward the United States, according to traders and analysts.
The change comes after Washington and Caracas reached an agreement allowing Venezuela to ship up to $2 billion worth of crude oil to the U.S. The deal is expected to significantly reduce the volume of discounted Venezuelan oil available to China, which has been a key buyer of sanctioned crude in recent years.
Venezuelan heavy crude has been an important feedstock for China’s independent refiners, known as “teapots,” which typically depend on cheaper sanctioned supplies from countries such as Russia, Iran and Venezuela. Analysts say these refiners are likely to feel the impact most from the redirection of Venezuelan exports.
Market data show that China imported about 389,000 barrels per day of Venezuelan oil in 2025, accounting for roughly four per cent of its seaborne crude imports. However, shipping data indicate that loadings of Venezuelan crude bound for Asia have largely stopped since the start of January, even though several tankers loaded late last year are still en route.
Analysts say the immediate impact will be limited, as crude already on the water could meet Chinese demand for several weeks. Over the medium term, however, refiners are expected to turn to alternative supplies, particularly from Iran and Russia, where availability remains strong.
Traders note that Iranian heavy crude is currently one of the most competitive substitutes, trading at deep discounts to international benchmarks.
Some refiners may also consider Middle Eastern grades such as Iraqi crude, while others could look to non-sanctioned sources including Brazil, Canada and Colombia, depending on pricing and logistics.
Meanwhile, tightening availability of Venezuelan crude has narrowed discounts for grades such as Merey, though trading activity has slowed as buyers reassess supply options.
Industry watchers say Chinese refiners are unlikely to bid aggressively for non-sanctioned crude in the near term, as cheaper sanctioned alternatives remain available and better aligned with their operating economics.
