Chinese refiners are paying a little less for Venezuelan oil after the US reimposed sanctions on the South American producer. 

Merey crude, often used to make bitumen to pave roads in China, traded at a discount of $14 a barrel to ICE Brent in recent days on a delivered basis, according to traders. That compares to $11 before sanctions were reinstated last week, and $8 at the start of the year.

China’s likely to draw more barrels from Venezuela after the US discontinued its six-month sanctions waiver, as other buyers, including India, shun embargoed oil to avoid run-ins with Washington. An average of 130,000 barrels a day previously bought by Indian refiners and 174,000 barrels a day of US-bound shipments could now be redirected to the world’s biggest crude importer, according to data intelligence firm Kpler. 

Private refiners in China have been the most resilient consumers of Venezuelan crude. The so-called teapots have been happy to skirt sanctions as they scour the market for the cheapest oil, a strategy that was upended after Washington’s waiver lured other buyers and raised prices.

China officially resumed Venezuelan crude imports in February for the first time since 2019, but third-party data providers say flows have remained constant over the years.

Merey attracted a discount of as much as $20 a barrel before the sanctions waiver, so the current level isn’t meeting with much enthusiasm, traders said. Bitumen’s rarely made money for refiners in recent years due to China’s sluggish economy. Margins fell to minus 887 yuan a ton this week, from minus 164 yuan a ton in April last year, according to OilChem data.