Chevron’s Venezuela comeback will spark heavy crude price correction
- zarra6
- Jul 31
- 2 min read
31 July 2025 Kpler
It didn’t take long for Washington to reverse its stance on Venezuela, much like many of its policy shifts these days. U.S. refiners will welcome the move, Chinese teapots will feel the pinch, and the heavy crude market is set for flow reshuffles and price realignments.
Market & Trading calls:
Bearish on Canadian crude prices in both the U.S. and Asia, as heavy crude tightness is expected to ease with the return of Venezuelan barrels to PADD 3.
Bullish on Venezuelan oil production, with output likely to rebound as access to U.S. naphtha resumes.
Bullish on Merey prices in China as cargo availability is poised to tighten amid shifting trade flows.
Washington has reportedly reauthorised Chevron’s operations in Venezuela, reversing its decision from just two months ago to revoke the licenses that allowed the company to produce oil in the Latin American country and market the barrels in the U.S. Details of the renewed permission remain unclear, but it is expected to help cool the heat in the heavy crude market — albeit arriving somewhat late, as the peak summer demand season is nearing its end. Nevertheless, it introduces upside risk to global supply just as the market is on the brink of shifting into oversupply by late Q3.
U.S. imports of Venezuelan crude peaked at as much as 300 kbd between late 2024 and early 2025, with the vast majority flowing to the PADD 3 region. On average, volumes reached 230 kbd last year and 166 kbd over the first five months of this year. The most recent Venezuelan crude cargo to the U.S. was delivered to Valero’s St. Charles refinery in mid-June.
Given their refinery configurations and product yield structures, refiners in PADD 3 require medium and heavy sour crude to sustain operations. However, they appear to be struggling to immediately replace Venezuelan barrels, as heavy crude supplies have been tight globally this summer due to strong demand and unplanned outages. Meanwhile, strong HSFO cracks this year have prompted refiners to reduce residual fuel use within their systems and instead boost their intake of heavy crude — further tightening an already constrained heavy crude market. Seaborne crude imports to PADD 3 fell to a four-month low of 1.04 mbd in June and have remained at a similar level so far in July.
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