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U.S. Sanctions Spark Venezuela Oil Surge Half the World Away | Bloomberg

The U.S. measures have sparked speculation over whether Venezuela will be able to sustain exports of its dense and sulfurous “heavy-sour” crudes. Meanwhile, American refiners are scouting for alternatives, squeezing supplies of similar oil varieties across the globe. Booming demand for infrastructure in China has made such grades prized in the Asian nation because they are suited for making bitumen — a residue of refining also known as asphalt.

China almost doubled imports of oil from Venezuela and the nearby storage tanks-dotted island of Aruba in January from a month earlier, tanker-tracking data compiled by Bloomberg show. That means its state oil companies have supplies that now fetch higher prices because of the uncertainty surrounding heavy-sour grades in the global market. The Merey grade accounted for 80 percent of the Latin American nation’s shipments to China last year, according to the data.

PetroChina sets a monthly offer price for Merey crude sales to its customers — mostly smaller privately owned refiners — based on its own formula. It’s selling the oil at a premium of $5.0272 a barrel to WTI for February, with an additional $2.70 per barrel of agent fees, according to the offer document seen by Bloomberg.

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U.S. Sanctions Spark Venezuela Oil Surge Half the World Away.