Traders seek Venezuelan oil discounts as shipping costs rise, sources say

• Aframax tanker charter costs from Venezuelan port Jose to US Gulf Coast have surged to $3.5 million ($5/barrel) from $1.35 million ($1.90/barrel) at year-start due to shipping attacks related to the US-Iran conflict
• Vitol and Trafigura now seek $18-$20/barrel discounts to Brent versus the $12-$13 discounts PDVSA recently agreed with joint venture partners, pressuring the state oil company's cash flow recovery efforts
• Venezuela's oil exports held steady at 1.17 million bpd in August, with the two trading firms maintaining about 597,000 bpd in volumes, though terminal bottlenecks and rising tanker queues threaten US plans to boost exports

Summary: Venezuelan Oil Discount Negotiations Intensify Amid Rising Shipping Costs

Key Developments:

Major oil traders Vitol and Trafigura are demanding steeper discounts on Venezuelan crude as surging freight costs squeeze profit margins. The companies are seeking prices $18-$20 per barrel below Brent for Venezuela's Merey heavy crude, up from current discounts of $12-$13 per barrel that state oil company PDVSA has agreed with joint venture partners.

Critical Data Points:

• Aframax tanker charter costs from Venezuelan Jose port to US Gulf Coast have surged to approximately $3.5 million ($5/barrel), up from $1.35 million ($1.90/barrel) at year-start
• Merey crude formula price reached $76.82/barrel in August, up from $67.36 in July—roughly $14 below Brent
• Venezuela's oil exports remained stable at 1.17 million barrels per day in August
• Vitol and Trafigura control over half of Venezuela's oil exports, shipping approximately 597,000 bpd

Market Context:

The discount negotiations follow the US capture of former President Maduro in January and subsequent efforts to reactivate Venezuela's oil sector. Rising transportation costs stem from the largest wave of shipping attacks since the US-Iran war began in late February.

Venezuelan crude prices had been recovering from heavy sanctions-era discounts through end-2025, with punishment clauses disappearing from freight contracts. However, this recovery now faces pressure from escalating shipping costs.

Implications:

Traders report refineries are resisting higher-priced Venezuelan crude due to transportation costs. PDVSA's attempts to sell directly to refineries—bypassing intermediaries to improve cash flow—may face challenges as margin pressures intensify across the supply chain.