Venezuelan supply shock looms as Chevron is pushed to exit

PDVSA has reportedly suspended oil loading authorizations to Chevron, a move that could accelerate the lack of Venezuelan crude availability in the USGC.

Market & Trading calls:

• Bearish on Venezuelan crude supply for April and May as PDSVA’s recent decision that might result in a sharper than expected output drop
• Bullish on heavy crude differentials in LatAm and Canada which will benefit once USGC scrambles for supplies

After peaking at a five-year high of 815 kbd in February, Venezuelan crude exports fell sharply to 670 kbd in March. Chevron accounted for 260 kbd and 220 kbd of those volumes, respectively. The company’s operations in Venezuela are entering their final phase following the Trump administration’s decision to revoke Chevron’s waiver. However, in late March, the U.S. extended the wind-down period until May 27, suggesting that crude exports in April may proceed with minimal disruption. In parallel, the U.S. imposed a 25% tariff on Venezuelan crude imports by all countries, casting uncertainty over future purchases by India and Spain—each of which received 40–60 kbd during Q1—and making a shift in flows toward China increasingly likely.

Venezuelan crude exports, kbd

Source: Kpler

Although the revocation of Chevron’s waiver was already expected to significantly curtail Venezuelan supply starting in May, recent developments may hasten the decline. On Thursday, news surfaced that PDVSA, Venezuela’s state oil company, had cancelled multiple authorizations previously granted to Chevron for crude loadings this month. This move appears to be a retaliatory response to the new U.S. tariff. Two of the affected cargoes had already been loaded and will now need to be returned to port, while a third had not yet begun loading.

Venezuela crude supply outlook scenario, kbd

Source: Kpler

Initially, we expected Venezuelan oil supply to decline from 890 kbd in March to 860 kbd in April and 820 kbd in May. However, the sudden suspension of loading authorizations could deepen the drop to 830 kbd in April and 800 kbd in May. In the short term, this abrupt supply shortfall will most severely impact the USGG—the primary destination for Venezuelan crude—forcing PADD 3 refiners to seek alternative sources from Latin America and Canada. As a result, prices for substitute crude such as Colombian Castilla and Canadian Cold Lake will further rise, with differentials of these grades already increasing by approximately $2/bbl between mid-March and early April.

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