News
28/01/26
US naphtha displaces Russian flows to Venezuela
New York, 28 January (Argus) — Naphtha shipments to Venezuela loading in January
have come entirely from US Gulf coast suppliers, reversing the previous
Russia-dominated trade for the diluent needed to transport Venezuelan crude
after US intervention. Ports in Houston, Beaumont and Corpus Christi, Texas,
have shipped between 970,000-1.22mn bl of naphtha to Venezuela so far this
month, according to Kpler and Vortexa data, compared to 560,000-1.21mn bl for
the last three months of 2025, when Chevron was the only oil major with a US
government waiver to trade with Venezuela. Vitol has joined commodity trader
Trafigura in this naphtha trade, after the US physically removed Venezuelan
president Nicolas Maduro from power and cracked down on sanctioned vessel
shipments to and from the country, cutting the primarily Russian flow of the
diluent to Venezuela. Since 2023 Venezuela has been the importer for the
majority of Caribbean-bound naphtha, and was typically the second-largest buyer
of US Gulf coast naphtha, before the US government removed sanctions waivers in
May 2025. Buyers in the country primarily import naphtha on long range 1 (LR1)
tankers, while the US Gulf coast spot market for refined product shipments is
typically dominated by medium range (MR) tankers. Rising Venezuelan demand could
spur additional LR1 demand from the US Gulf coast, which primarily trades as a
backhaul for more liquid LR1 markets in deeper Pacific basin ports, especially
for Mideast Gulf loadings. This could also affect the MR tanker market as other
Caribbean naphtha buyers look to stock up ahead of further Venezuelan demand.
Chevron sought an MR tanker for a US Gulf coast-Caribbean voyage on 27 January
to load naphtha between 30 January and 1 February. A charterer later fixed at
least one Caribbean-bound MR tanker at a $900,000 lumpsum on the same day, a
44pc jump in the voyage rate from the $625,000 lumpsum at the end of the trading
day on 23 January. It is unclear if the second cargo was naphtha or another
refined product. Naphtha spot participants unimpressed A swift rise in N+A
naphtha prices on the US Gulf coast opened the arbitrage to the region,
following the new supply agreement between the US and Venezuela. Differentials
for heavy naphtha, the primary grade use as a Venezuelan diluent, shot up by
more than 10¢/USG just before the first US naphtha shipment in early January. By
mid-January, N+A naphtha differentials gave up all the gains. Selling interest
for US Gulf coast naphtha diminished following the open arbitrage, potentially
setting a precedent that sellers wanted to avoid in an already long market. A
cargo of naphtha from Huelva, Spain, was booked for the US Gulf coast on 13
January with an estimated arrival of 3 February, shipping reports show. This
supported the view that the naphtha arbitrage to the US Gulf coast was open. The
Huelva cargo was reportedly suitable for blending to the Venezuelan diluent
naphtha specification, but this was not confirmed. The Venezuelan diluent
naphtha specification was roughly gauged as 70pc heavy naphtha and about 20-30pc
lighter naphtha. Increased Venezuelan production in the longer run is not
entirely bullish for US naphtha markets. Before Venezuelan production slowed
during the regime of former president Hugo Chavez, Venezuela actively exported
light naphtha from Jose and Las Salinas, primarily to the US Atlantic coast.
Increased Venezuelan rates would also elevate naphtha production, which could
diminish appetite for US naphtha imports and displace US naphtha market share
globally. By Ross Griffith and Daphne Tan Send comments and request more
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