Chinese refiners eye Canadian crude as Venezuelan oil supplies dry up

The Trump administration staged a massive geopolitical power-play with the capture of former Venezuelan leader Nicolás Maduro on Jan. 3, and that move has caused Chinese refiners to look to Canada as a new source of crude oil.With the US now in the position to administer Venezuela’s oil reserves — the largest in the world — for the foreseeable future, China has seen itself cut off from what was once a reliable source.Bloomberg reports that Chinese inquiries about Canadian oil have risen in the past weeks following Maduro’s arrest, with traders saying Canadian grades are among the most viable replacements for Venezuela’s Merey crude, a heavy-sour oil favoured by China.Traders have said regular customers of Venezuelan oil — such as Shandong Chambroad Petrochemicals, Shandong Dongming Petroleum & Chemical Group and Sinochem Hongrun Petrochemical — will need to secure alternative supplies.China has been Venezuela’s top crude buyer in recent years, benefiting from sanctioned oil sold at steep discounts.Both private and state-owned Chinese refiners have imported Venezuelan cargoes in the past through equity stakes in oil fields and oil-for-loans arrangements..WIECHNIK: US-backed Venezuela oil rebuild threatens Canadian crude exports.Shipments were also often transported using so-called “dark fleet” tankers to bypass American sanctions.Those flows have recently dried up as the US tightened an oil blockade on Venezuela.ABC News has reported that the US has also demanded that Caracas reduce ties with China, Russia, Iran and Cuba, and instead partner with Washington on oil production and exports.Canada’s role as a supplier to China and other Asian markets has expanded since the Trans Mountain pipeline expansion came online in 2024, allowing more oil to reach the Pacific Coast for export, with roughly 64% of all crude shipped via the pipeline destined for China.Athabasca West Blend is the most commonly shipped grade to China, followed by Cold Lake, both of which are produced in Alberta’s oil sands.Canada currently also sends approximately 90% of its oil exports to the United States, primarily to refineries in the Midwest and along the Gulf Coast.Canadian crude shipped from Vancouver takes 17 days on average to reach the port of Qingdao, compared with roughly 57 days from Venezuela’s Amuay Bay.The shorter route allows for more flexible tanker options, from Aframax vessels to very large crude carriers, reducing shipping constraints..Poilievre urges immediate pipeline approval as Carney downplays Venezuela oil risk.A shift by China toward purchasing more Canadian oil would be welcomed in Alberta and in Ottawa, where the federal government has been seeking to diversify trade beyond the United States since numerous tariffs were launched by the Trump administration in 2025.The Chinese demand for Canada’s liquefied natural gas (LNG) exports is already insatiable as the flagship LNG Canada project in Kitimat, BC, began commercial operations in mid-2025, with Phase 1 of the project producing 14 million tonnes per annum (mtpa), or roughly 2.5% of the global LNG trade, with China being one of the primary destinations for those exports.Chinese oil refiners striking deals with Canadian producers will only see the economic partnership between the two countries strengthen over the next several years.Traders now estimate that roughly 22 million barrels of Venezuelan crude are currently floating in vessels off Malaysia and China, providing a short-term option for Chinese refiners.However, that supply is expected to meet demand for only up to two months.From the second quarter of the year, buyers will likely need to rely on Canadian crude or other alternatives.According to Kpler data, China purchased just under 40% of Canada’s total seaborne crude exports in 2025.Still, Canadian oil remains more expensive than Venezuelan Merey, costing roughly US$8 to US$9 more per barrel — a premium that could still deter some Chinese buyers going forward.