Vitol and Trafigura – traders at the heart of Trump’s Venezuela oil grab
The companies’ special licences to ship still-sanctioned barrels have given them a head start in a potentially lucrative trade
US PRESIDENT Donald Trump has portrayed his takeover of Venezuela’s oil sales as a victory for America, but when his administration wanted to sell several billion dollars’ worth of the fuel quickly, the experts it turned to were a couple of foreign trading houses.
Vitol and Trafigura’s special licences to ship still-sanctioned Venezuelan barrels have given them a head start in a potentially lucrative trade, while Caracas is under pressure to get the oil flowing again after Trump’s blockade forced the industry to cut production levels as storage filled up.
For Vitol and Trafigura, this is also a chance to claw back business in key markets. US restrictions on oil from Venezuela, Russia and Iran have squeezed Western commodity merchants out of a growing chunk of the global oil trade in recent years, much of which has flowed at heavy discounts to buyers in Asia.
“It’s a big prize for the commodity traders and a lot more immediate than for any of the global oil companies,” said Christian Frutig, a former Trafigura and Standard Chartered commodities executive. “It’s an opportunity to get back into a business that was previously off limits.”
Taking delivery of and finding buyers for tens of millions of barrels of sanctioned oil, including a significant share stored on dark-fleet tankers off the coast of Venezuela, is a huge and complex task.
The Trump administration turned to Vitol and Trafigura because they were seen as the companies that would be able to move the initial barrels most quickly, according to an official.
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The traders have been moving to deliver the large volumes of oil into storage in the Caribbean, but the crucial question is how quickly they can find buyers for it – and at what price.
Bloomberg reported previously that two tankers were scheduled to sail from Venezuela toward Europe, some of the first such shipments in almost a year, including one that would deliver barrels to Repsol’s oil refinery in Cartagena, Spain.
The companies have also been offering cargoes to US Gulf Coast refiners at discounts to the Brent benchmark of about US$8 to US$9 a barrel, one person said. Reuters reported last week that Vitol had sold cargoes to Valero Energy and Phillips 66 at similar levels.
Given that the traders are buying crude from Venezuela’s state oil company Petroleos de Venezuela SA (PDVSA) at Brent minus about US$15 a barrel, that suggests a potential for hefty profits, in an industry in which trading margins are typically measured in cents rather than dollars per barrel.
Still, the devil will be in the details: Many of the early cargoes have been moved straight into storage, where the traders will be responsible for financing the oil until they can sell it. That’s expensive because banks are largely unwilling to touch the trade, meaning the traders are financing it with their own cash, a person familiar with the matter said.
What’s more, the oil market is in backwardation, with futures trading below spot prices, which makes financing oil in storage more expensive. If they can sell it, the traders’ margins are also likely to be eaten into by shipping costs, which have soared since the start of January.
And the clock is ticking. The US plans to allow more companies to deal in Venezuelan crude, something that would help ease port and storage-tank congestion, but would mean greater competition for both barrels and buyers.
“Get what you want”
Vitol and Trafigura are two of the largest commodity trading houses: a secretive group of largely privately owned companies responsible for buying, selling and transporting natural resources to where they are needed across the globe.
Their sprawling network of dealmakers, contacts and logistics experts mean the traders have time and again been poised to step in and profit during times of geopolitical and economic upheaval.
Most recently, the industry reaped massive profits during the energy crisis that followed Russia’s invasion of Ukraine in 2022, a year in which Vitol’s sales of US$505 billion made it one of the biggest companies in the world by revenue.
Together, the two companies handle roughly enough oil every day to supply the needs of Japan, Germany, India and Mexico combined.
And so earlier this month, when Trump summoned the world’s top oil CEOs to squirm under his questioning about their investment plans for Venezuela at a televised White House meeting, executives from Vitol and Trafigura came prepared with more than just promises.
It turned out they were already arranging for ships to pick up and export the country’s crude.
“Our first vessel should load in the next week,” Trafigura’s CEO Richard Holtum told the president.
John Addison, a senior Vitol trader and major Trump donor went even further: “We’re here to ensure that you’re going to be able to move all of this oil all around the world at the best price possible so that the influence that you have over the Venezuelans will ensure that you get what you want.”
Vitol and Trafigura’s opportunity in Venezuela comes just a handful of years after both were investigated and in some cases pleaded guilty to US charges of bribing national oil executives to secure contracts in South America.
That history came up on Jan 22, as US Senate Democrats called for greater transparency over the arrangements behind the Venezuelan oil trade.
“Given the urgency of the matter and the enormous risk of profiteering and corruption, the administration has a heightened obligation, beyond existing financial disclosure requirements,” the senators said.
Representatives for Vitol and Trafigura declined to comment.
The two trading houses have been granted contracts with PDVSA to help sell between 30 million and 50 million barrels of Venezuelan oil relinquished to the US following the shock capture of former Venezuelan leader Nicolas Maduro in early January.
Picking up
Bloomberg reported previously hat Trafigura and Vitol had already loaded or arranged to take roughly 12 million barrels of Venezuelan oil, and were picking up the pace as the US prepares to open up the playing field to other traders and oil firms.
The licences Trafigura and Vitol have with the US Treasury run until June 2027, according to people familiar with the matter, and also allow for trading other commodities such as metals and minerals.
That could potentially open the door to exports of other resources, such as gold and aluminum.
Washington has said oil sales will benefit both the US and Venezuela, though traders are free to send it where they like – and appear to be doing so.
The traders have been notifying refiners in the US to gauge interest for the oil, as well as in China and India, offering cargoes at discounts of about US$5 to US$8 a barrel to Brent to Asia.
Before the latest US moves on Venezuela, heavy crude from the nation was sold at discounts of over US$10 a barrel to Brent futures, on a delivered basis, to China.
The crude, a grade known as Merey, is a very dense liquid, meaning it is not the easiest to process, and many refineries are not built to handle this type of crude if used as a lone feedstock.
“Before the sanctions, China and India were main buyers of Venezuelan crude in Asia as they have big coker units that can process the heavy oil,” Sparta Commodities analyst June Goh said.
“That’s an opportunity for the trading houses to re-enter a trade which had been disrupted by US sanctions.” BLOOMBERG
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