China neutralizes the impact of US intervention in Venezuela with sanctions-hit oil reserves

According to WPB, China is known as the main consumer ofVenezuelan oil, and has been maintaining stable trade relations with Caracas for years. however, this strategic partnership has now faced one of the most critical challenges in its history. the abduction of Venezuelan president Nicolas Maduro, by U.Sforces, has changed the situation and faced a serious ambiguity in the future of the oil trade between the two countries.

In an unprecedented development, Donald Trump issued a shocking statement that Washington now has direct control of Venezuela. large American companies have been tasked to rebuild and revive the Venezuelan oil industry. the move is meant to maximum exploitation of the country's huge oil reserves.

The details of the project indicate that the United States intends to sell "large quantities" of Venezuelan crude oil on global markets. the sale will include current customers of the country as well as new buyers to be recruited. the crucial point in this regard is the elimination of China's name from the list of target buyers. this approach suggests a clear strategic shift by American policymakers, which seems to be an attempt to cut China's vital arteries and limit Beijing's access to cheap and strategic oil resources in the western Sahara. this can bring the geopolitical tensions between Washington and Beijing to a new level of competition.

In the past year, although the Venezuelan oil quota of China's total energy imports was limited to only 4 percent, the small volume of its strategic importance was small. Venezuela was the supplier of a special kind of crude oil that had unique features; it was heavy and with high Sulphur content that Chinese refineries valued. this type of crude oil is a critical raw material for asphalt production and plays a key role in massive infrastructure projects in China, including extensive housing construction and development of road networks and transportation.

in addition to the technical application, another factor that made it attractive to Chinese buyers was the price. Venezuela supplied oil with discounts on global markets. this led to the conversion of independent Chinese refineries, which are called the "teapot refineries" in the so - called "small pulsators", to Venezuelan oil loyal customers. the refineries, which usually have more flexibility in buying than government giants, have increased margins by relying on cheap oil.

However, given recent developments and changing management policies in Venezuela, the prospects for the future of the country and its oil industry seem cloudy and dark, and political uncertainties can disrupt future exports. but in the short - run,Chinese shoppers don't have much concern to meet their future needs. the reason for this is the existence of massive and accumulated reserves of crude oil that is now held in the "floating tanks “.

Based on the precise data of Kepler's analytical and information company, the considerable volume of these oils is now moving in giant Oil tankers. it is estimated that nearly 82 million barrels of crude oil are available on these ships, mainly in the territorial waters of China and Malaysia. the composition of these floating reserves is very interesting; almost a quarter of the volume (about 20 million barrels) belongs to Venezuela, but the vast majority of these reserves belong to Iran. this giant sea creature acts as a strategic backbone and allows China to continue its industrial and construction activities even if it is cut off directly.

In the context of political developments, the United States had started blockade of some of the ships that planned to ship to Venezuelan ports before attempting to kidnap Nicholas.

However, one of the most complex challenges facing is how to continue trading. the main question is that, given the state of intense uncertainty in the field of ownership of ships and the mechanisms of payment of mechanisms arising from radical political and security changes, it is unclear how China can buy and release these loaded cargoes without violating the sanctions.this lack of transparency could create new logistical and legal challenges for Chinese importers.

The American company chevron by receiving special permits from the U.S. administration, the oil giant managed to continue its activities in the common oil fields with Venezuela despite embargo exemptions. this exception points to the complexity of the American energy policy; on one hand, the pressure on the Caracas government, on the other hand, to maintain the interests of large American companies and to prevent the collapse of the oil vacuum by other competitors. the situation has caused chevron to be one of the few remaining bridges between the Venezuelan oil industry and the west.

Finally, the existence of these new sanctions has disrupted the importation of Venezuelan oil to China and is expected to face new challenges in the future of China and its proper management can be a winning leaf for the country.

By WPB

Bitumen, News, Trade, Oil, China, US, intervention, Venezuela,sanctions-hit