TLDR
- Venezuela supplies 5%–8% of China’s oil imports, compared to 1%–2% for the United States.
- China’s refineries are optimized for Venezuela’s heavier crude, making it harder to replace lost supply.
- Cnooc, PetroChina, and Sinopec shares declined 4.0%, 4.5%, and 1.5% respectively on Monday.
- Mizuho warned China’s other oil imports face choke points like the Straits of Malacca.
- While Chinese oil stocks fell, Japanese and South Korean energy shares gained on Monday.
Chinese oil-related stocks dropped after the U.S. ousted Venezuelan President Nicolás Maduro, raising concerns about China’s future oil access. Venezuela exports more oil to China than the U.S., and any disruption could strain Chinese refineries.
China Faces Higher Exposure to Venezuelan Oil Cuts
According to a report by Market Watch, Chinese oil imports from Venezuela account for 5%–8% of total volumes, compared to 1%–2% for the United States. Kenanga analyst Lim Sin Kiat said, “A total shutdown might affect China more, especially the refineries.” He explained that China’s infrastructure is optimized for Venezuela’s heavier crude, which is less desirable elsewhere.
Venezuela’s thick crude yields higher profits for Chinese refiners than lighter grades from other suppliers. This processing advantage adds pressure to replace lost barrels if exports stop. Supply disruption would hit refining margins and increase operational risks for domestic fuel producers.
Mizuho Securities Managing Director Vishnu Varathan stated that the risk compounds due to China’s shipping routes. “Denying China access to Venezuelan oil has accentuates China’s energy-shipping risks,” he noted. Most of China’s other crude supplies move through key choke points. These include narrow lanes like the Straits of Malacca, thus increasing strategic vulnerabilities.
Regional Energy Markets React to Supply Uncertainty
In Hong Kong, shares of Cnooc fell 4.0%, while PetroChina dropped 4.5% and Sinopec lost 1.5% on Monday. These losses came after traders priced in the risk of Venezuelan crude interruptions. Chinese firms dependent on heavy crude faced selling pressure throughout the day.
Meanwhile, energy stocks in other parts of Asia moved higher despite Venezuela’s developments. Tokyo-listed Inpex gained 1.6%, and Japan Petroleum Exploration rose 2.3%. In South Korea, SK Innovation advanced 2.4%, and S-Oil jumped 6.2%. Oil futures moved within a narrow range during Monday trading. Prices fluctuated between minor gains and losses across global benchmarks.
The post Venezuela Unrest Hits Chinese Oil Stocks: Is Maduro’s Capture the Start of a Crude Supply Crisis? appeared first on Blockonomi.
Source: https://blockonomi.com/venezuela-unrest-hits-chinese-oil-stocks-is-maduros-capture-the-start-of-a-crude-supply-crisis/
