Commodities trading house Vitol has begun shipping naphtha to Venezuela, supplying a critical component for oil exports coming out of the South American hotspot.
On Monday, the Dutch commodities giant chartered a crude oil tanker to load around 460,000 barrels’ worth of naphtha, an oil diluent, from the US Gulf Coast and ship the product to Venezuela, according to the energy intelligence firm Kpler.
Naphtha, a light petroleum petrochemical often mixed with heavy crude oil to make it easier to transport, is critical in Venezuela. The country’s primary Merey 16 type of crude is an extra-heavy grade of oil, meaning it is highly viscous and dense, and therefore cannot be moved through pipelines without being mixed with a diluent substance such as naphtha.
Since the US’s extraction of Venezuelan leader Nicolás Maduro, the Trump administration has been pressuring American oil companies to commit billions of dollars in capex for reentering and rebuilding Venezuela’s oil industry.
The country is widely understood to be sitting on the world’s largest proved oil reserves, but the oil’s primary heavy grade makes it difficult to transport and refine, eating into margins for oil producers.
However, the first winners have been the international trading houses Vitol and Singapore-based Trafigura, which cut the first deals with the Trump administration due to the firms’ ability to quickly begin moving product in and out of Venezuela, according to Reuters.
Vitol’s chartering of a crude oil tanker to export naphtha from the US to Venezuela is seen as the first movement of oil products under the Trump administration’s new management of the Venezuelan industry.
Naphtha is produced as a byproduct of oil drilling, potentially offering an added line of business for US oil companies willing to reenter Venezuela. Before the US began its blockade of sanctioned oil vessels moving in and out of Venezuela in December, Russia was the largest supplier of naphtha to the South American country.