Government officials in Caracas and Washington are discussing exporting Venezuelan crude to refiners in the United States, five government, industry and shipping sources told Reuters on Tuesday, a deal that could divert supplies away from China while helping state company PDVSA avoid deeper output cuts.

Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by U.S. President Donald Trump since mid-December.

The blockade was part of rising U.S. pressure on the government of Venezuelan President Nicolas Maduro that culminated in U.S. forces capturing him this weekend.

A potential deal to sell the trapped crude to the U.S. could initially require reallocating cargoes originally bound for China, two sources said. The Asian country has been Venezuela's top buyer in the last decade and especially since the United States imposed sanctions on companies involved in oil trade with Venezuela in 2020.

The supply would increase the volume of Venezuelan oil exported to the U.S., a flow that is currently controlled entirely by Chevron , PDVSA's main joint venture partner, under a U.S. authorization.

Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the U.S., has emerged in recent weeks as the only company fluidly loading and shipping crude from the South American country amid the blockade.

PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil. If PDVSA does not find a way to export oil soon, it would have to cut production more, one of the sources said.

The White House, Venezuelan government officials and PDVSA did not immediately comment. Venezuela's oil ministry has said the U.S. wants to steal the country's oil reserves and denounced Maduro's capture as a kidnapping.

U.S. refineries on the Gulf Coast can process Venezuela's heavy crude grades and were importing some 500,000 barrels per day (bpd) before Washington first imposed energy sanctions on Venezuela.

It was not immediately clear how sanctioned PDVSA would obtain proceeds from the oil sales.

The officials have been in talks this week about possible sale mechanisms, including auctions to allow interested U.S. buyers to participate in cargo offers, and the issuance of U.S. licenses to PDVSA's business partners that could lead to supply contracts, two sources said.

The parties have also discussed if the Venezuelan crude can refill the U.S. Strategic Petroleum Reserve in the future, one of the sources said.

Source: Investing.com