Physical Oil Trading
VLCCs Return To Venezuela Oil Trade As India Buys
A clear signal in the spot market: Venezuelan heavy crude is moving in
larger parcels, on
VLCC liftings, with
India
back as a key destination.
That is not just a shipping story. It affects price, execution risk, and which counterparties can actually perform.
What Happened
Venezuela Heavy Crude On VLCCs
Trading houses chartered VLCCs for March load windows at Venezuela’s Jose terminal, targeting India. The practical point: bigger liftings reduce freight per barrel and can drain stored barrels faster.
Freight Is Setting The Margins
High freight and route economics are forcing repricing across the Atlantic Basin, with West African barrels pressured when the arbitrage into Asia closes. If you trade physical, freight is not a footnote.
Sanctions Compliance Is A Real Cost Center
Enforcement and designations targeting “shadow fleet” vessels raise the bar on vessel screening, payment routing, and insurer comfort. “Cheaper” barrels can get expensive fast when execution breaks.
Compliant Tonnage Has The Advantage
Shipping markets are increasingly split between compliant and high-risk fleets. That split influences charter availability, demurrage outcomes, and whether banks will touch the trade documentation.
Why this matters:
physical oil trading is a chain. Price is only one link. Counterparty, vessel, insurer, payment path, and discharge readiness decide whether a trade clears or collapses.
Market Implications For Physical Traders
| Issue |
What Traders Are Doing |
What Moves The P&L |
| Parcel Size And Freight |
Shifting heavy crude into larger liftings where possible |
Freight per barrel, laycan discipline, discharge slot risk |
| Route Economics |
Re-optimizing flows when EFS and freight flip the arb |
Delivered cost into Asia vs Atlantic Basin realizations |
| Sanctions And Vessel Risk |
Stricter screening and preference for compliant tonnage |
Insurance validity, bank comfort, payment friction, delays |
| Quality And Refinery Fit |
Targeting refineries that can run heavy sour without disruption |
Crude yield value, residue handling, blending costs |
| Working Capital Stress |
More structured pre-pay, LC-backed, or collateralized execution |
Cost of funds, collateral haircuts, settlement timing |
Reality check:
if a counterparty cannot evidence vessel screening, cargo title chain, and a bankable payment route, the trade is not “pending”. It is fantasy inventory.
Execution Checklist For Buyers And Sellers
Before You Fix A Vessel
- Confirm laycan realism, load terminal constraints, and discharge slot availability.
- Run vessel screening and insurer acceptance early, not after fixture.
- Model demurrage exposure with conservative port assumptions.
Before You Sign A Contract
- Lock payment terms that match your funding reality (LC, SBLC, pre-pay, escrow, controlled account).
- Validate the title chain and documentation set needed by your bank.
- Align quality specs with refinery run plans and blending capability.
Disclosure
Expand Disclosure
This post is general information for commercial participants and is not legal, tax, or investment advice. Market references are based on publicly available reporting and official releases linked above.
Financely operates as a transaction-led capital advisory desk. Where regulated execution is required, delivery is coordinated through appropriately licensed firms operating under their own approvals.
Financing outcomes depend on counterparty diligence, KYC, AML, sanctions screening, and lender or investor approval.
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