Maduro’s capture triggers heavy sour crude squeeze as Caribbean tanker routes shift and China’s $17-19B oil-backed loans hang in balance.

By Güney Yıldız, for Forbes.com

For the original article this summary is based on, see the publisher’s website here.

Summarized by Probe International

On January 3, U.S. special forces captured Venezuelan President Nicolás Maduro in Caracas after airstrikes, leading to immediate changes in Caribbean tanker routes and signaling a potential heavy sour crude squeeze. While Venezuela accounts for less than 1% of global oil consumption, its Merey 16 crude is vital for specific refineries that cannot easily substitute lighter barrels. This disruption particularly impacts China, which has absorbed most of Venezuela’s sanctioned oil, creating significant operational, financial, and strategic risks.

China’s exposure includes approximately $17-19 billion in outstanding loans from the China Development Bank tied to Venezuela’s oil-for-loans program. The operational risk arises from Chinese refiners designed for Venezuelan heavy crude, while the strategic risk involves U.S. actions that could disrupt Chinese supply chains in the Americas.

Venezuela’s oil exports peaked at around 921,000 barrels per day in late 2025, primarily going to China through transshipment practices. However, tightening U.S. sanctions and vessel identifications have complicated these operations, and while alternatives to Venezuelan crude exist, they are limited by quality and logistics.

The China Development Bank’s position in Venezuela appears to be a structural write-down risk rather than a trading loss, having extended over $60 billion since 2007, secured by future oil shipments instead of sovereign guarantees. This model was viable when Venezuela produced 2.4 million barrels per day (bpd), but it collapsed as output fell to 350,000 bpd in 2020, recovering to about 900,000-1.1 million bpd by late 2025. The outstanding balance has stabilized at $17-19 billion due to repeated deferrals as Venezuela’s repayment capacity declined. The collateral is compromised, locked behind degraded infrastructure and a transitional government that may invoke odious debt doctrine to prioritize its own claims over those of China.