United States Takes Over Venezuela! Heavy Crude Oil Supply Shrinks, Domestic Plastic Costs Under Pressure

On January 3, 2026, the situation in Venezuela suddenly escalated. According to multiple reports, the United States intervened militarily to facilitate a change in the Maduro regime and announced that it would continue to maintain comprehensive sanctions on Venezuelan oil, while proposing a "resource recovery plan" to invest billions of dollars in rebuilding its collapsing energy infrastructure. Although this geopolitical upheaval did not immediately trigger a surge in oil prices, it once again focused global attention on this South American country, which possesses the world's largest oil reserves but is mired in production challenges. The ripple effects of oil price fluctuations have already begun to transmit downstream, posing potential impacts on the domestic plastic market.

U.S. oil product differences: U.S. struggles to process "special heavy oil"

Venezuela's oil resources are considered one of the "ballast stones" of the global energy landscape, with proven reserves reaching 303 billion barrels, accounting for about 17% of the world's total reserves, far exceeding Saudi Arabia. Its crude oil is most distinctly labeled as "heavy and high-sulfur," which is significantly different from the light and low-sulfur crude oil dominated by the United States. The most representative Merey-16 crude oil is a high-quality asphalt raw material with a rich variety of refined derivative products, but its extraction and processing require specialized equipment, making it costly. Currently, Venezuelan crude oil is affected by long-term sanctions, insufficient investment, and mismanagement, with the oil output being only a small fraction of its historical peak, currently accounting for about 1% of global supply. Nevertheless, its potential for restoring stock capacity is enormous. It is noteworthy that the crude oil in its core production area, Lake Maracaibo, is ultra-heavy oil, whereas U.S. domestic shale oil is mainly light and low-sulfur crude oil, suitable for direct entry into conventional refining facilities. Venezuelan heavy oil not only has high extraction costs and transportation difficulties but also requires supporting facilities for deep processing such as coking or hydrocracking, with density and viscosity far exceeding the processing standards of refineries in the Gulf of Mexico. Moreover, since the U.S. energy industry has shifted its focus to shale oil, there has been insufficient investment in upgrading heavy oil processing equipment, leading to a lack of technical reserves, which results in the inability of the U.S. to effectively absorb this regional crude oil. This unique oil product attribute and processing threshold determine the export direction of Venezuelan crude oil and the layout of the global supply chain, making it an irreplaceable special supplier in the global heavy crude oil market. In this export pattern, China is an important oil trade partner of Venezuela, and the cooperation stance between the two is influenced by the characteristics of the oil products, while also facing the impact of the current geopolitical events.

More than half of Venezuela's crude oil is sold to China.

China imports approximately 450,000 barrels of crude oil per day from this country, accounting for over half of its total exports, around 55%. In terms of domestic imports, according to Chinese customs and Reuters shipping schedule data, during the 2023–2024 period, China's monthly average imports of crude oil from Venezuela fluctuate between 300,000 and 500,000 barrels per day, accounting for less than 4% of China's total annual crude oil imports. Although this proportion is not high, the irreplaceability of crude oil in sectors such as asphalt is crucial for the stability of related industries, and the "oil-for-loans" model between China and Venezuela holds significant strategic importance. The recent U.S. military operation directly cuts off the logistics channels for Venezuelan crude oil exports. The U.S. has previously intercepted three oil tankers associated with Venezuela, causing a sharp decline in the short-term fulfillment capacity of China-Venezuela crude oil trade. In the long term, if a new government achieves "normalization" under U.S. guidance and sanctions are lifted, Venezuela may resume exports to China. However, this might compress China's import share, as its crude oil may flow more towards the U.S. and its allies, with the price discount advantage significantly narrowing. Furthermore, China has accelerated the diversification of its import sources in recent years, reducing its dependency on Venezuela.

The specific impact on domestic plastics.

The impact of this event on the global crude oil fundamentals is focused on the contraction of heavy crude oil supply, directly driving up the global heavy crude oil price spread and leading to a slight increase in international oil prices. For China, this not only exposes the risk of concentration in crude oil import sources, causing some refineries dependent on Venezuelan oil to face pressure from raw material shortages, but also forces the refining industry to accelerate upgrades to enhance compatibility with different quality crude oils.

The recent reduction in Venezuelan crude oil supply has increased crude oil costs and will directly raise raw material procurement costs for plastic production companies. Particularly, some domestic private refining enterprises and Sino-Venezuelan joint refining projects have long relied on Venezuelan heavy crude oil. The disturbance in raw material supply will further intensify the supply-demand tension expectations in the plastic market, supporting an upward trend in plastic market prices. Recent trends indicate that plastic prices have shown a fluctuating but strong tendency, and this event will reinforce this trend. It is necessary to be cautious of the risk of cost-driven price increases in the future. In summary, the essence of the U.S. military's raid on Venezuela is an energy geopolitical game, and its impact on the crude oil market is gradually being transmitted to the plastic industry. For the domestic market, besides strengthening the energy security defense line, plastic industry participants also need to closely monitor international oil price trends and Sino-Venezuelan trade developments to reasonably respond to the market risks brought by fluctuations on the cost side.

Author: Wang Shiqi, Senior Market Analysis Expert at Zhuangsu Shijie