Americas Aframax demand could take a hit amid non-renewal of Venezuelan sanctions waiver
In this piece, we examine the impacts of the non-renewal of Chevron’s licence, the potential repositioning of Aframax and potential repercussions on VLCC tankers.
The US Department of the Treasury recently announced that Chevron’s sanctions waiver was not renewed, meaning the company will no longer be able to market Venezuelan crude for export. While it was initially believed that Chevron would have six months to wind down its operations, the latest announcement suggests that the company must complete the process by April 3, 2025. This decision – if upheld – could leave an impact on the Aframax Atlantic market.
Aframax Trade Shift: Will Competition Intensify Elsewhere?
Aframax has been the main vessel class for Chevron’s Venezuelan crude exports to the US Gulf Coast. The non-renewal of GL41 is likely to tighten employment opportunities for Aframax, prompting a realignment in regional freight. Since the expiration of the US sanctions waiver on Venezuelan crude imports in May 2024, a total of 18 Aframax vessels have been actively engaged in this trade. On average, approximately 12 voyages per month have been recorded, with vessels loading in Venezuela and primarily heading to the US, maintaining a steady flow along this trade route.
While a core group of vessels remains dedicated to Venezuelan crude shipments, others have sought alternative employment in regions such as the US Gulf, the Mediterranean, and Northwest Europe. Going forward, this trend could encourage more vessels to relocate and gradually increase competition in these regions.
For now, however, there is no definitive indication that vessels are permanently exiting the Venezuelan trade. Of the eight Aframax vessels currently ballasting, five have declared Venezuela as their intended destination. This suggests that, at least in the near term, vessel commitments to this trade remain intact, though ongoing market conditions and regulatory developments could influence future movements.
Lack of vessel availability could weigh on exports
The potential loss of Venezuelan barrels is unlikely to have a significant impact on global supply demand balances, particularly as OPEC will start to unwind production cuts. After the April 3rd deadline, these volumes could still flow to Asia, primarily China, where VLCCs remain the preferred choice for long-haul shipments. With mainstream tanker owners generally avoiding sanctioned oil trades, Venezuela’s crude exports on that route have become increasingly reliant on the dark fleet. However, the availability of dark fleet tonnage remains tight, limiting its ability to fully absorb these volumes. If VLCCs from the mainstream market are drawn into Venezuelan trade to sustain exports, the resulting reduction in available tonnage could provide some support for freight rates in the mainstream fleet.
