Venezuelan oil disguised as Brazilian crude to circumvent US sanctions

Traders have quietly re-designated over $1bn worth of Venezuelan oil shipments bound for China as Brazilian over the past year, according to two maritime tracking companies, internal documents, and four industry sources. This scheme allows these players to avoid US sanctions while reducing logistics costs.

Independent Chinese refiners, the main buyers of oil from countries sanctioned by the United States, often source their supplies through offshore operations in Malaysia, a hub for transshipment of Venezuelan and Iranian crude.

However, since July 2024, some traders have been labeling this oil as originating in Brazil. This rebranding allows shipments to be sent directly from Venezuela to China, without stopping in Malaysia, shortening the journey by about four days.

Washington has imposed sanctions on Venezuela's energy exports since 2019, with the aim of drying up oil revenues for the government of President Nicolás Maduro, who has been in power for more than a decade after elections deemed fraudulent by observers.

The Venezuelan government has rejected the sanctions, calling them an "economic war" aimed at suffocating the country.

Spoofing and mixed bitumen

Faced with these constraints, for several years, traders have been resorting to ship-to-ship transfers to conceal the origin of Venezuelan crude before it is shipped to China, the world's largest oil importer. Recently, ships have also falsified their location signals—a technique known as "spoofing"—to simulate departure from Brazilian ports when they were actually leaving Venezuela, according to maritime data, satellite images, and coastal photos analyzed by TankerTrackers.com.

According to Chinese customs, between July 2024 and March 2025, China imported approximately 2.7 million tons of mixed bitumen from Brazil — or 67,000 barrels per day — worth $1.2bn.

While Chinese refineries regularly buy Brazilian crude oil, Brazil exports virtually no mixed bitumen, according to Petrobras. Brazilian customs have not recorded any such exports to China since at least 2023.

Mixed bitumen is a tar-like residue typically used in the manufacture of asphalt. The crude oil typically exported by Brazil is medium-grade, low-sulfur oil from its offshore "pre-salt" fields.

"What we export to China is mainly crude oil from the pre-salt fields, not bitumen," said Magda Chambriard, CEO of Petrobras, on the sidelines of a conference in Houston last week.

In reality, many shipments arriving in China labeled as Brazilian bitumen are believed to contain Merey, Venezuela's iconic heavy crude, sold by state-owned PDVSA through intermediaries, according to trade sources, Vortexa Analytics, and internal PDVSA documents seen by Reuters.

For years, Merey has often been reclassified as "mixed bitumen" to circumvent Beijing's import quotas on conventional crude oil, Chinese traders explain.

To pull off this sleight of hand, brokers alter the original documentation by providing a false certificate attesting to Brazilian origin, without passing through Brazilian ports or transshipment operations, according to three traders.

Hangzhou Energy implicated

In 2025, several ships chartered by Hangzhou Energy, a Venezuelan crude oil intermediary, falsified their position to appear off the coast of Brazil while loading in Venezuela, according to data from TankerTrackers.com and PDVSA documents.

Reuters was unable to contact Hangzhou Energy, which, according to the documents, has been loading Venezuelan crude since 2021.

In February, the Liberian-flagged tanker Karina, chartered by Hangzhou Energy, loaded 1.8 million barrels of Venezuelan Merey 16 under the name "Katelyn." It falsified its position while loading in Venezuela to simulate a departure from Brazil, before unloading its cargo at the Chinese port of Yangpu in early April.

Neither Chinese customs, PDVSA, nor Brazilian authorities responded to requests for comment.

Beyond shortening the journey and saving on transshipments, passing Venezuelan crude off as Brazilian also makes it possible to obtain bank financing, one of the traders points out.

"The savings on freight are limited, but it helps to unlock financing, which eases the pressure on liquidity during the two months it takes to complete the journey," he said.

China, like Venezuela, has repeatedly opposed unilateral sanctions.

It remains the main destination for Venezuelan oil, with around 351,000 barrels per day delivered in 2024. This volume rose to 463,000 barrels per day in the first four months of 2025, according to PDVSA documents and maritime tracking data compiled by Reuters.

The majority of these shipments are still declared as Malaysian, whether crude or mixed bitumen. Less than 10% are officially declared as Venezuelan.

With Reuters