Sudden Deterioration in Venezuela’s Situation and Crude Oil Export Halt
Venezuela holds the world’s largest proven oil reserves, with Merey crude being a typical high-sulfur heavy crude that yields 50%–60% bitumen. The bitumen produced is stable in storage and has long served as a key feedstock for refiners in China and across Asia. From late 2025 to early 2026, Venezuela’s political situation deteriorated sharply as the United States intensified sanctions and launched military operations, resulting in an almost complete suspension of the country’s crude oil exports. More than 17 million barrels of crude were stranded offshore, unable to be shipped. The crisis is likely to continue causing shortages of diluents, shutdowns of oilfields, and depressed export activity. Public data show that Venezuela’s average daily crude exports fell sharply from about 950,000 barrels in November 2025 to less than 600,000 barrels since December. This backdrop has not only disrupted the global energy market but also directly impacted feedstock supply across the bitumen industry chain.
Table 1： Crude Oil Quality Distribution and Characteristics of Major Producing Countries
Country/Region | Crude Oil Type and Characteristics |
Venezuela | Predominantly extra-heavy crude; high salt content, high viscosity, and costly extraction. |
Canada | Reserves concentrated in oil sands; extra-heavy crude/bitumen type with high extraction and refining costs. |
Middle East | Dominated by light, low-sulfur crude (“sweet oil”); easy to refine and one of the world’s most important sources of light crude. |
United States | Diverse sources including shale oil (light to medium) and conventional heavy crude; advanced refining technology enables processing of multiple crude types. |
Russia | West Siberia mainly produces light crude, while the Urals region yields heavier crude; a key global supplier. |
China | Resources concentrated in Bohai Bay, Songliao, and Tarim basins; high external dependence with imports covering light, medium, and heavy crude grades. |
Sources: Public information, CSPI Ratings
Bitumen Market Under Crisis: Short-term Cost Shock and Long-term Oversupply
The impact of the Venezuela crisis on China’s bitumen market is most evident in raw material shortages. Merey crude has long been a core feedstock for producing road bitumen in Chinese refiners, and the suspension of exports has left some refiners facing supply gaps. While certain refiners may turn to heavy crude from the Middle East or Canada as alternative sources, substitution remains limited due to constraints in logistics costs, bitumen yield quality, and supply volumes. At the same time, process adjustments, extended transportation cycles, and rising costs further compound the uncertainty of the substitution path.
Meanwhile, the supply tightness caused by the crisis has made spot market quotations more sensitive, and production costs of domestic refiners are expected to rise significantly. Beyond price dynamics, the increase in crude oil discounts has further elevated bitumen production costs. From a price perspective, both bitumen spot and futures prices showed a notable uptick in early January 2026, reflecting the market’s rapid response to raw material disruptions. In the short term, under the dual pressures of supply constraints and elevated costs, bitumen prices are expected to remain at relatively high levels since November, exerting temporary pressure on infrastructure construction and related industries.
On the demand side, China’s apparent bitumen consumption increased by nearly 10% year-on-year in the first ten months of 2025, driven by accelerated highway project construction and other factors, resulting in a temporary release of demand. However, fixed asset investment data on transportation show that cumulative national highway construction investment reached RMB 2,224.3 billion in the first eleven months of 2025, down 5.9% year-on-year. This continued the downward trend observed since 2023, indicating that incremental demand from new highway projects has slowed significantly. Looking ahead to the “15th Five-Year Plan” period, the focus of national infrastructure investment is expected to shift further toward new infrastructure, with the share of traditional highway investment continuing to decline. In addition, fiscal pressures at the local government level may further affect the initiation and progress of new projects. Meanwhile, the prolonged downturn in the real estate market will continue to suppress bitumen demand in the waterproofing sector.
Overall, in the short term, China’s bitumen market is expected to exhibit a pattern of “high costs, high prices, and low supply” with cash flow stability and cost pressures on downstream construction enterprises requiring close monitoring. From a medium- to long-term perspective, although the consumption tax reform introduced in early 2025 has to some extent constrained refinery operating rates, domestic bitumen production has continued to grow. By November 2025, cumulative bitumen output had already surpassed the full-year level of 2024, indicating sustained expansion on the supply side. The market fundamentals therefore remain characterized by abundant supply and oversupply. The raw material disruptions caused by the Venezuela crisis are largely temporary and are not sufficient to alter the long-term structural oversupply in China’s bitumen market.
Refiner Profitability Pressures and Risk Outlook
The profitability of bitumen production is primarily influenced by multiple factors, including crude oil prices, market demand, and the discount on diluted bitumen.
The impact of the Venezuela crisis on the profitability of the refiners can be observed in several dimensions. First, the crisis is expected to lead to risk polarization among enterprises. Large state-owned refiners are relatively insulated, whereas certain local refiners—particularly those without crude oil import quotas—face significant cash flow pressures. Rising feedstock costs have compressed profit margins for these operators.
Second, financial strain is intensifying. Elevated costs and reduced output may tighten the funding chains of some local refiners, exposing them to heightened liquidity and debt-servicing risks.
Finally, policy sensitivity is increasing. Import substitution depends heavily on policy coordination, and different types of refiners vary in their ability to adapt. Close attention is required to potential shifts in the medium- to long-term trade structure.
Overall, while the crisis is expected to drive bitumen prices higher and intensify supply tightness in the short term, from a medium- to long-term perspective, structural economic transformation and potential oversupply remain the core pressures constraining profitability.
Note: This report is translated from the Chinese version. In case of any discrepancies, the Chinese version shall prevail.
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