How China is factor in oil tanker seizures targeting Maduro, Venezuela

The escalating U.S. campaign to seize tankers linked to Venezuelan oil could also escalate tensions between the U.S. government and China if more crude oil intended for the Chinese market is caught up in the U.S. military campaign.

On Saturday, the Panama-flagged tanker Centuries was seized carrying sanctioned Venezuelan oil, a move condemned by China. The seizure was the latest in the President Donald Trump‘s vow to block tankers carrying Venezuelan oil. Maritime experts say the move may have relied on a legal authority that suggests more seizures will be coming, and potentially target more oil intended for the Chinese market.

According to Dimitris Ampatzidis, senior risk and compliance analyst at Kpler, the seizure of the Panama-flagged Centuries may have been conducted under the 2002 Salas-Becker agreement, which allows U.S. authorities to board Panamanian-flagged vessels with just two hours’ notice.

“The most interesting part of the Centuries seizure is the suggestion of the U.S. likely relying on its prior boarding agreement with the Panama Maritime Authority,” said Ampatzidis, adding that the use of this agreement can lead to additional seizures.

Kpler analysis shows that out of the total of 23 shadow tankers currently identified within Venezuela’s exclusive economic zone, three of those vessels are operating under the Panama flag and are loaded with sanctioned Venezuelan crude.

“If the Ragnar, Balsa, and Larko attempt to depart, it places them in the higher-risk enforcement category because they are operating under the Panama flag,” Ampatzidis said. “We can see seizures as we saw with the Centuries.”

Ragnar was loaded on Dec. 16, and Balsa and Larko were loaded on Dec. 17.

“Beyond already-sanctioned vessels, the U.S. appears increasingly willing to target other ships linked to the shadow fleet when they attempt to depart Venezuela with cargo — particularly if they are stateless (no flag) or Panama-flagged,” Ampatzidis said.

“The most interesting aspect of all of this is that by squeezing Venezuelan oil, you are not only putting tremendous pressure on the Maduro regime, but you are also impacting China strategically,” said Aaron Roth, retired Coast Guard captain and principal, federal strategy & security, for the Chertoff Group. “The longer it goes on and it may create negotiating space in U.S.-China diplomacy, because Venezuelan oil is discounted to China, and it’s the type of heavy crude that China can refine,” he said. “Without VZ oil, China will have to go to the market to Russia and the Middle East, which will be more costly to them,” he added.

Venezuela has produced around 900,000 barrels of crude…