There is a recent noteworthy trend in the energy market—behind-the-scenes negotiations between the US and Venezuela regarding crude oil exports. According to reports, some Venezuelan crude oil originally destined for China may be rerouted to the US, helping Venezuela’s state oil company PDVSA alleviate severe capacity pressures.

Since December last year, the Trump administration has imposed an export blockade on Venezuela, and PDVSA has not had an easy time. Millions of barrels of crude oil are stranded on tankers and in storage tanks, unable to leave, with inventories piling up. Currently, the only legal export channel is controlled by Chevron—this company has received special authorization from the US to report daily exports of 100,000 to 150,000 barrels of Venezuelan crude oil, becoming the only smoothly operating player during the blockade.

The core issue facing PDVSA is actually quite simple: storage space is nearly full. If exports continue to be blocked and capacity cannot be restored in the short term, production will have to be further cut. This is not good for either side.

Several proposals on the negotiation table include: rerouting some of the crude originally destined for China to the US; conducting open auctions for US buyers to bid; issuing licenses to PDVSA’s commercial partners to restart supply contracts; or even exploring whether Venezuelan crude can be used to supplement the US Strategic Petroleum Reserve.

Historically, before energy sanctions, US refineries imported about 500,000 barrels of Venezuelan heavy crude daily, mainly processed at refineries along the Gulf Coast. These refineries are particularly well-suited for Venezuelan oil quality, so restarting imports also holds significant strategic appeal for US energy policy.