By Arathy Somasekhar and Georgina McCartney

HOUSTON, Feb 26 (Reuters) - Spot prices of a key medium

crude grade in the U.S. Gulf Coast spiked on Wednesday as

refiners sought alternatives following President Donald Trump's

termination of a license allowing U.S. major Chevron ( CVX ) to

export Venezuelan oil.

Trump said he was reversing an authorization granted by

former President Joe Biden's administration in November 2022,

without mentioning the company's name. Venezuela's Vice

President Delcy Rodriguez said the U.S. had made a "damaging and

inexplicable decision" by going against Chevron ( CVX ).

In January, Chevron ( CVX ) exported almost 300,000 bpd of

Venezuelan oil to the United States on average, according to

LSEG vessel tracking data and reports from state company PDVSA.

While imports of Venezuelan crude accounted for only 3.5% of

total U.S. crude imports in November, it was about 13% of crude

oil imported by U.S. Gulf Coast refineries, according to the

U.S. Energy Information Administration.

Venezuela was the fourth largest crude supplier to the U.S.

in the first 11 months of 2024.

Prices for Mars, a medium sour crude that U.S. refiners

favor, spiked 70 cents higher to a $1.70 premium over U.S. West

Texas Intermediate crude on Wednesday, the grade's largest daily

rise in about a month.

While the United States can find other supplies, the price

of the alternative barrels and the cost of shipping will

pressure U.S. refinery margins amid extensive U.S. sanctions on

Russian oil that have already tightened heavy crude supplies.

Trump's announcement to block Venezuelan oil purchases comes

just days before his month-long pause on Canadian and Mexican

oil tariffs ends. Any tariffs on those would significantly

tighten heavy crude supplies along the U.S. Gulf Coast.

Gulf Coast refiners will look to alternative heavy crude oil

such as Colombian, said Rohit Rathod, a senior oil market

analyst at Vortexa. Refiners may also look as far as the Middle

East for alternatives, he added.

Higher volumes of Guyanese oil could also make their way

into the United States, a trading source said, while another

source said U.S. refiners would likely seek heavy fuel oil from

Brazil.

"The news could certainly support other grades including

Colombian temporarily although some refiners have been actively

replacing crude with fuel oil as feedstocks, or taking lighter

domestic crudes," a trader said.

Ecuador's President Daniel Noboa in January said his country

could ramp up exports to as much as 250,000 bpd to countries

currently buying Venezuelan oil to make up for any shortfall

from license terminations in Venezuela.

Valero Energy Corp ( VLO ) was the top processor of

Venezuelan crude in 2024, followed by Chevron ( CVX ) and then PBF

Energy ( PBF ).

Trump said the license termination would take effect on

March 1. It was not immediately clear what would happen with

cargoes of Venezuelan crude currently navigating to U.S. ports

or about to depart from Venezuela through the end of the month.

As has happened before, Washington might allow Chevron ( CVX ) to

discharge those cargoes shipped before the deadline, Rathod

said, adding that in the worst case, they will have to resell

them, likely to Europe or India.

Chevron ( CVX ) typically ships five to six cargoes of Venezuelan

oil per week to its own U.S. refineries and to others,

contributing significantly to shipping activity at Venezuelan

and nearby ports such as Aruba.

Chevron ( CVX ) said it was considering the implications of the

Trump administration's announced termination of its deal with

Venezuela.