Sales of Venezuelan oil for loading in October stalled after a surge in shipping costs muddled negotiations between the country’s state oil company and buyers of its oil. Shipping costs — a key component of the delivered price — have more than doubled from the end of August. That’s making Venezuelan crude less competitive with Canadian barrels for US refiners and snarling sales deals, according to people with knowledge of the situation. Canada and Venezuela are the largest suppliers of foreign oil to the US.

Commodity traders such as Vitol Group and Trafigura Group, tapped by the US to help sell Venezuelan oil, have a broad arrangement — but not an obligation — to buy oil from Petroleos de Venezuela SA. Buyers of Venezuelan oil are currently being offered the oil at a discount of around $14 to benchmark ICE Brent prices, loading in October. With the cost to ship oil to the US Gulf Coast at nearly $7 a barrel, it means the oil arrives at a discount of $7 per barrel, or at least $5 more expensive than competing Canadian supplies.

The dispute risks disrupting a key source of crude for American refiners amid record diesel prices and ahead of US midterm elections. To complicate matters, US demand for the type of lumpy and sulfurous oil produced by Venezuela has taken a hit by the unexpected shutdown of facilities including Exxon Mobil Holdings Corp.’s Joliet refinery in Illinois and Valero Energy Corp.’s Port Arthur refinery in Texas.