Why Canadian oil producers might face challenges if the US achieves success in Venezuela

US Shifts Focus to Venezuelan Oil Imports

Last week, the Trump administration accelerated efforts to redirect Venezuelan oil exports to the United States. President Trump even pledged that this new oil supply would be delivered straight to American ports.

Whether this initiative will prove financially viable—especially if Trump aims to push global oil prices below $50 per barrel—remains uncertain. The move could present particular challenges for Canada.

Competition Between Canadian and Venezuelan Oil

Both Venezuela and Canada are major producers of heavy crude oil, a type that US refineries prefer to blend with lighter domestic oil for optimal processing.

According to the American Fuel & Petrochemical Manufacturers, US refineries operate most efficiently with a mix of crude types, with about 70% of capacity relying on heavier grades not found in the US.

Several factors have positioned Canada as the primary supplier of heavy crude to the US. The US Energy Information Administration reports that Canada accounted for 60% of American crude imports in recent years—almost double the share from a decade ago.

This backdrop set the stage for a White House meeting where President Trump convened oil industry leaders to determine which companies would be permitted to participate in the new Venezuelan oil imports.

Executives from leading US oil firms, along with representatives from Italy, the UK, and other countries, attended the session.

Trump emphasized the significance of heavy crude, noting that US refineries are well-equipped to process Venezuelan oil, which he described as “very good, heavy oil.”

This development could pose a direct threat to Canadian oil exporters.

Market Response and Impact on Canadian Producers

Initial market reactions have been telling. Shares of Canadian oil companies declined last week, while the broader energy sector remained mostly stable.

• Canadian Natural Resources Ltd. (CNQ) dropped over 6.5% in the past week.
• Enbridge Inc (ENB) also saw a significant decline, ending the week more than 5% lower.

Canadian Oil’s Outlook Amidst Shifting Imports

On average, the US imports approximately 4 million barrels of crude oil daily from Canada. President Trump recently announced an agreement with Venezuela to supply between 30 and 50 million barrels in an initial shipment to the US.

This volume represents less than two weeks’ worth of Canadian oil exports to the US. While Trump’s team has promised additional shipments, many analysts believe the long-term impact on Canada will be limited.

Canada’s Response and Competitive Edge

Canadian Prime Minister Mark Carney has already addressed the situation, expressing confidence that Canadian crude will continue to be a key supplier.

At a recent press conference, Carney highlighted that Canadian oil remains attractive due to its low risk, low cost, stable government, robust infrastructure, and proximity to US markets.

In recent years, over 90% of Canada’s crude exports have gone to the US, with 2023 shipments valued at more than $96 billion. US government estimates put the value of US-Canadian oil trade at around $150 billion in 2025.

Analysts: Canadian Oil Remains Resilient

According to Capital Economics, fears about the decline of Canadian oil sands are overstated. Their analysis suggests that increased Venezuelan production is unlikely to threaten Canada in the near term, as it will take years for Venezuela to ramp up output, and Canadian crude primarily serves refineries in the Midwest, while Venezuelan imports are expected to target Gulf Coast facilities.

Although Trump has often downplayed the US reliance on Canadian oil, his administration’s actions have shown that American refineries still depend on Canadian heavy crude.

During last year’s tariff disputes, Canadian oil received a preferential rate of 10%, compared to the headline 35% tariff on other Canadian goods. This underscores the ongoing importance of Canadian oil to the US market.

The Ongoing Need for Canadian Heavy Crude

As energy analyst Fernando Valle explained in a Yahoo Finance interview, the US does not produce enough oil to meet its own needs and relies on Canadian heavy crude to balance refinery operations.

Canada’s established infrastructure, stable political environment, and geographic proximity ensure its oil remains a competitive and reliable source for US refineries, even as new suppliers like Venezuela enter the market.

Ben Werschkul reports from Washington for Yahoo Finance.