The recent developments in Venezuela have sparked a flurry of questions: How will the U.S. actions there impact Canada's oil industry? It's a complex situation, so let's break it down.
While the U.S. is making moves in Venezuela, industry experts suggest the immediate impact on Canada's oil market will be minimal. U.S. President Donald Trump has expressed interest in reshaping Venezuela's oil sector. However, the U.S. has stated it won't govern the South American country and will maintain its 'oil quarantine,' leaving many wondering what's next.
But here's where it gets controversial...
Luis Virla, who formerly worked in Venezuela's petrochemical industry, believes it will take years and significant investment to restore Venezuela's energy infrastructure and sector to its former glory, even to the levels of the 1990s.
Despite the long road ahead for Venezuela, news of the U.S. operation caused a dip in Canadian energy stocks. Cenovus Energy Inc. and Canadian Natural Resources Ltd. saw drops, along with Suncor Energy Inc. Enbridge Inc., with its extensive oil pipeline network, and South Bow Corp., which transports crude to the U.S., also experienced declines.
Venezuela produced approximately 1.1 million barrels of oil per day in November 2025, exporting 950,000 barrels. However, U.S. measures, including a blockade, reduced shipments to around 500,000 barrels daily in December.
Shaz Merwat, from RBC Thought Leadership, suggests that Canadian oil should have no trouble 'finding a home' in the U.S., with about 4 million to 4.2 million barrels a day exported to the U.S. via pipelines. The majority goes to the U.S. Midwest, approximately 2.8 million to 2.9 million barrels per day.
And this is the part most people miss...
Merwat points out that Venezuelan crude primarily goes to the U.S. Gulf Coast, and the U.S. Gulf Coast and West Coast each receive about 400,000 to 500,000 barrels per day from Canada.
Virla, now a professor at the University of Calgary, highlights that refineries on the Gulf Coast, designed for Venezuelan oil, have largely switched to Canadian oil. He raises the question of whether these refineries will prioritize Venezuelan oil again.
Merwat adds that the price of oil could be a more significant factor than the destination. The increased availability of oil gives U.S. refineries more options, potentially increasing their bargaining power and widening the price difference for Canadian heavy oil.
Heather Exner-Pirot, from the MacDonald-Laurier Institute, isn't overly concerned about competition from Venezuela, as Canadian oil already faces competition from the U.S., Brazil, Mexico, and OPEC.
Exner-Pirot suggests that Canada should continue its current strategy. The refineries that buy heavy oil are primarily in the United States and Asia. She suggests that if Canada wants to diversify its exports, it should focus on Asian refineries that want its heavy oil.
Virla believes it will take years for Venezuela to return to its previous production levels, presenting an opportunity for Canada. He encourages the Canadian industry to diversify its client base and include other energy products to reduce exposure to market fluctuations.
Alberta Premier Danielle Smith emphasized the need to accelerate pipeline production to diversify oil export markets. The federal Energy Minister's office stated it was too early to speculate on the potential impacts but would continue its work to 'transform our economy.'
The Canadian Association of Petroleum Producers (CAPP) believes the situation reinforces the need for diversification. Lisa Baiton, president and CEO of CAPP, stated that in an unpredictable world, Canada must remain competitive for energy investment to thrive through market cycles and global volatility.
What are your thoughts on this situation? Do you agree with the experts' assessments, or do you see other potential impacts on the Canadian oil industry? Share your opinions in the comments below!
