A Revival of Venezuela’s Oil Industry Poses a Challenge for Canada

The two countries both produce heavy oil, which is difficult to refine, and have relied historically on American refineries to buy it.A refinery in Punto Fijo, Venezuela, in 2021. Historically Canada and Venezuela were direct competitors in the oil business.Credit...Adriana Loureiro Fernandez for The New York TimesJan. 5, 2026, 6:33 p.m. ETThe U.S. attack on Venezuela will likely have ripple effects on Canada’s oil industry, which may now have to intensify efforts to diversify beyond the U.S. market, experts said.President Trump’s plan to revive the oil flow in Venezuela — which involves U.S. companies returning to spend “billions of dollars” to fix infrastructure and then selling large amounts of oil to the rest of the world — is a particular challenge for Canada, which produces the same heavy and difficult-to-refine oil that Venezuela does.Until 2024, virtually all of Canada’s oil exports, which mostly come from Alberta’s oil sands, headed to the United States. Mr. Trump’s vision to revitalize Venezuela’s energy industry, which faces considerable hurdles, may accelerate moves to wean Canada from its reliance on the United States market, such as a pipeline linking the Pacific Coast of British Columbia to landlocked Alberta.“The only way, in the long term, to increase our competitiveness and increase our optionality is with pipeline capacity that doesn’t just point to the United States,” said Rory Johnston, the founder of Commodity Context, an oil markets analytics firm in Toronto.When the United States largely barred Venezuelan imports through extensive sanctions, refineries along the American Gulf Coast equipped to handle heavy crude turned to Alberta’s oil sands instead. Rory Johnson said that if the United States were to resume importing Venezuelan oil, that may gradually push Canadian oil out of the Gulf Coast refineries.“Canada’s vulnerable on both the supply and demand side to shocks because of our high rate of dependence on the U.S. market,” said Robert Johnston, the director of energy and natural resources policy at the University of Calgary in Alberta. Last year, Prime Minister Mark Carney of Canada and Danielle Smith, the premier of Alberta, signed an agreement conditionally approving the construction of a pipeline from Alberta to a new oil tanker port on the coast of British Columbia. Rory Johnston said that the prospect of expanded imports from Venezuela “increases the argument for” building such a pipeline and port.Since taking power last year, and in the wake of Mr. Trump’s trade war with most of the world, Mr. Carney has emphasized developing large infrastructure projects to reduce Canada’s trade dependence on the United States.For now, the United States’ pipeline networks may also help Canadian oil companies by limiting the effects of renewed exports from Venezuela. Most of Canada’s exports, Rory Johnston said, go to refineries in the Midwest that can handle heavy oils. But without billions of dollars in investments, pipeline networks in the United States cannot move large amounts of Venezuelan crude oil north, he said.Robert Johnston said that there was little apparent interest among major oil companies in making large-scale investments in Venezuela despite Mr. Trump’s wishes. Still, he said, any resumption of substantial shipments to the Gulf Coast from Venezuela would mean lower prices for Canadian oil in the U.S. market.“It wouldn’t be catastrophic, but it would be unwelcome,” he said.Since the expansion of a government owned oil pipeline to the Pacific Coast in 2024, Canada has started reducing its almost total dependence on oil exports to the U.S. Of the roughly 4 million barrels of oil a day Canada exports, Rory Johnston estimates that 500,000 to 700,000 barrels now go to Asia and China in particular.By some estimates, it will take 18 months for Venezuela to start producing 1.5 million barrels a day.Like many analysts, Rory Johnston said he did not anticipate that China would continue to buy oil from a Venezuelan industry under American control, potentially creating an opening for Canada to offset whatever business it loses on the American Gulf Coast.“It would be kind of ironic if the U.S. intervention in Venezuela elevated China’s interest in Canada,” Robert Johnston said.Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at austen@nytimes.com.SKIP