U.S. designs for Venezuelan oil industry put pressure on Canadian oil stocks

CALGARY – Shares in Canada’s biggest oilsands producers came under pressure Monday after the U.S. military captured the Venezuelan leader and President Donald Trump announced plans to put that country’s oil industry into the hands of American companies. 

Canadian Natural Resources Ltd. closed down about six per cent on the TSX, while Cenovus Energy Inc. finished almost five per cent lower and Suncor Energy Inc. dipped 1.6 per cent. 

Enbridge Inc., which operates a vast cross-border oil pipeline network that it plans to expand, and South Bow Corp., whose Keystone system ships crude to the U.S., each fell around three per cent. 

Overall, the TSX energy subindex was down about 3.6 per cent. 

Refineries on the U.S. Gulf Coast are set up to process heavy crude like that produced in Alberta’s oilsands and in Venezuela. But U.S. sanctions on the South American country have meant virtually none of its supplies go to the U.S. market today. 

“If those restrictions were lifted, then Canada may have more competition right away in terms of Venezuelan oil that now technically can access the U.S. Gulf Coast,” said Jackie Forrest, executive director of the ARC Energy Research Institute.

But Forrest said any discounts on Canadian heavy oil prices would be “modest” — in the US$2 to US$3 per barrel range — so the market reaction Monday “seems a bit overdone.” 

Canada sends about 400,000 barrels a day of crude to the world’s largest refining complex on the Gulf Coast, a relatively small portion of the roughly four million barrels a day of oil Canada supplies to the U.S. overall. Most currently goes to refineries in the Midwest region, which is deeply integrated with pipeline networks originating in Alberta, like Enbridge’s Mainline and South Bow’s Keystone.  

There are ways to offset some of that pricing pressure by exporting crude abroad, via the Gulf Coast or from the Trans Mountain pipeline on the West Coast, Forrest added. 

Not much has changed in oil markets near-term and it could be months or even years before the fate of sanctions and Venezuela’s production shakes out, said Dane Gregoris, managing director of Enverus’s oil and gas research group.

“Political changes happen quickly, but industrial changes happen very slowly,” he said. 

But he said there’s a “reasonable case to be made” for investors to reduce their exposure to Canadian energy names under the assumption that more heavy oil may eventually flow to the U.S. market and weigh on Canadian prices. 

“I think that’s why you’re seeing a broad sell-off of oil and gas equities today,” he said. “Some of that seems a little bit overstated or kind of snap reaction.”

It’s clear Trump wants to take control of Venezuela’s oil reserves — 300 billion barrels or about 17 per cent of the world’s total, Derek Holt, head of capital markets economics at Scotiabank wrote in a report Monday.

“It’s a hostile takeover in the global energy sector, the only difference being that guns were used instead of shareholder tactics.” 

But he cautioned against leaping to the conclusion “that this will unleash a torrent of new supply on world markets with effects that allegedly include snowing under Canada’s oil industry.”

Venezuelan production peaked at 3.5 million barrels a day in 1998, and it now churns out less than a third of that, with most going to China. Holt said he doubts a U.S. intervention will lead to a swift return to its glory days. 

“Its energy and broader infrastructure lay in shambles. Political uncertainty is off the charts. American hubris thinks it can restore order and run the country with a compliant local administration,” he wrote, noting past forays into Iraq, Afghanistan and elsewhere suggest otherwise. 

Meanwhile, the United States’ own production has been crowding out imports and the world is awash in supply, putting pressure on global prices. The price of West Texas Intermediate crude, the key U.S. light oil benchmark, saw a bump on Monday, but it was still below the US$60 per barrel mark and about 20 per cent lower than it was at this time last year. 

“What do you think unleashing three billion barrels of reserves in Venezuela would do to world oil prices relative to production break-evens? U.S. Big Oil isn’t that dumb,” Holt wrote. . 

“Nevertheless, the prudent thing for Canada to do would be to act with a greater sense of urgency in terms of building capacity to export oil to Asia (arguably ditto for Mexico),” Holt wrote. 

It could take five to 10 years for Venezuela to meaningfully ramp up its production if it were to get a stable government and attract investment, Forrest said. But long term, it makes sense for Canada to send more of its oil to Asia, Forrest said.

“Hopefully it increases our motivation,” she said. “We need new outlets for our crude oil to diversify our export markets to protect us from threats like this.”

Last year, the Alberta government announced plans to fund early work on proposal to ship up to a million barrels a day of bitumen to the West Coast for export. In November, Premier Danielle Smith and Prime Minister Mark Carney signed a sweeping energy accord that includes support for that idea.  

“Recent events surrounding Venezuelan dictator Nicolas Maduro emphasize the importance that we expedite the development of pipelines to diversify our oil export markets, including a new Indigenous co-owned bitumen pipeline to B.C.’s northwest coast to reach Asian markets,” Smith’s office said in a statement Monday. 

Stephen Legault, senior manager at Environmental Defence, said it would be smarter to invest in renewable energy. 

“Venezuelan oil, if it ever again appears in greater abundance, will enter a world awash in cheap oil and falling demand.”

This report by The Canadian Press was first published Jan. 5, 2026.

Companies in this story: (TSX:CNQ, TSX:CVE, TSX:SU, TSX:ENB, TSX:SOBO)