SHONDELL SABAD, SENIOR STRATEGIC ADVISOR AT AEG

Recent headlines around regime change in Venezuela have raised concerns about new crude supply entering global markets. Early last week, Canadian heavy differentials widened despite no change in WTI prices. This reaction misses the fundamentals.

A thoughtful piece from RBN Energy explains why: Venezuela’s hydrocarbon sector is in deep structural distress. Infrastructure degradation, capital flight, and years of mismanagement mean any meaningful production recovery will take years, not months. Short‑term displacement of Canadian barrels into the U.S. is highly unlikely.

Canada exports over 3 million barrels per day of crude oil to the U.S.; however, the destination matters. Approximately 2.5 million bpd of Alberta production flows to the U.S. Midwest, while only ~700,000 bpd is delivered to the U.S. Gulf Coast. Any returning Venezuelan supply would be structurally suited to Gulf Coast refineries – not Midwest markets – and therefore does not directly compete with the majority of Alberta’s exports. In that context, the more strategic opportunity for Canada is not displacement in the U.S., but incremental demand offshore.

China has been quietly importing an estimated ~470,000 bpd of Venezuelan heavy crude; much of it is rebranded to work around sanctions. If those flows are disrupted or redirected, China’s refiners will need replacement barrels. Canadian heavy, WCS, Cold Lake, and Lloydminster blends are among the closest quality matches available at scale.

With the Trans Mountain Expansion providing new tidewater access, Canada is now positioned to compete where it couldn’t before.

This is one of the most important heavy-oil realignments in a decade. The strategic question is not whether Alberta is exposed, it is whether we move fast enough to capture the opportunity. 

📖 Read the full RBN analysis here.

RBN Energy has long been one of the most reliable sources of North American energy fundamentals—clear, data-driven, and consistently insightful.