U.S. refiners poised to gain as Venezuela oil sanctions face possible lift

Jan 07, 2026 News

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– Gulf Coast plants could absorb up to 1 million barrels per day, squeezing out Canada

HOUSTON, Jan 6 (Reuters) – A full-scale resumption of Venezuelan oil exports would benefit refiners in the United States and lower their fuel production costs, with the refineries capable of absorbing most of the roughly 1 million barrels per day of crude if U.S. sanctions on the South American country are removed. The U.S. and Venezuela have been discussing exporting crude from the South American country to the United States, Reuters reported on Tuesday. U.S. oil executives are expected to visit the White House on Thursday to discuss Venezuela, sources said.

A boost in Venezuelan exports could hurt Canadian companies that sell a similar heavy oil, and small Chinese refiners, which would face higher costs if Venezuelan crude diverts to the United States. U.S. President Donald Trump wants U.S. oil companies to spend billions of dollars to rebuild Venezuela’s oil industry, which is dilapidated and producing well below its potential after decades of mismanagement and underinvestment. Trump has said the U.S. would run Venezuela and its oil sector after U.S. troops snatched President Nicolas Maduro from Caracas on Saturday and transported him to New York to stand trial on drug charges.

U.S. GULF REFINERIES BUILT FOR HEAVY CRUDE

It would take years of work for oil companies to pump a lot more oil from Venezuela. The country’s existing exports could, however, quickly redirect to the United States from China if the U.S. lifted a blockade on Venezuelan exports that Trump imposed in December, and removed sanctions on doing business with Venezuela.

Before sanctions were imposed in 2019, several large U.S. Gulf Coast refineries bought and processed about 800,000 bpd of Venezuela’s heavy oil, according to U.S. government data, and some were designed to process this type of crude rather than U.S. light oil. Those refineries would be first to benefit, analysts said. “If sanctions are lifted in the short term, the Gulf Coast can absorb a substantial portion of that 1 million bpd operationally, but the barrels would clear by pushing out other heavy crudes and competing aggressively on price,” said Rommel Oates, founder of refining software company Refinery Calculator.

The all-electric wake sport boat is part of its creators’ bold bet that the marine world is ready to go electric. Valero PBF Energy and Phillips 66 already buy Venezuelan crude from Chevron, and could take more, analysts and trading sources said. Valero alone, the largest Gulf Coast refiner, can process an incremental 300,000 to 400,000 bpd, Barclay’s analyst Theresa Chen said.

U.S. Gulf Coast refineries can run 3 million to 4 million bpd of heavy crude, analysts noted.

Phillips 66 on Tuesday said its two U.S. Gulf Coast refineries could run up to a couple of hundred thousand bpd of Venezuelan crude.

EXXON, OTHERS, COULD BUY FROM VENEZUELA

Chevron imports about 150,000 bpd of Venezuelan crude to the United States. It is the only U.S. oil major operating in Venezuela under a license from Washington that exempts it from sanctions.

Marathon Petroleum, Motiva Enterprises, owned by Saudi Aramco, TotalEnergies and ExxonMobil purchased Venezuelan crude before sanctions and could buy more if it were available. “Gulf Coast refiners are structurally advantaged to receive Venezuelan barrels due to waterborne access and historical familiarity with these grades prior to the 2019 sanctions,” said Barclays’ Chen. The availability of cheaper crude to U.S. refiners could provide some price relief for motorists, Chen added. U.S. refiners’ shares rose between 3% and 10% on Monday, compared to a 3% increase in the broader S&P Energy Index. The refining companies did not immediately respond or declined to comment. Chevron did not immediately reply to requests for comment on whether the company would sell more crude to U.S. refiners.

REDIRECTING FLOWS

U.S. refiners have imported more crude from Canada, Mexico, Colombia, Brazil and the Middle East since sanctions were imposed on Venezuela.

Greater U.S. imports from Venezuela would displace those crudes, most notably Canadian.

Canada boosted output to record levels in 2025, exporting about 90% of its crude to the U.S.

Shares of Canadian oil producers Canadian Natural Resources and Cenovus Energy fell between 5% and 6% on Monday. “Canadian heavy crude had picked up the slack while Venezuela was struggling. The grades will compete, which is good for U.S. refining but also bad for Canada,” a refining source, who was not authorised to speak on the record, said.

A long-term increase in Venezuelan output would pressure Canadian oil prices and strengthen the case for a new Canadian export pipeline to the Pacific coast, said Randy Ollenberger, a managing director at BMO Capital Markets. Prime Minister Mark Carney said he expects Canadian crude to stay competitive.

CHINESE REFINERS’ DILEMMA

Chinese independent refiners, known as teapots, are the biggest buyers of Venezuelan crude, and would seek alternatives if those supplies are redirected long-term.

The teapots would likely turn to Canadian and Middle Eastern crudes, sources said. Switching to Canadian oil would drive up Chinese refiners’ costs, as Venezuelan Merey crude is the cheapest among their supplies. Chinese teapot refineries would still have access to discounted Russian and Iranian crude. Indian refiners Reliance Industries and Indian Oil Corp also buy Venezuelan oil and would do so again if terms were attractive, sources said.

Meanwhile, government officials in Caracas and Washington are discussing exporting Venezuelan crude to refiners in the United States, five government, industry and shipping sources told Reuters on Tuesday, a deal that could divert supplies away from China while helping state company PDVSA avoid deeper output cuts. Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by U.S. President Donald Trump since mid-December.

The blockade was part of rising U.S. pressure on the government of Venezuelan President Nicolas Maduro that culminated in U.S. forces capturing him this weekend. A potential deal to sell the trapped crude to the U.S. could initially require reallocating cargoes originally bound for China, two sources said. The Asian country has been Venezuela’s top buyer in the last decade and especially since the United States imposed sanctions on companies involved in oil trade with Venezuela in 2020.

The supply would increase the volume of Venezuelan oil exported to the U.S., a flow that is currently controlled entirely by Chevron, PDVSA’s main joint venture partner, under a U.S. authorisation. Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the U.S., has emerged in recent weeks as the only company fluidly loading and shipping crude from the South American country amid the blockade.

PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil. If PDVSA does not find a way to export oil soon, it would have to cut production more, one of the sources said.

The White House, Venezuelan government officials and PDVSA did not immediately comment. Venezuela’s oil ministry has said the U.S. wants to steal the country’s oil reserves and denounced Maduro’s capture as a kidnapping. U.S. refineries on the Gulf Coast can process Venezuela’s heavy crude grades and were importing some 500,000 barrels per day (bpd) before Washington first imposed energy sanctions on Venezuela.

It was not immediately clear how sanctioned PDVSA would obtain proceeds from the oil sales.

The officials have been in talks this week about possible sale mechanisms, including auctions to allow interested U.S. buyers to participate in cargo offers, and the issuance of U.S. licenses to PDVSA’s business partners that could lead to supply contracts, two sources said.

The parties have also discussed if the Venezuelan crude can refill the U.S. Strategic Petroleum Reserve in the future, one of the sources said.

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• oil, oil tank, sanctions, U.S. Strategic Petroleum Reserve, Venezuela, Venezuelan crude

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