With friends like US President Joe Biden, who needs enemies?After killing the Keystone XL pipeline on his first day in office, the American head honcho has dealt Canada’s oil industry another blow by agreeing to lift sanctions on founding OPEC member Venezuela, including a resumption of oil imports.That’s because the South American nation produces a similar blend of heavy oil to Canada’s used in Gulf Coast refineries prompting renewed ‘barrel-on-barrel’ competition in the world’s largest market..Prior to imposing the sanctions in 2019, Venezuela had been exporting up to half a million barrels per day (bpd) into the US Gulf Coast, which were quickly soaked up by higher imports from Canada and Mexico..On Wednesday, the US Treasury Department lifted restrictions on imports and exports of crude oil and refined petroleum products such as diluent — and gold — for a period of six months in exchange for allowing free and fair elections in 2024.Prior to imposing the sanctions in 2019, Venezuela had been exporting up to half a million bpd into the US Gulf Coast, which were quickly soaked up by higher imports from Canada and Mexico.By restoring that production, Canadian barrels will face increased price pressure in the form of steeper discounts in order to compete.Heavy oil is particularly valuable for its higher content of diesel fuel. The Biden administration has been under increasing pressure to lower fuel prices heading into an election year after global oil prices spiked after Russia’s invasion of Ukraine..“They’re easing up on the worst regimes in the world, giving them the revenues to stay in power and spread terror and corruption, while kneecapping environmentally responsible development in Alaska.”Senator Lisa Murkowski.Likewise, the move to ease pressure on Venezuela comes after a deal with Saudi Arabia to open the oil taps in exchange for normalizing ties with Israel appears to be firmly off the table, at least for now.The war in Gaza is also raising the prospect of supply restrictions if the US decides to reimpose sanctions on Iran in response to its role in supporting Hamas and Hezbollah.It also throws a kink in China’s oil supplies, which had been the primary destination for Venezuelan president Nicolas Maduro’s barrels.But with oil prices fast approaching the psychological USD$100 mark, the US administration was under pressure to limit any future supply shocks.Republican lawmakers were outraged.“They’re easing up on the worst regimes in the world, giving them the revenues to stay in power and spread terror and corruption, while kneecapping environmentally responsible development in Alaska,” Alaska Senator Lisa Murkowski fumed in a statement..Trans Mountain expansion will add 500,000 bpd of export capacity from Canadian shores when it comes on stream in 2024..The full impact on Canada is unclear. It’s not certain how fast Venezuela will be able to ramp up production of years — decades — of decay in its oil sector. And continental North American oil flows are set to undergo a big shakeup in the first quarter of 2024 when the Trans Mountain pipeline expansion adds another 500,000 bpd of export capacity from Canadian shores.
With friends like US President Joe Biden, who needs enemies?After killing the Keystone XL pipeline on his first day in office, the American head honcho has dealt Canada’s oil industry another blow by agreeing to lift sanctions on founding OPEC member Venezuela, including a resumption of oil imports.That’s because the South American nation produces a similar blend of heavy oil to Canada’s used in Gulf Coast refineries prompting renewed ‘barrel-on-barrel’ competition in the world’s largest market..Prior to imposing the sanctions in 2019, Venezuela had been exporting up to half a million barrels per day (bpd) into the US Gulf Coast, which were quickly soaked up by higher imports from Canada and Mexico..On Wednesday, the US Treasury Department lifted restrictions on imports and exports of crude oil and refined petroleum products such as diluent — and gold — for a period of six months in exchange for allowing free and fair elections in 2024.Prior to imposing the sanctions in 2019, Venezuela had been exporting up to half a million bpd into the US Gulf Coast, which were quickly soaked up by higher imports from Canada and Mexico.By restoring that production, Canadian barrels will face increased price pressure in the form of steeper discounts in order to compete.Heavy oil is particularly valuable for its higher content of diesel fuel. The Biden administration has been under increasing pressure to lower fuel prices heading into an election year after global oil prices spiked after Russia’s invasion of Ukraine..“They’re easing up on the worst regimes in the world, giving them the revenues to stay in power and spread terror and corruption, while kneecapping environmentally responsible development in Alaska.”Senator Lisa Murkowski.Likewise, the move to ease pressure on Venezuela comes after a deal with Saudi Arabia to open the oil taps in exchange for normalizing ties with Israel appears to be firmly off the table, at least for now.The war in Gaza is also raising the prospect of supply restrictions if the US decides to reimpose sanctions on Iran in response to its role in supporting Hamas and Hezbollah.It also throws a kink in China’s oil supplies, which had been the primary destination for Venezuelan president Nicolas Maduro’s barrels.But with oil prices fast approaching the psychological USD$100 mark, the US administration was under pressure to limit any future supply shocks.Republican lawmakers were outraged.“They’re easing up on the worst regimes in the world, giving them the revenues to stay in power and spread terror and corruption, while kneecapping environmentally responsible development in Alaska,” Alaska Senator Lisa Murkowski fumed in a statement..Trans Mountain expansion will add 500,000 bpd of export capacity from Canadian shores when it comes on stream in 2024..The full impact on Canada is unclear. It’s not certain how fast Venezuela will be able to ramp up production of years — decades — of decay in its oil sector. And continental North American oil flows are set to undergo a big shakeup in the first quarter of 2024 when the Trans Mountain pipeline expansion adds another 500,000 bpd of export capacity from Canadian shores.
