Canada Produces A Lot Of Oil. So Does Venezuela

[ad_1] by BLACK ENTERPRISE Editors January 18, 2026

Venezuela has the most important oil reserves on this planet: estimated at 300 billion barrels.

Politicians in Alberta like to assert credit score, or solid blame, in the case of the worth of a barrel of oil. Low costs are Ottawa’s fault, or the earlier authorities’s — its laws or coverage or ideology or some mishmash of all three. Excessive costs are the results of prudent governance, in fact.

In actuality, Canada, and Alberta particularly, are on the mercy of worldwide markets and international powers which can be largely outdoors both’s management — inventory markets, political upheaval, election cycles and struggle all affect the worth. To not point out the basics of provide and demand.

It’s why the U.S. assault on Venezuela, and assertion of management over its oil, is popping heads right here within the north, and elevating all types of questions on the way forward for Canada’s oil trade. Venezuela has the most important reserves on this planet.

The Narwhal appears at how international oil markets work, and why Venezuela, particularly, is inflicting a lot concern in Canada.

Actual fast — how a lot oil do Canada and Venezuela produce? As talked about, Venezuela has the most important oil reserves on this planet: estimated at 300 billion barrels.

By comparability, Alberta has 159 billion barrels.

However Venezuela’s rulers nationalized the oil and fuel trade, kicking out all however one of many remaining U.S. corporations in 2007 (Chevron remained underneath a particular deal and ships small quantities to the U.S.) and drove it into the bottom, leaving its infrastructure in tatters and driving away its specialists.

In the meantime, Venezuela has been the topic of U.S. sanctions since 2019.

So it hasn’t been as huge of a participant because it may have been lately — and Alberta has been growing manufacturing.

Provide and demand is the quick reply right here. If there’s a whole lot of demand for oil and never sufficient provide, the worth goes up, or if there’s loads of provide and never sufficient demand, the worth goes down.

What’s provide? Properly, say an oil-rich nation like Saudi Arabia decides to flood the market. Costs go down. Bear in mind the beginning of the COVID-19 pandemic, when a barrel of oil was value lower than a bottle of maple syrup? Saudi Arabia had flooded the market and demand was down as folks stayed residence.

An excessive amount of provide is about the place the worldwide markets at the moment are, even earlier than Venezuela was an element. Costs have been depressed, though not dramatically, with an oversupply of oil that’s solely anticipated to extend — merely attributable to provide outpacing demand.

Demand can also be forecast to say no, however there’s debate round when that can occur. The Worldwide Vitality Company, which beforehand forecast a speedier drop within the coming years, revised its forecast to point out demand rising till 2050 if present authorities insurance policies stay throughout the globe, nevertheless it may decline sooner if governments take extra motion on decreasing carbon emissions.

Regardless, oil producers are cautious, centered on reining in prices. In Canada, the most important oil gamers aren’t constructing huge new oil tasks and have been trimming employees whereas wooing stockholders with dividends.

There are barrels, after which there are barrels — why are there completely different oil costs? The value of oil varies throughout areas and throughout various kinds of oil.

In Canada, the most important commodity is heavy oil from the oilsands, however there are additionally lighter varieties, the form of crude that most individuals take into consideration once they image pumping oil out of the bottom.

On Jan. 6, days after the U.S. assault on Venezuela, the worth for a barrel of American oil was about $78, whereas a barrel in Canada was going for round $58.

That unfold is what’s generally known as the worth differential, one thing that has been a significant headache for Canadian producers up to now when there was a large gulf between the 2 benchmarks.

That differential has shrunk lately, partly as a result of development of the Trans Mountain pipeline enlargement, which allowed Canada to promote extra oil on the worldwide market fairly than relying virtually solely on the U.S. as a buyer — a key driver of suppressed costs.

Previous to that, producers would promote oil at a reduction to refineries within the U.S., which had loads of provide and will afford to be choosy, significantly as oilsands manufacturing surged.

TD Economics has warned the worth differential may enhance if sanctions on Venezuelan oil are eased and extra crude oil begins to circulation, probably reversing the positive factors from the Trans Mountain enlargement.

It’s additionally typically costlier to tug oil sands out of the bottom than, say, drilling a nicely over a recognized area of shallow reserves.

Going again to these refineries, it’s essential to notice that many U.S. refineries are set as much as deal with the heavy oil that Canada produces. There are the Midwest refineries which can be stuffed with Canadian crude, and the Gulf Coast refineries, which additionally deal with a justifiable share of our northern provide.

And that’s the place Venezuela is available in as a probably important issue.

With the current assault and the rhetoric spewing from the U.S., there’s motive to consider that Venezuelan manufacturing may ramp up, albeit slowly and with out a complete lot of private-sector enthusiasm.

These Gulf Coast refineries within the U.S. are a brief tanker journey throughout the Caribbean from Venezuela, which simply so occurs to have large deposits of the identical thick oil that’s produced in Canada’s oil sands.

So if that area dramatically will increase manufacturing, Canadian crude shall be pushed out. Important manufacturing would additionally pour into the worldwide market, which is at present oversupplied and anticipated to see a big glut in 2026.

That will drive costs down around the globe — a double whammy for Canada.

One factor that appears clear is that Venezuela will be unable to supply thousands and thousands of further barrels of oil in a single day. The nation’s infrastructure is in poor form and its specialists have fled to different international locations.

Experiences say the White Home has been pressuring U.S. oil and fuel corporations to get on board and spend money on the nation, however that can require billions of {dollars} or extra. It doesn’t seem as if many are too excited on the prospect.

There’s no assure of political or monetary safety in Venezuela which is able to make any firm cautious of pouring giant sums into the realm.

It’s a bonus Prime Minister Mark Carney highlighted whereas in Paris this week, saying Canadian oil is “clearly low-risk and low value.”

So what? Whereas Venezuelan oil won't flood into the market in a single day, the impacts of the assault are already being felt in Canada.

Politically, Alberta Premier Danielle Smith wasted no time arguing the prospect of Venezuelan oil means a brand new pipeline to the West Coast has to occur instantly — though there’s nonetheless no firm that wishes to construct it.

Alberta has tied its fortunes to grease and fuel costs, with nonrenewable assets forming the single-largest supply of presidency income — 27% of all income in 2024-2025. So when the worth drops, the federal government can shortly go from surplus to deficit, virtually in a single day. A one-dollar change in value means a $750 million swing.

Lengthy-term, if Venezuela does come on-line with important manufacturing, Alberta could possibly be hit arduous, impacting residents and authorities providers. Oil and fuel can also be Canada’s most important export.

On the flip aspect, the push for a brand new pipeline may lock in long-term dependence on oil and fuel assets because the world transitions to electrification and political stress may imply giant sums of public {dollars} are pumped into supporting that infrastructure. Critics have warned of the actual prospect of stranding important investments as demand for oil falls.

Even with out the market impacts of Venezuelan oil, there's now additionally the primary concrete instance of a U.S. authorities — that’s more and more searching for management over assets and economies within the Western Hemisphere — exhibiting it isn’t averse to utilizing its army energy to realize these ends.

Any nation with useful assets on this hemisphere is now probably in danger from a rustic with extra wealth and energy than another on this planet, and with seemingly few scruples about flexing its would possibly.

That provides a degree of uncertainty that would add to the cautious strategy of Canadian oil producers, including one other layer to the financial repercussions of the present second.