A change in leadership in Venezuela could potentially restore the country’s status as a significant oil producer and also present a challenge to Canada’s thriving oil industry, which has been experiencing growth despite low commodity prices. The Canadian energy sector has seen robust performance, with production on the rise as oilsands operations expand.
Following the removal of Nicolás Maduro in Venezuela by the U.S., Canadian energy company stocks took a hit. There are speculations that Venezuela’s oil industry could undergo a revival with U.S. intervention, raising concerns that increased Venezuelan production could impact the Canadian industry in the long term.
Venezuela holds the world’s largest oil reserves and produces heavy oil, similar to that of Western Canada. If more U.S. companies invest in Venezuela as anticipated, the country has the potential to significantly increase its heavy oil production.
While Venezuela’s oil production peaked in 1970, output has declined due to sanctions and government policies, reaching around 900,000 barrels per day last year. In comparison, Canada produces nearly five million barrels per day, with the majority exported to the U.S.
The revival of Venezuela’s oil industry could pose a future risk to Alberta’s oil-dependent economy, although this scenario is likely years away. Significant investment and stable governance are essential for Venezuela to increase its oil production.
The White House is urging U.S. oil executives to reinvest in Venezuela, but uncertainties surrounding the political situation may deter major capital commitments. While Venezuelan oil may be competitive for U.S. Gulf Coast refineries, the established pipeline network and proximity give Canada an advantage in supplying the Midwest refineries.
With the U.S. being a major customer for Venezuelan crude, potential redirection of oil to the Gulf Coast could prompt China to seek alternative sources. Canada, with its increasing crude oil exports to Asia, could potentially fill this gap, especially with the expansion of the Trans Mountain pipeline.
There is a possibility of building additional pipelines to the West Coast to support increased oil exports. Despite minimal short-term impact on the Canadian oil industry, the events in Venezuela add to the uncertainties faced by an industry already dealing with layoffs and low prices. Political instability remains a factor influencing oil prices in 2026.