While we do not expect the US announcement of its oil deal with Venezuela to be substantially problematic for Canada’s crude, it provides an excuse to refresh ourselves on the energy trade with our southern neighbour.

Notwithstanding the rhetoric, Canada’s market share has grown to ~70% of weekly crude imports into the US.

We’d note that this is despite Venezuelan crude imports nearing their pre-sanction levels (as barrels were re-routed from China to the US). It’s an open question whether Venezuelan exports into the US can meaningfully expand beyond that given the substantial investments needed for the country to increase its production.

Even at the peak of Venezuelan crude oil imports into the US in 1997, we’d note that Canada and Venezuela only modestly overlapped (East Coast). Venezuelan crude was mainly imported into the Gulf Coast (PADD 3) where Canadian crude minimally competed.

Fast forward to 2025, less than 10% of Canadian crude oil imports went to the Gulf Coast, limiting any potential disruption; the vast majority feeds refineries in the Midwest. In fact, America’s Midwest and Rocky Mountain refineries are entirely dependent on Canadian crude.

While the US remains the predominant export destination, Canada has been gradually diversifying its export of hydrocarbons…

… with improved market access to Asia enabled by the Trans Mountain Expansion Project.

Admittedly, there is a limit to Canada’s diversification - imposed by the physical constraints of geography and available infrastructure (new pipelines could help).

As illustrated in the 2023 outline of the crude oil pipeline network by CAPP, the design favours sending Western crude into the US before later turning back towards Canada. Put differently, any credible discussion of the crude oil nuclear option must similarly recognize that the US has the technical capacity to turn off oil flow to Ontario and Quebec.