We’re going to have a longer post about this later today, but Canada’s biggest chip in their trade negotiations was oil and gas. That’s no longer the case. The Venezuelan oil deal and its provisions were released by the White House yesterday, and well, our neighbors to the North have lost a lot of leverage.
From Fox Business’ Elizabeth McDonald:
Canada’s premiers now concerned that Trump’s deal for the US to control 65B barrels of Venezuelan oil will replace Canadian crude and reduce Canada’s influence in the market. 90% – 95% of Canada’s oil exports go to the U.S., worth about $126B. Venezuela could cut that by 40% starting in just a couple of years, oil pros say, so long as Venezuela can get its oil infrastructure back up and running that was destroyed by communism.
Plus Venezuela’s heavy crude can be easily shipped to Gulf Coast refineries specifically configured to process heavy, sour crude they specifically need. Canada’s problem is that Venezuela can more quickly deliver heavy crude the U.S. Gulf Coast by tanker, while Canada has to move much of its oil thousands of miles by pipeline. If Venezuela can restore production, U.S. refiners could have a new, nearby source of the heavy crude they need—and Canada could lose some of its leverage in its biggest market.