Prime Minister Mark Carney has said he’s not concerned about the future of Canadian oil even if Venezuela begins to produce more of the product following the US seizure of Nicolás Maduro.
Speaking to reporters in Paris, Carney said Canadian oil remains competitive because it is “low risk”, “low cost” and “low carbon”.
He said Canada welcomed the seizure of Maduro, which “creates the possibility for democratic transition in Venezuela”.
Canada’s largest export is oil, the vast majority of which is sold to the US. The seizure of Venezuela’s leader has fuelled concerns Canada could lose its biggest customer, and leverage in trade talks with Donald Trump.
Trump has been open about his ambitions for American petroleum companies to scale up their operations in Venezuela following the military operation that captured Maduro.
In an interview with NBC News on Monday, Trump said he believed the US oil industry could be “up and running” with increased operations in Venezuela within 18 months or less, “but it’ll be a lot of money”.
He added that “having a Venezuela that’s an oil producer is good for the United States because it keeps the price of oil down”.
Venezuela is estimated to have over 300 billion barrels of oil reserves, which accounts for 17% of the world’s total reserves. Canada, meanwhile, is home to 10% of reserves.
Canadian energy company stocks fell on Monday morning, but Carney said he did not believe more Venezuelan production would harm domestic oil producers.
Canada is focused on diversifying its exports, particularly to Asia through a proposed pipeline to the Pacific coast, making “Canadian oil competitive in the medium and long term”, he said.
He added that a “functioning, not corrupt” economy in the Latin American country will be good for both the Venezuelan people and the Western hemisphere.
Nearly all of Canada’s oil exports — around 97% — head south to the US, valued at about $100bn (£74bn) in 2023 alone.
While the events in Venezuela has spooked investor confidence in the sector, Heather Exner-Pirot, director of natural resources, energy and the environment at the MacDonald-Laurier Institute think tank, said she expects that to be short-lived.
“I think we’ll see a lot of instability and chaos in Venezuela for at least the next few months,” she said, adding that this likely won’t make it an attractive place for investment.
Derek Holt, vice president and head of capital markets economics at Scotiabank in Toronto, said in an analysis note that “oil pundits may be getting way ahead of themselves”.
“Greater caution is required before leaping to their conclusions that this will unleash a torrent of new supply on world markets with effects that allegedly include snowing under Canada’s oil industry.”
Exner-Pirot said that Canada should still cement its plans to diversify exports away from the US because it is no longer a reliable customer.
Ottawa signed a memorandum of understanding with the Canadian province of Alberta — home to the country’s oil patch — in late November that opens the door to a pipeline to the Pacific. But it faces significant hurdles, including lack of buy-in from neighbouring British Columbia and First Nations groups.
Alberta has until 1 July to submit a formal proposal for the project.
Carney is facing pressure to do so from Conservative opposition leader Pierre Poilievre, who wrote in an open letter to the prime minister that Canada needs to “move millions of barrels a day to overseas markets quickly to reduce our dependence ton the US market”.
He called on Carney to “immediately approve” a pipeline project to the Pacific.
Trade talks between Canada and the US have been on hold since late last year, after an anti-tariff advertisement that was run and paid for by the province of Ontario angered Trump.
Prior to that, the Trump administration and the Carney government were working on a deal to lower tariffs that included more energy exports to the US.
Maduro’s seizure has raised questions on whether Canada still has that leverage. In a post on X, Katie Miller, a conservative political advisor and wife to Trump’s deputy chief of staff Stephen Miller, remarked that “the US doesn’t need anything from Canada”.
But Exner-Pirot noted that there is still demand for Canadian oil, as the Trump administration’s overall stated objective is to lower oil prices rather than replace supply.
“Canada is very low risk, very reliable,” she said, echoicing Carney. “And our oil will look attractive for different reasons”.
