Prime Minister Mark Carney said he is not concerned about the future of Canadian oil even if Venezuela starts producing more of it after the US arrest of Nicolas 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 welcomes Maduro's takeover, which “creates the possibility of a democratic transition in Venezuela.”
Canada's largest export is oil, the vast majority of which is sold to the United States. The detention of Venezuela's leader has fueled fears that Canada could lose its biggest client and leverage in trade talks with Donald Trump.
Trump has openly stated his ambitions to expand the activities of American oil companies in Venezuela after the military operation that captured Maduro.
In an interview with NBC News on Monday, Trump said he believes the U.S. oil industry could be “up and running” with expanded operations in Venezuela in 18 months or less, “but it's going to be a lot of money.”
He added that “having Venezuela as an oil producer is good for the United States because it drives down oil prices.”
Venezuela's oil reserves are estimated to be over 300 billion barrels, representing 17% of the world's total reserves. Meanwhile, Canada holds 10% of reserves.
Shares of Canadian energy companies fell Monday morning, but Carney said he doesn't believe increased production in Venezuela will hurt domestic oil producers.
Canada is focused on diversifying its exports, especially to Asia through a proposed pipeline to the Pacific Coast, which would make “Canadian oil competitive in the medium to long term,” he said.
He added that the Latin American country's “functioning, non-corrupt” economy would benefit both the people of Venezuela and the entire Western Hemisphere.
Almost all of Canada's oil exports – around 97% – head south to the US, and are valued at around $100bn (£74bn) in 2023 alone.
While events in Venezuela have dented investor confidence in the sector, Heather Exner-Pirot, director of natural resources, energy and environment at the Macdonald-Laurier Institute think tank, said she doesn't expect that to last long.
“I think we will see a lot of instability and chaos in Venezuela for at least the next few months,” she said, adding that this would likely not make it an attractive investment destination.
Derek Holt, vice president and head of capital markets economics at Scotiabank in Toronto, said in a research note that “oil experts may be getting ahead of themselves.”
“Great caution is needed before jumping to conclusions that this will cause a flood of new supplies into world markets, with consequences that presumably include snow falling under Canada's oil industry.”
Exner-Piro said Canada should still cement its plans to diversify exports outside the U.S. because it is no longer a reliable buyer.
In late November, Ottawa signed a memorandum of understanding with the Canadian province of Alberta, home to the country's oil region, that opens the door to a pipeline to the Pacific Ocean. But it faces significant obstacles, including a lack of support from neighboring British Columbia groups and First Nations.
Alberta has until July 1 to submit a formal proposal for the project.
Carney faces pressure from Conservative Opposition Leader Pierre Poilevre, who wrote in an open letter to the prime minister that Canada needs to “quickly move millions of barrels per day to overseas markets to reduce our dependence on the US market.”
He called on Carney to “immediately approve” the pipeline project to the Pacific Ocean.
Trade talks between Canada and the United States have been stalled since late last year after an anti-tariff ad run and paid for by the province of Ontario angered Trump.
Before that, the Trump administration and the Carney government worked on a tariff reduction agreement that included increasing energy exports to the United States.
Maduro's arrest has raised questions about whether Canada still has that kind of leverage. In a post on X, Katie Miller, a conservative political adviser and wife of Trump's deputy chief of staff Stephen Miller, noted that “the US doesn't need anything from Canada.”
But Exner-Piro noted that there is still demand for Canadian oil because the Trump administration's overall stated goal is to lower oil prices rather than replace supply.
“Canada is very low risk, very reliable,” she said, echoing Carney. “And our oil will look attractive for a variety of reasons.”
