Why More Venezuelan Oil Won’t Solve America’s Gasoline Problem

The article discusses why more Venezuelan oil won't necessarily solve America's gasoline problem, despite Trump's recent announcement of securing majority control over Venezuelan fields containing over 65 billion barrels of oil. While the new agreement would indeed increase U.S. supply and potentially lower gasoline prices in the long term, the effect on prices will depend on several factors.

First, Venezuela is currently producing around 1.25 million barrels per day (bpd), and the new projects aim for production above 1.5 million bpd. However, reaching these higher production levels will require significant investment in drilling, workovers, improved infrastructure, reliable access to diluents, and more drilling rigs.

Second, Venezuela's heavy crude is particularly well-suited to the sophisticated refineries lining the U.S. Gulf Coast, but this doesn't directly translate into lower gasoline prices. The Gulf Coast has built refineries capable of processing heavy, high-sulfur crude from Venezuela, Mexico, and Canada, but the shale boom has flooded the U.S. with light crude that produces far less residual feedstock compared to Venezuelan Merey.

Therefore, while higher Venezuelan production could give Gulf Coast refiners a growing source of the heavy feedstock their complex equipment was built to process, it won't necessarily add processing capacity. The ultimate constraint on gasoline prices remains the global refinery capacity, which is already at 97.4% utilization, with crude inputs at about 17.4 million bpd.

Brief written by urgent.news from OilPrice's own syndicated text. Machine-written — may contain errors; check the original before relying on it.