Venezuela’s heavy crude isn’t a great fit for the US emergency reserve. It could still help refill it.
More Venezuelan heavy crude could also increase competition for Canada, a major supplier of heavy oil to US refineries.
During his visit to Caracas, US Energy Secretary Chris Wright signed several energy deals with Venezuela. While discussing the potential swap of Venezuela's heavy crude for lighter American oil to refill the Strategic Petroleum Reserve, Wright emphasized that the Venezuelan barrels do not necessarily have to enter the reserve themselves.
Instead, the heavy crude could be traded for lighter US crude, with the US receiving barrels of Venezuelan heavy crude in exchange for barrels of American light or medium crude. This swap could address the mismatch between Venezuela's heavy crude grades and the Strategic Petroleum Reserve's specifications. Additionally, the Venezuelan heavy crude could be redirected to US refineries, while the lighter American barrels obtained through the swap could be used to fill the reserve.
Wright clarified that the barrels in question would not directly go into the reserve, but could instead find their way to US refineries, where they would be processed accordingly. The new agreement also grants North American Blue Energy Partners 100-year concessions over 17 Venezuelan oil fields, with the US government receiving a 35% equity stake in the company's corporate parent, and the State Department gaining the right to buy 20% of the oil produced.
The increased competition from Venezuelan crude could potentially lower prices, which Wright believes would boost consumption.
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