United States captures Maduro - What Does That Mean for Oil Markets in the Northern Hemisphere?

Maduro Captured

As you are most likely aware, on January 3rd of 2026, a Delta Force squadron captured the leader of Venezuela, Nicolás Maduro, and extracted him to New York to face a number of federal charges. This has led to conflicting feelings, controversy, and debate online, but what does this action mean for the northern hemisphere's gas markets? Not long after Maduro's capture, Trump took action seemingly in the hope of taking advantage of Venezuela's substantial oil output,

Oil is one of Venezuela's primary industries, accounting for over 80% of its exports. In fact, they sit on the largest oil reserve in the world. And because of these large reserves, Trump has reported that large American oil companies will return to Venezuela to rebuild their long-neglected oil infrastructure following their removal in 1976 after Venezuela formally nationalized its oil industry. This news was also followed by further reports by Trump that America will seize 30-50 million barrels of oil and send that oil to the United States. With the US taking somewhat substantial control over Venezuela's economy, mainly its oil industry, this led some to believe that Venezuela could become an energy powerhouse, mainly relying on the US. This signals risks for Canada, as the country sends 97% of its oil to the United States and could eventually see those exports substituted by more affordable Venezuelan oil.

Venezuela's economy fails

Maduro was elected in 2013 following the previous leader's death. Maduro was accused of rigging elections to hold on to power, leading to sanctions from many world superpowers, including the United States. In 2019, the United States imposed a complete embargo on transactions with Venezuela's national oil company, the PDVSA, effectively cutting off exports to key markets like India and the European Union. And as a result of these factors and a decrease in the price of oil in the mid 2010s, we saw Venezuela's economy nosedive. GDP contracted to less than a third of its previous size in 2012, and the country experienced a period of hyperinflation that saw prices rise by hundreds of thousands of Venezuelan bolívares while oil production also fell by over two-thirds.

Canada Vs Venezuela

Both Venezuela and Canada produce the same type of oil that is high in sulfur content, thick, and much harder to process. The US has long built most of its oil infrastructure to specifically handle and refine this type of heavy oil, as in the early 2000s, the US imported almost half of Venezuela's oil output a day. And because of this, a prominent number of oil refining sites in the US are located on the Gulf Coast, where oil can be easily imported from Venezuela via tanker.

And because of this, there are concerns that if the US is to build out Venezuelan oil infrastructure, oil imports per day from Canada could mostly be replaced by Venezuelan oil purely because of Venezuela's extremely large reserves. Although, as of right now, the US does not have the infrastructure to immediately substitute its Canadian oil imports. American oil refineries are broken up into PADDs or Petroleum Administration for Defense Districts, with five separate ones being spread across the United States. Currently, 78% of Canada's oil is sent to PADD 2 and 4. These PADs are positioned on the Canadian border and the west coast, where it would not make economic sense to replace Canadian oil, as the shipping costs to transport Venezuelan oil to these areas would outweigh the difference in price between the two countries. There could still be a substitution at the other 3 PADDs, but those make up a much smaller percentage of Canadian oil imports. This could also be less economical, as there are thousands of miles of pipelines connecting American oil refineries to Canada; transferring Venezuelan oil by boat or plane is very likely more expensive than abandoning these Canadian pipelines. Repairing Venezuela's decades-old abandoned oil infrastructure could also cost upward of one hundred billion dollars if companies were looking to restore Venezuela to its original peek and this would still take an estimated 10 years. Whether large oil companies are willing to make that investment in an unstable country like Venezuela is still being speculated. If we are not to see a large change either in the country of Venezuela or a lack of production in Canada, Venezuelan oil may not do as much economically as many have believed.