A new U.S. deal giving Washington majority control over Venezuelan oil fields is unlikely to bring down gasoline prices before November. Refining capacity, not crude supply, is the bottleneck driving pump prices above $4 a gallon.
Trump announced Friday that the U.S. had secured majority control over Venezuelan fields holding more than 65 billion barrels of oil, saying the agreement would substantially lower gasoline prices "long into the future". On Sunday, he added that Washington would soon use Venezuelan crude to refill the Strategic Petroleum Reserve.
But more Venezuelan crude oil does not immediately translate into cheaper fuel. Venezuela is currently producing roughly 1.25 million bpd, while the new projects target production above 1.5 million bpd. Going substantially beyond that will require more drilling, workovers, better infrastructure and more rigs, according to Rystad Energy.
Gulf Coast refiners need the heavy crude
U.S. imports from Venezuela averaged 637,000 bpd over the four weeks through Aug. 21, reaching 662,000 bpd in the latest week, per the EIA. Venezuela was the second-largest U.S. crude supplier behind Canada during that stretch. Gulf Coast refineries built delayed cokers specifically to process the heavy, high-sulfur crude that Venezuela, Mexico and Canada supply, unlike the light shale crude that dominates U.S. output. Rystad expects heavy and extra-heavy crude to account for roughly three-quarters of Venezuelan production through 2028. That would give Gulf Coast refiners a growing source of heavy feedstock, increasing competition with Canadian and other heavy grades.
Refining capacity is the real constraint
U.S. refinery utilization reached 97.4% in the week ending Aug. 21, the highest in nearly eight years, with crude inputs already near 17.4 million bpd. Replacing one crude barrel with another doesn't add processing capacity. Meanwhile, Middle East refinery runs sit at about 7.3 million bpd, down from 9.9 million bpd before the war in February, and Kpler doesn't expect a full recovery before Q2 2027.
Fuel markets reflect that shortage. The Gulf Coast diesel crack against WTI reached $91.06 a barrel on Aug. 25, up from $30 a year earlier, while the gasoline crack climbed to $40.43 from $16.40. Regular gasoline now sits above $4 a gallon, roughly $1 more than a year ago.
Trump is expected to meet U.S. refiners and fuel retailers this week to discuss lowering gasoline prices, with Valero, Marathon Petroleum and PBF Energy among the companies expected to attend. Venezuelan oil may eventually help, but the deal is unlikely to add enough production before November to change what Americans pay at the pump.
Source: Oilprice.com
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