The U.S. refining industry is turning its attention back to Venezuelan crude. Despite holding the title of the world's largest oil producer, attention is focusing on why U.S. President Donald Trump and Secretary of State Marco Rubio have mentioned the need for Venezuelan oil. Analysts say this stems not from an issue of U.S. production volume but from a structural mismatch rooted in refinery infrastructure and differences in crude characteristics.
On the 8th (local time), the Wall Street Journal (WSJ) reported that most of the oil produced in the United States is light and low in sulfur. This shale-derived crude has the advantages of lower refining expense and consistent quality. However, major U.S. refineries were not designed around such light crude. The refining infrastructure across the United States was built to process heavy, high-sulfur, more acidic crude imported decades ago from Canada, Mexico and Venezuela.
In particular, the large refining complexes clustered along the Gulf of Mexico are optimized for heavy crude refining. According to the American Fuel and Petrochemical Manufacturers, about 70% of U.S. refining capacity operates most efficiently when using heavy crude. Nine of the 10 largest U.S. refineries are located in this region, and these facilities struggle to generate sufficient profitability on light crude alone.
Secretary of State Marco Rubio said in a recent ABC interview that "refineries along the Gulf Coast are among the best in the world in terms of heavy crude refining capacity." He noted, "As heavy crude supply tightens globally, refining assets are not being fully utilized." The point was that a structural mismatch has emerged: the capacity exists, but there is not enough crude to run it.
Venezuela is a prime supplier that can address this issue. Venezuela holds some of the world's largest reserves of heavy crude. But in recent years, political and economic turmoil and sanctions have caused oil output to plunge. Most of the small volumes produced have been exported to countries such as Cuba and China, effectively halting supplies to the United States.
As oil exports to the United States from Mexico and Venezuela fell, U.S. refiners turned to Canada. Centered on oil sands, Canada expanded heavy crude production and emerged as the largest oil supplier to the United States. Canada now ships more oil to the United States than all other countries combined. Still, Canadian crude carries constraints in terms of logistics and environmental expense.
As a result, about 40% of the crude processed by U.S. refineries still comes from imports. That is because different crude grades must be blended to produce a range of petroleum products such as gasoline, diesel, jet fuel and asphalt. Relying on a single light crude stream makes it difficult to achieve the optimal refinery slate.
Since the crude export ban was lifted, the United States has exported large volumes of domestically produced light crude overseas. At the same time, it has maintained a dual structure by importing heavy crude to keep the refining sector running. U.S. light crude is exported to India, China, Korea and Europe, while foreign heavy crude feeds U.S. refineries.
In the end, analysts say the reason the United States is revisiting Venezuelan oil lies not in energy shortages but in the structural needs of the refining industry. Despite its appearance as the world's largest oil producer, the "quality" of crude and its "refining suitability" have emerged as the key variables shaping actual energy policy. Accordingly, the U.S. approach to Venezuela may be reoriented around refining infrastructure and supply chain stability rather than crude output.