Why Venezuelan Crude Won't Lower Gas Prices Immediately

While U.S. Gulf Coast refineries are technically optimized to process Venezuela’s heavy, high-sulfur crude, the current crisis is rooted in a severe lack of refining capacity rather than a shortage of raw oil. U.S. refineries are already operating at 97.4% capacity, the highest level in nearly eight years. Replacing expensive heavy feedstocks with Venezuelan imports may improve refinery economics, but it does not expand the actual throughput required to convert crude into gasoline and diesel.

Global fuel markets remain constrained by a massive shortfall in refined products, with Middle Eastern refinery output down by roughly 2.5 million barrels per day compared to pre-conflict levels. S&P Global reports that gasoline cracks have climbed to $40.43 per barrel, more than double their value a year ago. Even with the new agreement, Rystad notes that increasing Venezuelan output beyond 1.5 million barrels per day will require years of intensive investment in infrastructure and drilling rigs. As the White House prepares to meet with executives from Valero, Marathon Petroleum, and PBF Energy, the disconnect remains clear: while more Venezuelan oil can lower crude costs, it cannot bridge the multi-million-barrel deficit in global refined product supply.