Canadian Heavy Oil Sells at Deepest Discount in 18 Months

Canadian heavy crude prices have fallen sharply, with Western Canada Select (WCS) now trading at its widest discount to the North American benchmark in 18 months. The drop comes amid political upheaval in Venezuela and renewed expectations that more Venezuelan oil could soon flow into the United States market.

As of this week, WCS was selling at a discount of about $14.45 per barrel compared to West Texas Intermediate (WTI), the primary benchmark for North American oil. While Canadian heavy crude has historically traded at a discount due to quality and transportation factors, this is the largest gap seen since July 2024.

Analysts say the widening spread is being driven by developments in Venezuela, where the U.S. government has taken control of oil tankers and announced plans to increase Venezuelan oil production within the next 18 months. President Donald Trump also confirmed a new agreement under which Venezuela could supply up to 50 million barrels of oil to the U.S.

Venezuela produces a similar grade of heavy crude to Canada, meaning the two countries compete directly for the same refinery space—particularly along the U.S. Gulf Coast, which receives roughly 10 per cent of Canada’s total oil exports, or about 350,000 barrels per day.

Economists warn that even a modest increase in Venezuelan supply could pressure Canadian prices. “It doesn’t take much additional production from Venezuela reaching the Gulf Coast to impact pricing,” said ATB Financial chief economist Mark Parsons, noting that markets are already reacting to the possibility of increased competition.

However, Parsons added that a major rebound in Venezuelan output would take years and require significant investment. Venezuela’s oil production peaked at 3.7 million barrels per day in 1970, but years of sanctions, underinvestment, and policy failures have reduced output to around 900,000 barrels per day in recent years.

While the current price drop is not yet seen as a long-term threat to Canada’s oil sector, industry experts say the situation underscores how sensitive Canadian heavy crude prices are to global supply shifts—especially when competing producers re-enter key U.S. markets.