US gains leverage over Canadian oil, weakens China amid US plans to overhaul Venezuelan oil market

The Trump administration's plans to revitalize the Venezuelan oil market puts the United States at an advantage over Canada and serves to weaken China, according to energy experts.  

Conservative politicians, including the leader of Canada's conservative opposition party, are calling on Canadian Prime Minister Mark Carney to approve a new Pacific coast pipeline to help aid the country's oil exports to overseas markets, amid fears that the United States' involvement in Venezuela's market will significantly impact the competitiveness of Canadian oil. Canadian lawmakers are concerned that increased oil exports from Venezuela to the United States, which is Canada's largest oil purchaser, will displace oil from Canada, forcing the country to drop its prices in order to stay competitive. 

Meanwhile, experts have added that the U.S. involvement in Venezuela's oil market will also serve to weaken China. 

"This is going to be bad for all petrostates, and Canada is basically a petrostate," Energy and Environment Legal Institute's Steve Milloy, a former fossil fuel industry lobbyist, told Fox News Digital. 

TRUMP TELLS SCARBOROUGH US WILL KEEP VENEZUELA OIL WHEN PRESSED ON IRAQ COMPARISONS

A "petrostate" is a term used to describe a nation whose government and economy heavily rely on revenue from oil and natural gas exports. 

"Canada, like all petrostates — Iran, all of OPEC, all those people — are going to be at our mercy," Milloy added. 

The leader of Canada's conservative opposition party, Pierre Poilievre, said in a letter to Carney Tuesday, that the country needs to "move millions of barrels a day to overseas markets" in order to reduce Canada's "dependence" on the United States' oil market. 

"Venezuela's re-entry to American markets means time is running out," Poilievre told Carney in his letter, arguing "our sovereignty depends" on buffering the Canadian oil markets from the United States' influence amid its plans to go into Venezuela and overhaul its oil. 

"Recent events surrounding Venezuelan dictator Nicolás Maduro emphasize the importance that we expedite the development of pipelines to diversify our oil export markets, including a new Indigenous co-owned bitumen pipeline to BC’s northwest coast to reach Asian markets," Alberta Premier Danielle Smith also said Monday.

But, according to Carney, Canadian oil will remain "competitive," citing its "clearly low risk" and "low cost" due to the country's stable governance, Reuters reported Tuesday. "That makes Canadian oil competitive for the medium and long term," Carney said. "We welcome the prospect of greater prosperity in Venezuela, but we also see the competitiveness of Canadian oil."

3 KEY TAKEAWAYS FROM TRUMP'S PUSH TO PUT US OIL FIRMS BACK IN VENEZUELA

However, Milloy argued that if Canada is "forced to sell cheaper oil" it will significantly impact the country's ability to generate revenue. But, Milloy also noted, it is also slightly "premature to say what's going to happen just yet" as it will take time for the impact of the United States' intervention in Venezuela's oil market to take shape.

"There's a lot yet to be worked out," Milloy said.   

In addition to Canada, Milloy suggested that President Donald Trump's decision to go into Venezuela and take over its oil market also helps the United States' leverage over China.

"Another important factor is that a lot of Venezuelan oil went to China," he pointed out. 

"China is basically oil poor, and that's why China has been trying to electrify everything. They have a lot of nuclear power there, they're running as much solar and wind as they can because they're oil poor, they don't have natural gas and and they need to insulate themselves when they do something stupid like invade Taiwan," Milloy said. "If they're dependent on oil and gas, the global market will just shut down. There will be an embargo, and they'll be screwed. So they're trying to electrify everything as much as possible — the trucks, the cars, just everything. And this is just another lever on China … They were buying their oil from Venezuela, probably at a cut-price, and that's going to end. Trump said he would sell oil in China, but it's not going to be a cut-price."

That sentiment was also echoed by U.S. Oil and Gas Association President Tim Stewart.

"Long term, what this does now, is it puts 40% of the entire production in the world under the U.S. security umbrella — that's from Alberta to Argentina. And it completely resets the global geopolitical world in terms of the U.S.'s ability to project its interests across the world. We can do things internationally without having an immediate price spike in crude," Stewart told Fox News. 

"Venezuela is the poster child for the Belt and Road Initiative. The numbers I saw with Venezuela now is about $20 billion to China over just the course of the last few years, and that's largely backed by crude shipments," Stewart continued. "What this says to China is ‘I’m sorry, but your failure to plan with good borrowing partners does not constitute our financial obligation.' It also sends a message to China, ‘Hey get out of our hemisphere.’ …  (China) takes about 80% of Venezuela's crude right now so it's going to have a big impact on them."