Traders See Little USWC Impact Amid Venezuela Conflict


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- Developments in Venezuela have drawn renewed attention 
across global crude and refined product markets, but traders on the U.S. West 
Coast say the situation is unlikely to materially affect gasoline or distillate 
pricing in California, where supply dynamics remain driven far more by local 
refinery operations than by changes in Latin American crude flows.

   "I don't think the situation in Venezuela will affect USWC," one U.S. West 
Coast trader said, pointing to the region's limited exposure to Venezuelan 
barrels and the structural isolation of the California fuel system.

   California refineries primarily process a blend of domestic crude from 
Alaska,  ANS, and the U.S. Lower 48 states, along with imports of Napo and 
Oriente crudes from Ecuador, Castilla Blend from Colombia and, at times, 
Arabian Heavy from the Middle East. Venezuelan crude has not been a meaningful 
feedstock for California in recent years, data from the Energy Information 
Administration shows. " While U.S. imports of Venezuelan crude have partially 
resumed, those barrels have largely flowed into U.S. Gulf Coast refineries, 
with little to no domestic crude and imports from the Latin America and Middle 
East," the EIA says.

   As a result, market participants say shifts in Venezuelan production or 
exports are unlikely to translate into immediate changes in West Coast refined 
product balances.

   Instead, traders continue to focus on refinery reliability and operational 
issues within the state, which historically have had a far greater impact on 
prices than global geopolitical developments. California operates as a 
constrained fuel market, dependent on a small number of refineries producing 
CARB-compliant gasoline, with limited ability to quickly replace lost barrels 
through imports or inter-regional transfers.

   That dynamic has kept the market sensitive to outages that could push spot 
prices higher dramatically. In recent weeks, however, at the onset of the new 
year, prices have remained relatively steady amid the absence of new 
disruptions.

   Spot gasoline markets on the West Coast opened the new year on stable 
footing. Los Angeles CARBOB traded at a 20 ct premium to February NYMEX RBOB 
futures, while San Francisco CARBOB was assessed at a 25 ct premium to the same 
contract. Market participants said values have held within a narrow range since 
the start of January, reflecting balanced supply conditions and the lack of new 
refinery flares.

   Looking ahead, participants said any sustained move in West Coast gasoline 
prices is more likely to be triggered by refinery issues, seasonal maintenance, 
or unexpected demand shifts than by developments in Venezuela.

   "Venezuela's aging petroleum infrastructure would require substantial 
investment to significantly increase output, making it unrealistic to expect 
that higher Venezuelan production would quickly translate into cheaper gasoline 
prices on the U.S. West Coast," Paul Ronney, professor and chair of Dept. of 
Aerospace and Mechanical Engineering at the University of Southern California, 
said. "Venezuelan oil is very heavy and high in sulfur, which makes it more 
expensive to produce and refine than lighter U.S. grades like West Texas 
Intermediate."




(c) Copyright 2026 DTN, LLC. All rights reserved.