Venezuela's heavy crude could be swapped for American oil to fill emergency reserve, Wright says

The United States may swap Venezuelan heavy crude for American light or medium oil rather than pump the Venezuelan barrels directly into the Strategic Petroleum Reserve.

Energy Secretary Chris Wright described the option during a CNBC interview while visiting Venezuela. “We'll swap you a barrel of heavy crude for a barrel of light or medium United States crude,” Wright said, calling oil markets fluid.

The proposal addresses a basic quality problem. Venezuelan crude is dense and has a high sulfur content, making much of it unsuitable for the reserve’s current specifications. Venezuela’s Merey-16 and Boscan grades contain more sulfur than the limits defined for Strategic Petroleum Reserve crude and are also denser than much of the oil already held there.

Those differences matter to refiners, whose equipment is configured for specific ranges of density and sulfur. Oil outside those ranges can affect operations, refined-product yields and profit margins. The United States could therefore gain access to Venezuelan crude while replacing it in the emergency stockpile with oil better suited to the reserve’s caverns.

The reserve is at a 44-year low after Washington released up to 172 million barrels as part of an effort to calm global markets during the war with Iran. The release has also prompted concerns about cavern damage and how quickly the United States could respond to a supply crisis. The Strategic Petroleum Reserve is held in underground caverns along the Texas and Louisiana coasts.

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We'll swap you a barrel of heavy crude for a barrel of light or medium United States crude