Those wondering what a complete meltdown of Venezuela would mean to global markets might soon find out.

On Jan. 23, opposition leader Juan Guaidó, president of the National Assembly, swore himself in as president of the country, defying sitting President Nicolás Maduro and immediately gaining recognition by the U.S., Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Paraguay, Peru and the Organization of American States. Maduro showed no inclination of stepping aside, blamed the U.S. for a coup attempt and severed diplomatic relations with Washington.

Assuming a stalemate in the short term, U.S. sanctions against Venezuela will deprive Gulf Coast refineries of affordable heavy crude. The country sold an average of 500,000 barrels per day (bbl/d) to the U.S. in 2018, and replacing that volume with supplies from Canada and Mexico is more costly.

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