Venezuela’s oil exports to the United States remain the primary cash resource for its state-owned oil company, and efforts by the U.S.to cut off that revenue would likely force it to send crude to China, India or other Asian countries.

U.S. refineries that depend on Venezuela’s heavy crude would have even more trouble securing supplies as Canadian and Mexican crude are often not as discounted and are limited in availability.

The U.S. has considered moves to cripple Venezuela’s oil shipments, which account for nearly all of the country’s exports, in response to the reelection of socialist President Nicolas Maduro, a vote that was widely viewed as a sham. However, it has not yet taken that step, nor has it elected to cut off supply of U.S. oil that goes to Mexico.

Washington has recognized opposition leader Juan Guaido as Venezuela’s head of state.

Guaido is considering naming a board to state-run PDVSA’s U.S. subsidiary, Citgo Petroleum, in a gambit to generate revenue for the opposition.

Venezuela, on average, exported about 500,000 barrels of crude a day to the United States in 2018, according to U.S. Energy Department data.

The U.S. share of its exports has declined in recent years, with more shipments going to Russia and China.

Those deliveries are being made largely through oil-for-debt repayment structures as output from Petróleos de Venezuela, S.A., (PDVSA), has slumped to near 70-year lows during a nationwide economic crisis. Venezuela’s output has been cut in half since 2016 to less than 1.2 MMbbl/d, according to figures from OPEC secondary sources.

Shipments to the U.S. account for about 75% of the cash Venezuela gets for crude shipments, according to a Barclays research note published last week. The primary importers of Venezuelan crude are Citgo, Valero Energy, and Chevron.

The country could seek additional deals with Turkey, India or other Asian nations. Gas Energy, a Caracas-based consultancy, said in a report that India was the second-largest importer of Venezuelan crude in November.

“While Venezuela will be hard hit the first month, they will find some market for their crude,” said Diego Moya Ocampos, principal Americas analyst in country risk at IHS Markit.

Though the U.S. produces nearly 12 MMbbl/d, complex Gulf Coast refineries need heavier crude grades to produce diesel and other high-margin products, and cannot simply sub in light crude.

Prices of heavier U.S. grades like Mars Sour, an offshore medium U.S. crude, and Heavy Louisiana Sweet crude have risen as buyers scramble for supply. Mars traded at a $7.10 premium to U.S. crude on Jan. 24, a five-year high, according to Refinitiv Eikon data, as bidders came into the market to secure supplies through the second quarter, traders said.

“It would make a tight market even tighter. If it happens, it would be an unambiguous headwind for refiners already struggling to find supplies,” said Bob McNally, president of Rapidan Energy Group, an energy consultancy in Bethesda, Maryland.

Traders said the U.S.may need to sell oil from the U.S. Strategic Petroleum Reserve to cover supply shortfalls as additional shipments are secured via Canada or Mexico.

Sanctions could also include U.S. exports of petroleum products to Venezuela that are used for blending with Venezuelan heavy crude.

Federal Waters