I have nearly completed a story on the refining sector, which I had planned to publish today. In connection with the story, I was planning on increasing the Buy limit for Marathon Petroleum (NYSE: MPC), which has surged past the buy target since being added to the portfolio last October. I was also planning on recommending a new position in Valero (NYSE: VLO) for reasons I will detail in that story.

However, the late-breaking news is that the Trump Administration is considering significant sanctions on oil imports from Venezuela. The threat of sanctions is in response to Venezuelan President Nicolas Maduro’s pledge to rewrite his country’s constitution on July 30. President Trump promised that if he followed through, the US “will take strong and swift economic actions.”  

According to the most recent data from the Energy Information Administration (EIA), the U.S. presently imports 800,000 barrels per day (BPD) of oil from Venezuela. This ranks Venezuelan imports third behind Canada and Saudi Arabia, but Venezuela is the top source of foreign oil for U.S. Gulf Coast refineries.

According to S&P Global Market Intelligence, a total of 13 US refineries imported Venezuelan crude in 2016. The Phillips 66 (NYSE: PSX) Sweeny, Texas Refinery imported just over 46 million barrels of Venezuelan crude last year, the most of any US refinery in 2016. Citgo’s Lake Charles, Louisiana, refinery was second with nearly 45 million barrels of Venezuelan crude in 2016, according to EIA data. Venezuela’s state oil company, PDVSA, owns Citgo. 

The Trump Administration has said that action could be imposed next week and that all options are on the table. A full ban of Venezuelan crude would indeed impact refiners, but some would see their margins hit harder than others.

As a result, I want to take the weekend to further investigate which refiners are at the greatest risk prior to making new recommendations. In any case, my intention is to publish the refining story on Monday, which will likely include new advice on MPC and VLO.