“We know that Venezuela has the world’s largest reserves of oil, and we know they’re certainly underproducing their prior peaks by quite a wide margin, just about one million barrels of oil versus peak levels of over 3.5 million decades ago,” Madden said.
“But I think it’s a leap too far to think that all those barrels are going to come immediately back to market and flood the U.S. Gulf Coast and Midwest refineries with Venezuelan heavy crude.”
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Madden said he thinks the situation in Venezuela will have a muted impact on the U.S. market. He said Venezuela is a smaller player in the global economy, with a mostly non-existent trading relationship with the U.S. due to sanctions.
“I think the market is signalling that it’s business as usual, so I think we have to distance the legal and the moral value judgments from the economic reality of it,” he said.
This is about oil, but it isn’t about necessarily pumping more oil NOW, it is more like a diamond mine buying up (well in this case seizing by lethal force) diamond reserves… to keep anyone else from digging them up and driving down current prices.
Venezuelan oil MUST remain off of the world markets by and large in order for the current glut of oil production not to be an economic dead end for oil production companies in the US and elsewhere who overcommitted in a world where EV vehicles are proliferating at a rapid pace.
Ironically the US attacks on Venezuela are about the most anti-capitalist anti-competitive behavior you could imagine.
It is so important to understand the difference in grades of crude oil.
The US’s refining capacity is currently oriented around lighter and sweeter crudes. They can’t just handle a big glut of Venezuelan oil today. They would need retooling and and reconfiguration. And Venezuela needs a bunch of new and reinvested infrastructure if it wants to ramp up its production.
All of that is a large, large amount of capital expenditure, and the people who can put that money down will want solid assurances that the Venezuela arrangement will continue for years and decades.
And Trump is certainly not giving them “long term thinking” vibes right now.
Naw. The capital cost is going to be offloaded to taxpayers and the oil barons will get another yacht or two.
The whole point is to loot Venezuela and make bank while the taxpayers cover the expensive parts and “maintain stability”.
Right and I think Trump doing this was mainly about introducing instability into Venezuela to reduce the likelihood foreign investors will help make this happen that aren’t US companies, and I don’t think US oil companies by and large want oil supply to increase on the world market.