Oil prices traded slightly higher Monday morning, up 55c to $57.87/Bbl (8:00 AM CT) for WTI amid President Maduro’s capture
- The US carried out a grab operation early Saturday morning and captured Venezuela’s President Maduro
- The Trump administration have been ratcheting up pressure on the Maduro regime with a vessel blockade that targeted Venezuela’s oil exports
- The South American country’s exports fell to a 17-month low in December due to the US blockade (Bloomberg)
- According to Kpler data, many of those vessels were loaded with crude but never left Venezuelan waters due to threat of seizure
- The unknown for the oil market is how oil flows from Venezuela will change due to US actions
- The US said the navel blockade remains in place despite capturing Maduro
- AEGIS notes that in the short-term, geopolitical risk have been heightened putting slight upward pressure on crude oil prices. However, if oil is allowed to flow at pre-blockade levels then this is net bearish prices in the short-term. For reference, Venezuela accounted for only 1% of global crude production and many analysts see volumes returning to pre-blockade levels
Analysts opine on Venezuela’s oil production future (Bloomberg)
- Oil analysts see upside risk to Venezuela’s supply over the long run
- The scope for higher Venezuelan oil out in the long run may eventually pressure global crude prices (Goldman Sachs)
- Regime change in Venezuela would be on the of the largest upside risks to global oil supply in the long run (JPMorgan)
- Consensus is that there will have to be anywhere from $50-$100 billion invested into Venezuela to return the nation to its former production glory – not a short-term task