The post analyzes how loaded Venezuelan tankers escaping the US blockade could create a crude supply shock, raising diesel and marine logistics costs and potentially pushing crude toward the $65/bbl needed for Exxon and Chevron project economics.
XOM — WATCH The author argues that if US enforcement against Venezuelan tankers creates a heavy-crude supply shock, crude prices would need to rise toward $65+/barrel, which would improve the economics of Exxon Mobil's Orinoco Belt steam extraction and offshore projects and justify their investment. The catalyst is the dozen loaded tankers that left Venezuela in dark mode and possible US blockade enforcement; the stated alternative/risk is that cargoes go to China/India as before and prices stay flat.
Now for the Exxon and Chevrons of the world this justifies the exploration/investment in steam extraction in the Orinoco Belt onshore and new offshore platforms, but they’d need a ~$65 a barrel floor to keep the lights on and break even.
CVX — WATCH The author argues that if US enforcement against Venezuelan tankers creates a heavy-crude supply shock, crude prices would need to rise toward $65+/barrel, which would improve the economics of Chevron's Orinoco Belt steam extraction and offshore projects and justify their investment. The catalyst is the dozen loaded tankers that left Venezuela in dark mode and possible US blockade enforcement; the stated alternative/risk is that cargoes go to China/India as before and prices stay flat.
Now for the Exxon and Chevrons of the world this justifies the exploration/investment in steam extraction in the Orinoco Belt onshore and new offshore platforms, but they’d need a ~$65 a barrel floor to keep the lights on and break even.