▶ Full Post Text
Seems to be a consensus that Venezuela has not played a significant role in the oil market, and oil is oversupplied with a low price projected for the next few years. If anything, increased supply from Venezuela will squeeze out shale/sands, and lower oil price (good for Trump claiming victory re affordability). But we saw positive stock price moves yesterday from major oils (Chevron, etc.). Seems short-term misinterpretation / wrong-direction hypes, or I'm missing anything? Below is from a digest I got from a newsletter, which seems to be implying the same...
\-----------------------
* The post-Maduro political outlook for Venezuela is highly uncertain, with former President Trump stating the US will 'run' Venezuela via an unspecified 'group' until a safe transition.
* Crucially, there was no damage to Venezuelan oil facilities from the US strikes. Trump indicated that US oil companies would invest billions to fix the broken infrastructure and resume operations.
* Near-term Oil Price Impact:
* Any immediate oil spikes are expected to be "muted/short-lived"
* The market might even see downside, as Saudi Aramco (2222.SR) closed down -1.6%
* A comparison is drawn to the US bombing of Iranian nuclear facilities on June 22, 2025: crude opened +4% but closed -7% the next day, as the market faded supply impact risks
* The risk to oil supply from Venezuela is considered "MUCH more significant" than from Iran previously. Iran was exporting >2.1 million bpd of crude and products, while Venezuela was at only c0.5 million bpd crude last year and <1 million bpd including products at peak
* There is no risk of impedance to oil flow through the Straits of Hormuz (>21 million bpd of crude and product) as there was with Iran
* Global oil oversupply is currently much larger than in mid-2025, providing more room to absorb outages
* Crude positioning is "much less long" now compared to last summer
* Medium-term Oil Price Implications:\*\*
* More likely to be \*\*bearish\*\*
* JPM argued that in a post-Maduro scenario, Venezuelan production could initially fall by 50% but then recover significantly
* Recovery Projections:
* Venezuelan production could recover to 1.2 million bpd in a few months (an increase of +250k bpd vs. the 2025 average) and reach 1.3-1.4 million bpd within 2 years, with potential for further upside
* Venezuela holds the world's largest oil reserves but currently produces only about 1 million bpd, or <1% of total global supply. This low production is due to a lack of investment exacerbated by sanctions and the political backdrop, despite historically producing as high as 3 million bpd in the early 2000s
* Bearish on Crude for 2026 and 2027, with Brent projected to average $58/bbl and $57/bbl respectively, and a risk of $40/bbl without OPEC cuts
* Impact on Other Regions:
* A recovery in Venezuelan refinery runs and product exports would impact the US market
* An eventual return of significant quantities of heavy Venezuelan oil to the US market would pressure Canadian oil sands producers, who filled the gap when sanctions diverted Venezuelan crude to China
* The future call on US shale could also take a hit
* Overall Stance on Oil Equities:
* The newsflow from Venezuela is seen as "ultimately bearish for oil equities" and supports a cautious view on the space.
* Suggest selling into any short-term EU oils strength.
* If oil spikes, it will likely be muted/short-lived
* The cautious outlook for crude prices (Brent averaging $58/$57 in 2026/2027) is "clearly not great for equities".
* Least Preferred Stocks: EQNR (Equinor), Eni (ENI.MI), OMV, AkerBP (AKRBP.OL), and Aker Solutions.
* [2222.SR](http://2222.SR) (Saudi Aramco):\*\* Aramco closed -1.6% on the day the report was written, which is noted as a potential "early indicator of market thinking".
* Regional Impact: Stock implications are expected to have a "larger impact likely on North American than EU oils". This is due to the more direct impact of Venezuelan oil on the US market and Canadian oil sands producers.