Oil was up in early trading on Friday and could close out the week with a slight gain, but benchmark prices were remarkably flat given the turmoil raging in Venezuela.
Venezuela’s military backs Maduro. Venezuela has been rocked by turmoil this week, with the Maduro regime teetering on the brink of collapse. The U.S., clearly seeking regime change in Venezuela, recognized the head of the national assembly, Juan Guaidó, as the rightful president on Wednesday, which corresponded with massive nation-wide protests. However, by Thursday, the military stuck by President Maduro , which will provide the leader a lifeline. In the meantime, Venezuela’s oil production is expected to continue to decline. Guaidó has offered some details on new plans for the oil sector, including new picks to head up Citgo and PDVSA. He is trying to obtain control of the country’s oil assets, but with the military backing Maduro for now, there is no sign of an imminent downfall. Billions of dollars’ worth of investment from Russia and China are on the line .
U.S. sanctions on Venezuela possible. News reports suggest that the Trump administration is mulling harsh sanctions targeting Venezuela’s oil sector. It is unclear if the administration will follow through, but if it did, sanctions would hit U.S. Gulf Coast refiners that depend on heavy oil from Venezuela, including Citgo, Valero (NYSE: VLO), Chevron (NYSE: CVX) and PBF Energy (NYSE: PBF).
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30 years ago I went to Venezuela. Living conditions were terrible then, so it must be even worse now. I sure hope our young people learn from this that Socialism NEVER WORKS. Power ends up in the hands of few who are corrupt. 99% of the people end up living in poverty. Pray for the poor folks in Venezuela. This will be a blood bath if Maduro decides to fight it out.
Venezuela Update - Jan 25
Venezuela Update - Jan 25
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group