Bear in mind that Venezuela may have the largest oil reserves in the world, and that this may make OPEC nervous. However, how nervous can oil that is not so sweet make them?
Readers should bear in mind that in Latin America, the hydrocarbon industry, and specifically the oil industry, requires superlative investment, given that Venezuelan oil is too heavy, not as light as, for example, Saudi oil. This means that it is necessary to ‘import more light oil’ in order to mix it with local oil. Let’s say that, for practical purposes, Venezuelan oil looks more like mud than anything else, and I very much doubt that anyone wants to fill their car’s tank with mud, or am I wrong?
Don’t get me wrong, oil is oil, but this makes it more difficult to refine and, therefore, also means it has to be sold at a higher price on international markets. This means that it would not be profitable to sell it at market prices because it is not competitive.
In addition, the country risk is brutal because the current reforms led by interim President Delcy Rodríguez continue to keep Venezuela’s natural resources nationalised, and that should concern any investor, since they could invest billions of dollars and then lose all the infrastructure required to refine Venezuelan oil, making any other US operation using fracking even more profitable.
Think about it this way: Will Trump win the midterm elections? Well, I think Polymarket will be right in saying that he most likely won’t, and what will happen to all the money invested in Venezuela? You don’t need to be a missile pressurisation engineer to know that!
Let’s say that investing in Venezuelan oil becomes a coin toss, with both sides potentially leading to gains or losses inversely proportional to current expectations. Proof of this is that a new Democratic government in the United States of America would bring about a Copernican shift in the country’s international policy. I doubt that ‘America First’ or ‘MAGA’ will be sustained by a new Biden or Kamala or a future Obama 2.0.
But let’s dig deeper: is there a real attempt to open up the Venezuelan oil industry to the world, or are we facing a massive manoeuvre to deport even more Venezuelan immigrants? Or is it a smokescreen for the Epstein files, desperately trying to prevent a political trial?
Well, what is in plain sight does not require glasses…
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