Five oil knowns and unknowns surrounding Venezuela
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Five days after the toppling of Nicolás Maduro, let's take stock of knowns and unknowns about Venezuela's oil and White House plans.
Why it matters: The White House sees control of Venezuela's oil as a pillar of its hemispheric strategy — and a big U.S. business opening.
Here are five takeaways after a wild week...
1. Control of oil is the story. Trump officials revealed Wednesday that they plan to directly handle Venezuelan oil sales and revenue "indefinitely" via U.S.-controlled accounts in major global banks.
- Trump's lieutenants claim this will benefit both Americans, and Venezuelans who haven't shared in resource wealth under the Maduro regime.
- Under the Trump team's plans, the U.S. could take "some control" of state-owned oil giant PDVSA, the Wall Street Journal reported last night.
2. Trump's business aim is not subtle. Venezuela is "going to be purchasing ONLY American Made Products, with the money they receive from our new Oil Deal," Trump said on social media on Wednesday.
- This includes farm products, medical equipment and medicine, and power infrastructure.
- His comment goes further than a DOE document posted yesterday. It said the U.S. would authorize imports of oilfield equipment and services from American companies and "other international energy partners."
3. Dems want info on Big Oil. Top Senate Democrats on several committees jointly penned letters — like this one — to Exxon, Chevron, and other heavyweights.
- The members write that they have "serious concerns about how the Trump Administration engaged with the oil companies" before using force in Venezuela.
- It's a preview of what's to come if Democrats retake the House or Senate.
4. A muted oil industry speaks volumes. The biggest U.S. firms have said little about the White House vision of domestic players rebuilding Venezuela's broken-down oil infrastructure.
- Analysts say companies will be hesitant to invest billions of dollars amid huge legal and financial uncertainties and modest prices.
5. Markets aren't reaching firm conclusions. Oil price movements have been modest, suggesting traders don't predict large new Venezuelan flows anytime soon.
- Slight declines show that Maduro's ouster seems slightly bearish in what's already a soft market. Stock prices of big U.S. oil companies haven't seen huge changes amid their silence about big new investments.
- But shares of oilfield services heavyweights — Baker Hughes, Halliburton, and SLB — are sharply up. This suggests traders see nearer-term opportunities for them in working over existing wells to boost output.
What we're watching: Oil execs' huddle with President Trump on Friday.
- The Financial Times reports they will seek "strong legal and financial guarantees" before committing capital.
