00:00Let's start with the breaking news over the weekend, the situation in Venezuela, the fact that the Trump administration is being pretty transparent about the fact that they're eyeing the oil industry in Venezuela strategically.
00:16My question is, how quickly can Venezuela actually ramp up production again?
00:21We just showed a chart showing that Venezuela actually right now are producing sub 1 million barrels a day.
00:26How long is it going to take before they can get back to 3 million plus again?
00:31Well, I'm not going to say that they will never reach back that level because we had Iraq, for instance.
00:37They went through not similar, but at least, you know, a sharp decline.
00:40And then they managed to recover back to their peak.
00:44But that took a while. That took a few years.
00:46But in the case of Venezuela, there are so many unknowns today.
00:50And also the decline in oil production in Venezuela did not happen because of sanctions.
00:56Or because of below ground factor.
00:59The main problems for Venezuela, and that's why I've been fascinating in this country, is how governments can really mess up their natural resources.
01:06And actually, the problems in Venezuela started when Chavez came to power and he changed all these policies and the contracts.
01:14And that's why you had companies such as ExxonMobil, the American majors.
01:17They took Venezuela to international arbitration because they introduced all these aggressive terms and almost mini-nationalization of the industry again after opening up to the private sector.
01:27So you had this massive structural decline in the capacity in the country, the expertise of PDVSA, because, again, Chavez fired almost half of the employees at some point when they went on strike of PDVSA.
01:38There are structural fundamental problems.
01:40The sharp decline that we have seen has not been seen in Venezuela's history.
01:44So to go back to the levels that you're talking about, the 3.7 million, it will take a while.
01:49But we could see some few hundred thousands coming back to the markets if the sanctions are relieved.
01:54But nothing major to move the market in a different direction unless we have disruptions or something else happening elsewhere.
02:03But, of course, they're sitting on a huge amount of oil reserves.
02:07And I was reading a statistic over the weekend, and this was based on an article that our colleague Javier Blas was writing about.
02:13Combined oil reserves from Venezuela, Guiana, and the U.S. could give the U.S. about 30 percent of global oil reserves if consolidated under its influence.
02:24I mean, surely, as an energy analyst, you have to think about the fact that the U.S. is looking to actively grow its clouds and exercise that clouds over global oil markets at a time where you could argue that OPEC plus influence is diminishing.
02:40OPEC.
02:40Well, yes, I know.
02:43I can see the argument and the logic in that rationale.
02:47But, again, it's not just what you have below ground.
02:49It's what you are doing above ground that is more important.
02:53For me, the main influence, of course, oil plays a role.
02:56But the main consequence of the U.S. actions in Venezuela is already raising so many questions, including how are they going to have access to those reserves?
03:05Because constitutionally, only in the U.S. and maybe a few parts of Canada, that is part of private ownership.
03:11So it all depends on the contractual arrangements that are going to be in place in Venezuela and whether we are going to see the legal changes, the constitutional changes.
03:19But the main point for me today, and that's what I'm observing, is the geopolitical risk that it's creating and the message that the U.S. may be sending to other important players around.
03:29Because it's not a common action of a power such as the U.S. to directly intervene.
03:35We have been accustomed to sanctions, but a direct intervention by a super major power like the U.S. is watched closely globally.
03:43And are the Americans sending a message to other sanctioned countries, primarily Russia and Iran?
03:48That is the key question that we should focus on today.
03:52Do you think there needs to be more geopolitical premium priced in to where oil is trading today?
03:58I cannot say whether it should be more or less, because if I look at the fundamentals at the current situation where we are all expecting a surplus this year, everything else being the same.
04:09And of course, if more Venezuelan oil comes to the market and no sanctions, further enforcement applied on Iran, on Russia, let's wait and see.
04:16But given the current situation, I don't think it's going to it should be more priced in.
04:21But definitely we should keep an eye on what the consequences are going to be from the actions in Venezuela, not only in Venezuela, but also elsewhere.
04:29But at the moment, it's keeping the market, if you want, stable, but it's kind of nervous stability.
04:36And that's why we heard OPEC talking about cautiously observing the market before changing their course of action.
04:42Yeah. And if you look back at 2025, it was a very challenging year for the oil complex and in the year down between 17, 18 percent, something like that.
04:54And I just wonder whether at these levels and you've got Brent trading around 60 dollars, whether that is fully accounting for the extra supply, the surplus of supply versus demand that's to come in 2026,
05:09or whether you think there could still be potential for further downside.
05:13I think there could be potential for further downside, assuming there are no further actions on Iran and no escalations with Russia,
05:21because the situation in Venezuela already takes away, like especially if the sanctions are relieved and the blockade is removed and the more sanctioned,
05:29the sanctioned barrels from Venezuela come back to the market.
05:32Because when you have a situation of a market which is already predicted to be in surplus, then every additional barrel will put a downward pressure on prices.
05:41But let's see what the OPEC plus producers are going to do.
05:44I don't think if prices are going to collapse, which I doubt they will.
05:47They will just keep on watching and not alter their strategy.
05:50They are there. There are still influential players in the market.
05:53But at the moment, I think it's wise enough from their side and like everybody else to wait and see how the situation is going to unfold because it caught everyone by surprise.
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