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America is doing the nation-building thing again May 21, 2018

Posted by hslu in 特朗普, 石油, 美國, Oil, Trump, U.S. Foreign Policy, 川普.
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Source: CNBC


This time, it’s on Venezuela because Venezuelan President Nicolas Maduro has just won re-election on Sunday. He’ll be in power until 2024.

Trump doesn’t like Maduro’s leftist administration so that he’ll punish Maduro and impose sanctions against Venezuela’s oil exports.

In time, Trump hopes that sanctions will cripple Maduro’s government, devastate Venezuela’s economy and make Venezuelans suffer. With this kind of economic backdrop, Trump hopes that Maduro will not stay in the office too much longer and a new candidate will eventually emerge to form a pro-U.S. government.

America did the same thing to Iran with heavy sanctions for many years. The anti-U.S. Iranian government is still in power but ordinary Iranian people have suffered the most.

Depends on the severity of the sanction on Venezuelan oil, crude oil price will react, possibly very violently. Stocks of oil companies will move and the most likely direction is up.

Buy oil company stocks before they get too expensive to buy.

I worked on Venezuelan heavy oil projects with a Mobil engineer from Venezuelan for more than a year. It was a tough project to work on because, even though Venezuela has the largest oil resources in the world, the quality of Orinoco Belt heavy oil was very low and it required significant up front capital investment to produce and upgrade the oil. For years, only oil refineries in Houston were equipped to handle Venezuelan’s heavy crude. With shale oil production booming in Texas’s Permian Basin, the U.S. no longer needs Venezuelan heavy oil.

Several years after I left the project, Venezuela nationalized the Venezuelan oil industry (for the second time) and the Venezuelan engineer decided to leave Mobil and joined the Venezuelan national oil company, PDVSA. Unfortunately, the state of PDVSA has been going downhill ever since for the lack of technology and necessary capital for upfront investment. Instability of the political system didn’t help either.

A severe sanction against Venezuela oil will kill PDVSA, sink Venezuela into years of depression and take out hundreds of thousands barrels of oil from an already tight world oil market.

What a mess.

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