President Trump's latest OPEC tweet has heightened speculation that volatility is returning to the global oil market. But the truth is oil volatility never went away.
The U.S. government's goal to knock Iran oil exports down to zero may be boxed in by its own policy towards Venezuela.
Backed by a host of Latin American countries and the United States, Juan Guaido's declaration of himself as the legitimate president of Venezuela represents the sternest test Maduro has faced to his hold on power—and the oil market has already felt the effects.
The crisis in Venezuela's energy sector is accelerating as creditors are laying claim to the few remaining productive energy assets in the country.
Venezuelan intelligence arrested two employees of Chevron who balked at signing contracts with PDVSA. The move has broad implications and will likely lead to even more production losses.
More sanctions against Venezuela could be looming, which would further undermine the country’s production at a time the global market is tightening.
PDVSA is engaging in all kinds of no cash deal making to bypass oil cargo seizures. But the company could face even more difficulty this year as Venezuela’s financial woes have bitten into its capacity to keep its oil fields running.
Stacking PDVSA with military officials may help President Maduro avert unrest in the short run, but it will likely accelerate the deterioration of the state oil company.
The risks of more oil production losses have intensified as the financial screws on Caracas continue to tighten. Deteriorating conditions in Venezuela are occurring at the same time OPEC is looking to extend its production cut and tensions throughout the Middle East are rising.
There’s little question the global market will lose more production from Venezuela in the coming months and years. The country's crude output is at risk of falling to as low as 1.2 million barrels per day.