Will oil prices collapse? Donald Trump attacked Venezuela, Russia has a serious problem

Political changes in Venezuela may mean an increase in the oversupply of crude oil on the global market – says Jakub Bogucki, an expert from the e-petrol.pl portal. In his opinion, this may result in a decline in the price of the raw material and deepen Russia's problems with liquidating its crude oil production.

US President Donald Trump announced on Saturday that Americans had attacked Venezuela and captured its leader, President Nicolas Maduro, and his wife. US Attorney General Pam Bondi said that those captured had been charged in the United States with drug and terrorism-related crimes and that both would be tried in New York. The Venezuelan authorities blamed the US for the attacks and declared a state of emergency in the country.

Bogucki pointed out that the effects of US actions towards Venezuela will be known on Monday, when the stock exchanges open; then we will find out how oil prices will react to these events.

– It will not be a revolutionary effect. Venezuela was already blocked in terms of its ability to export oil. The short-term effect of the United States' actions in Venezuela should not have a radical impact on the market, said Bogucki, noting that it would be different if it were an attack on Iran or other Middle Eastern countries.

When asked about the impact of the events in Venezuela on crude oil supplies to China, he said that China was limiting its purchases of this raw material. – This oversupply of crude oil still hangs over the market, so if more oil from Venezuela becomes available as a result of political changes in that country, it could be an advantage for China, another opportunity to buy cheap oil – Bogucki pointed out.

Changes in Venezuela are just beginning

In his opinion, if the Americans change the Venezuelan government, we will have another very significant oil export. – Global oversupply may continue to increase – said the expert. Bogucki admitted that this will have an impact on the decline in oil prices on global markets, but it is difficult to assess in what time frame.

– Changes in Venezuela are just beginning and it is difficult to assess how quickly they will take place – he noted. According to Bogucki, if cheap oil flows from Venezuela to other markets in the world, it will be a problem for Russia. – Russia is already having trouble liquefying its oil – he added.

In Bogucki's opinion, the only advantage for Russia at the moment is that “President Trump is now focused on the situation in Venezuela and pays less attention to what is happening between Russia and Ukraine.” – I think this is a temporary situation – says Bogucki. He said that the US attack on Venezuela is also a signal to Russia. – It is a demonstration of force that can be understood in Russia in this way: Americans will not mess around with someone who will make their economic and political life difficult, Bogucki noted.

on Friday, On January 2, the e-petrol.pl portal reported that Venezuela was facing an almost complete paralysis of fuel exports, which led to the critical filling of storage tanks in the country.. A US naval blockade targeting sanctioned tankers limits exports to a minimum. The website indicated that Venezuela produces mainly very heavy crude oil that requires dilution for transportation and processing. Its production processes produce large amounts of residual fuel, particularly high-sulfur fuel oil, which is typically exported to Asia.

“We will be heavily involved in the oil sector in Venezuela,” US President Donald Trump said in an interview with Fox News on Saturday. Trump added that the attack on Venezuela is a signal that other countries will “no longer push around” the US.

Trump thus answered the question about the future of the Venezuelan oil sector in the face of the current US blockade of Venezuela.

– Well, I think we'll be heavily involved in this. What can I say, we have the greatest oil companies in the world, the biggest, the best, and we will be very committed, the American leader said.

The president later added that he would “let other countries have the oil” and therefore did not expect China to be a problem in the context of Venezuela.

The United States has been increasing pressure on the Venezuelan authorities for several months and has been carrying out attacks on boats suspected of transporting drugs to the United States; more than 110 people have died in these attacks so far. (PAP)

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