The world’s crude oil producers will have to wait and see what will happen to oil prices following the U.S. capture of Venezuelan dictator Nicolas Maduro, and his wife, Cilia Flores, on Saturday during a daring attack by U.S. military special forces.
At least one publication, Forbes, predicted there would not be much of an impact as a result of the capture. Its headline Saturday morning declared, “Don’t Expect An Oil Price Spike Due to Nicolas Maduro Capture.”
Senior Contributor David Blackmon, expressed his opinion in a weekend piece indicating, “Based on what we know at the moment, the likely answer is “not much.” Simply put, the fear premium in crude oil prices has all but disappeared in recent years, as we saw in real time last June, when the U.S. launched a massive stealth bombing run in an attempt to destroy Iran’s nuclear facilities.”
Blackmon contends that 10 years ago, oil prices would have certainly spiked “due to the uncertainty that would have ruled in the markets. Instead, because of the immediacy of information flow thanks to modern technologies and other factors, that strike created a tiny blip on the screen.”
He claims there is only one foreseeable geopolitical event that would result in a big immediate increase in oil prices and that would be a shutdown on shipping traffic out of the Persian Gulf through the Strait of Hormuz. Nearly 25% of the world’s crude oil supply travels out of the Persian Gulf and a shutdown “would send oil prices soaring, perhaps to record levels, as traders scrambled to secure supplies needed to fill their contractual obligations.”
Such an impact would, in all probability, not be likely due to Maduro’s arrest, because his country, once a powerhouse in crude oil production, collapsed over the past several years.
Over the weekend, President Trump said the U.S. intends to run Venezuela until a transition in leadership can occur. The President said the U.S. will run the country until a “safe, proper and judicious transition” could happen. The U.S. will also take over the country’s oil industry.
“Very large oil companies” will spend “billions of dollars” in Venezuela.
“The oil business has been a total bust,” he told reporters on Saturday, noting the country’s oil industry had been controlled by a government-run company. “They were pumping almost nothing in,” according to USA Today.
“Very large U.S. oil companies” will “go in, spend billions of dollars, fix the badly broken infrastructure” and “start making money for the country.”
“We’re going to be replacing it, and we’re going to take a lot of money out so we can take care of the country,” said President Trump.
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