The Rising Influence of Rising Affluence

[Democritus_of_Abdera]

Re HES…

Trump has threatened to ban Venezuelan crude oil imports into the US if the July 30 vote for a Venezuelan Constitutional Assembly goes in Maduro’s favor. (e.g. see the July 18 article by Jim Wyss et al.in the Miami Herald, quoted below).

I hope that this is a bluff… but, if not, I would expect a temporary shock to the US oil industry until import adjustments are made. Companies that do not rely upon Venezuelan oil (such as Hess) might obtain windfall profits… Those that rely heavily on Venezuelan oil (such as Valero) might be hit hard.

Venezuela is the source of about 10% or our imported oil (i.e. in 2016 we averaged 7.9M bod with 0.74M bod of from Venezuela); albeit it has been declining rapidly in recent months. see: https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm

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http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article162281848.html

On Monday, Trump suggested that .... “If the Maduro regime imposes its Constituent Assembly on July 30, the United States will take strong and swift economic actions,” ...

… the White House confirmed it’s considering a range of political sanctions against the South American nation if it goes ahead with plans to rewrite the constitution, including a ban on oil imports.

Although limiting Venezuela’s oil imports to the U.S. is seen as a powerful weapon, it’s not clear how effective it would be. “Extending existing sanctions, which are targeted mainly at individuals, to oil exports could precipitate default, and perhaps the collapse of the government, although it may not be immediate as the government finds ways around them and relies more on its friends,” Stuart Culverhouse, the chief economist for Exotix, a London-based investment bank, said in a statement. “There are examples whereby governments have continued to muddle through even in the face of tight sanctions.”