The Insanity of Mending Ties With Venezuela

A smart guy once told us all that insanity is doing the same thing over and over and expecting different results.

Well, I can’t help but think we’ve gone insane when it comes to certain energy policies. 

You’d think things felt a little screwy too if you saw President Joe Biden’s latest gambit to keep a lid on oil prices. 

Right now, his administration is in talks with President Nicolás Maduro to provide sanctions relief for Venezuela… 

And I can’t help but think that history is about to repeat itself. 

Sanctioning Venezuela is nothing new to us; we’ve been imposing them on the Venezuelan government for more than 17 years for a variety of reasons ranging from terrorism to drug trafficking. 

In August 2017, then-President Trump started financial sanctions against PDVSA, Venezuela’s state-controlled oil company, effectively shutting it out of financial markets by forbidding it to issue or renegotiate bonds. 

Less than a year later, an embargo was placed on Venezuelan oil, with even harsher restrictions piling on over the next few years. 

The reasons for these sanctions were clear as day — we wanted an end to a corrupt and brutal reign of President Maduro, who has been in control of the country since 2013. 

The veteran members of our investment community probably recall the daily horror stories that flooded news headlines back then: horrific food shortages, hyperinflation — it was a nightmare. 

However, instead of giving in and resigning, Maduro consolidated his power and tightened his grip on the country. 

While the U.S. continued to place more sanctions on the country, our imports from Venezuela ceased in 2019. 

At least, they did until last January, when Chevron was given permission to resume production. Slowly but surely, our imports of Venezuelan oil have climbed throughout 2023. 

If Biden’s massive sales of the Strategic Petroleum Reserve last year were a Hail Mary to control oil prices, it’s hard to imagine what he would have to do next to prevent prices from running higher. 

Well, now we know.

The Insanity of Mending Ties With Venezuela

Memory is a fickle thing for most people, and some things that should have not been forgotten were lost. 

You see, there’s a serious issue with President Biden’s plan to import more Venezuelan oil — one that has gone overlooked over the years, especially now that the mainstream media’s headlines have shifted toward Russia and China. 

The problem is that Venezuela’s oil industry is on the verge of collapse. 

Production there peaked more than 25 years ago. 

More importantly, things have gone from bad to worse. A decade ago, PDVSA was pumping nearly 2.5 million barrels per day out of the ground. 

Today, it’s fallen to under 750,000 barrels per day. 

We’re not talking about the light, sweet crude that flows out of Texas, either. Most Venezuelan production comes from the Orinoco Belt, which is notorious for being among the worst-quality crude on the planet. This extra-heavy crude comes with a far higher breakeven price than most people realize. 

Of course, this isn’t even to mention the fact that PDVSA is in shambles, plagued by incredible mismanagement and corruption. 

And yet we’re now in talks to provide some sanction relief in a Hail Mary attempt to boost supply. 

That’s a bit too much wishful thinking for us. 

Apparently all Maduro has to do is hold a fair election; the same guy would’ve beat Jesus in an election because he controls the system. 

But hey, maybe this time will be different. 

Until next time,

Keith Kohl

Check us out on YouTube!

A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.