Fool me once, shame on you. Fool me twice, shame on me.
But what about three times? Four? Five?
How about getting fooled for eleven years?
That’s how it feels for nearly all Venezuelans at this point after watching the sham election that took place in their country on Sunday.
I know, I know. Election fraud has been a hot topic here in the U.S. for years, stretching far back to previous elections that nobody seems to want to forget. But we’re not talking about grainy security cam footage or accusations of mysterious ballet boxes that might sway a few key votes.
Not only does Nicolas Maduro have a terrible reputation for running free elections, he openly mocks the process.
He claimed an early victory on Sunday with 51% of the vote, which is a spectacular feat considering that polls prior to Sunday showed him getting beaten by more than 25 percentage points — that’s the kind of public outrage that happens when annual inflation is around 50%, and your citizens experience egregious hyperinflation of more than 400,000% in 2019!
But what’s even more impressive is that he did so without having to release the voting data. Maduro can just sit back and say it’s over.
However, the impact of Maduro’s election will be more far-reaching than you might first think. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
So before we gear up for our own election coming down the road this November, let’s take a moment to dig into why Maduro’s win is going to come with consequences — particularly in the oil sector.
Maduro had just one job… just one!
After years of sanctions placed on the country’s oil industry, President Biden gave Maduro one opportunity to make things right again. In order to loosen U.S. sanctions on Venezuela’s oil sector, all Maduro had to do was run a free and democratic election.
By the way, let’s ignore the fact that mending ties with Venezuela was a ludicrous idea from the Biden administration to begin with.
Unfortunately, the Biden administration has been backed into a bit of a corner ever since 2022, when it sold off more than half of our Strategic Petroleum Reserves to keep oil prices somewhat stable that summer.
With that option no longer on the table, the choice was to try and help Venezuela’s state-run oil company, PDVSA, boost output. Holding a free and fair election would allow President Biden to remove sanctions and raise global supply.
Not surprisingly, everyone seems to dispute the results of the election except for Maduro. In fact, exit polls late Sunday also showed Maduro losing by a wide margin.
Whoops.
Leading up to this election, President Biden eased up a bit on PDVSA, and the U.S. started buying Venezuelan crude again in the beginning of 2023 on the promise that an election would take place. Our imports of Venezuelan crude grew to 209,000 barrels per day last April.
Venezuela has actually been quite successful raising oil output, with PDVSA on track to raise production to one million barrels by year-end. To give a little perspective on this, U.S. sanctions led to PDVSA’s output collapsing to nearly 300,000 barrels per day in 2020.
Now, if you’ve been wondering why we’ve been so complacent with Maduro’s regime, it may be due to the fact that the heavy, poorer quality crude that is extracted from Venezuelan fields is the type of heavy crude that our refineries along the Gulf of Mexico are geared toward.
I’m not convinced that Venezuela’s good fortunes will last. Depending on the outcome of this week’s election fraud accusations, the country’s oil production would crater again if the U.S. tightened its sanctions — an inevitability under a second Trump term.
In that event, there’s only one place left that the U.S. will look to replace that lost oil.
Stay tuned.
Until next time, Keith Kohl 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
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