# Where Venezuela’s Oil Fits in the Global Market: React

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 9 Jan 2026, 11 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/62d6a8bf-ccba-4a36-a98f-b3cd00b5ec97/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

What the recent US action in Venezuela means for global oil markets is still an open question. While the prospect of additional oil is drawing interest, high production costs, infrastructure constraints and political risk complicate any near-term jump in Venezuela’s oil output. As markets weigh the scale and speed of a potential comeback, how much could Venezuela really move the needle in a global oil system already facing a glut of crude? On today’s show, Kamala Schelling talks with David Doherty, BNEF’s head of natural resources research, to discuss some of his team’s recent analyst reactions, including “Venezuela’s Oil Market Impact Hinges on Cost Per Barrel” and “Venezuela’s Oil Renaissance Faces Several High Hurdles.” Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com Links to research notes from this episode: Venezuela’s Oil Market Impact Hinges on Cost Per Barrel: React - https://www.bnef.com/analyst-reactions/t8giodkjh6v600 Venezuela’s Oil Renaissance Faces Several High Hurdles: React - https://www.bnef.com/analyst-reactions Trump’s Venezuela Move Could Shift Crude Flows Back to US: React - https://www.bnef.com/analyst-reactions/t8dsuukk3ny800 US Action in Venezuela and the Commodity Markets - https://www.bnef.com/themes/t8fw2ut96osi00 See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Kamala s Shelling and you're listening to Switched
[0:03] Speaker 1: on the Bloomberg and EF podcast. Today we're bringing you
[0:06] Speaker 1: another Analyst Reaction episode. It's a mini conversation that zooms
[0:10] Speaker 1: in on one specific event to tell a broader story
[0:13] Speaker 1: about the energy transition. And today that event is a
[0:16] Speaker 1: big one, the recent US military action in Venezuela and
[0:20] Speaker 1: what it could mean for the global oil market. With
[0:22] Speaker 1: me is David Daherdy, beanef's head of Research for Natural Resources,
[0:26] Speaker 1: to discuss Venezuela's huge oil reserves and what turning on
[0:29] Speaker 1: the venezulin taps would really mean for prices, trade routes,
[0:32] Speaker 1: and the oil market balance. David's team has recently published
[0:35] Speaker 1: a series of analyst reactions or short BNF research notes
[0:39] Speaker 1: that respond to an event as it unfolds about Venezuela.
[0:43] Speaker 1: Our conversation today is largely based on two of them,
[0:46] Speaker 1: Venezuela's oil market impact hinges on cost per barrel and
[0:49] Speaker 1: Venezuela's oil renaissance faces several high hurdles. BENIFE clients can
[0:54] Speaker 1: find the rest of these pieces, as well as other
[0:56] Speaker 1: analyst reactions, by heading to BNF go on the Bloomberg
[0:59] Speaker 1: Turnriminal or at BNF dot com. If you'd like to
[1:03] Speaker 1: learn more about how BNF approaches strategy research on the
[1:05] Speaker 1: energy transition, including developments and commodity markets, trends across different sectors,
[1:10] Speaker 1: and the cross cutting technologies shaping the future. You could
[1:13] Speaker 1: find more information on BNF dot com, and if you'd
[1:16] Speaker 1: like to speak with a member of our team about
[1:18] Speaker 1: becoming a client, email us at Sales dot BNF at
[1:21] Speaker 1: Bloomberg dot net. So let's dive in and discuss Venezuela's
[1:25] Speaker 1: oilfields and what they could mean for the global.
[1:27] Speaker 2: Oil market in the near and longer term.
[1:38] Speaker 1: David, thank you so much for joining today.
[1:40] Speaker 3: Thanks for having Regarda.
[1:42] Speaker 1: We've heard a lot over the last week about how
[1:44] Speaker 1: Venezuela has the largest proven oil reserves in the world.
[1:47] Speaker 1: So let's start with a hypothetical. If we could simply
[1:50] Speaker 1: ramp up production of Venezuelan and oil tomorrow, what would
[1:53] Speaker 1: it do to global oil balances.
[1:55] Speaker 3: That won't happen, firstly, but if it were, you could
[1:58] Speaker 3: at the very best increase oil supply by about two
[2:02] Speaker 3: million barrels per day of predominantly heavy heavy oil. The
[2:06] Speaker 3: market at the moment is already in deep excess supply,
[2:10] Speaker 3: so that would really hurt oil prices. But again that
[2:14] Speaker 3: is virtually impossible and it won't happen. I think the
[2:16] Speaker 3: numbers that you're hearing about maybe coming online over the
[2:20] Speaker 3: next two years are in the region of three hundred
[2:23] Speaker 3: to five hundred thousand barrels incremental, and that's on top
[2:26] Speaker 3: of the already one million barrels per day or so
[2:28] Speaker 3: of Venezuelan oil that is being exported, so it's a
[2:31] Speaker 3: much smaller number.
[2:32] Speaker 1: Does the world's oil market need that oil? Do we
[2:35] Speaker 1: have a deficit that that could help satisfy?
[2:37] Speaker 3: There is no deficit whatsoever for this to satisfy. It
[2:40] Speaker 3: is interesting in that the grade of Venezuelan oil is
[2:44] Speaker 3: probably in need in the oil market. So Venezuelan oil
[2:48] Speaker 3: is quite heavy, you could think of it as sludgy
[2:51] Speaker 3: and thick, and a lot of the growth and oil
[2:54] Speaker 3: supply over the past two decades or so has come
[2:57] Speaker 3: from places like the United States or even Brazil, whether
[3:01] Speaker 3: the oil is lighter or even medium, and it's a
[3:04] Speaker 3: different quality. Now, the new modern high tech refineries in
[3:07] Speaker 3: the world that have been built aim to buy heavy
[3:11] Speaker 3: oil and upgraded into a high priced product like gasoline
[3:15] Speaker 3: or jet fuel for example. Perhaps the world could do
[3:17] Speaker 3: it more heavy oil, but it doesn't necessarily just need oil.
[3:20] Speaker 3: It's got plenty as it is.
[3:21] Speaker 1: That's fascinating because we keep hearing about how venezuela and
[3:24] Speaker 1: oil is heavy and sour, and both of those words
[3:27] Speaker 1: sound so negative to me. But you're saying that, actually
[3:29] Speaker 1: people want heavy oil these days. Why why is that
[3:32] Speaker 1: what they're building new refineries for.
[3:34] Speaker 3: Well, generally it's cheaper than higher grade oil. So you're right, negative,
[3:39] Speaker 3: sour and heavy, these two words are not necessarily positive words.
[3:42] Speaker 3: But likewise, sweet and light oiled might be too sweet
[3:45] Speaker 3: and too light for the refining system. So if you're
[3:48] Speaker 3: a US golf codes refinery or a advanced refinery in China,
[3:52] Speaker 3: they're built in theory to buy cheap crude oils, heavy
[3:56] Speaker 3: sour crude oils and translate them into high and good
[4:00] Speaker 3: quality products that they can sell for a higher price
[4:03] Speaker 3: so that their margin increases. And having an expensive oil
[4:07] Speaker 3: that you can turn into a products that's going to
[4:09] Speaker 3: be the same price, whether you make it from heavier
[4:11] Speaker 3: or medium oil for example, doesn't make a huge difference
[4:14] Speaker 3: apart from your margin so basically this would turn into
[4:17] Speaker 3: a higher margin for a complex refinery.
[4:19] Speaker 1: So would we then expect Venezuelan oil to be heading
[4:22] Speaker 1: to the US or to China for refining.
[4:24] Speaker 3: Yes. So Traditionally the US Golf Coast, which has some
[4:28] Speaker 3: of the biggest and most advanced refineries in the world,
[4:31] Speaker 3: was a big, big buyer of Venezuelan oil, and even
[4:34] Speaker 3: in the past, over maybe the last three or four years,
[4:37] Speaker 3: China's big complex refineries have been the buyers of venezuela
[4:41] Speaker 3: and oil. Again, take in a cheap oil at a
[4:44] Speaker 3: big discount and turn it into a high price product
[4:46] Speaker 3: like gasoline. The interesting point here is will China still
[4:50] Speaker 3: be allowed to buy Venezuelan oil at this discount or
[4:54] Speaker 3: will all of the volumes now be directed towards Gulf
[4:57] Speaker 3: Coast buyers who could benefit from this cheaper source of oil.
[5:00] Speaker 1: That is a fascinating point about who will be allowed
[5:03] Speaker 1: to buy it, even if it does all go to
[5:05] Speaker 1: the US. I would imagine those Golf Coast refineries are
[5:07] Speaker 1: not just sitting empty waiting for venezuela and oil. So
[5:11] Speaker 1: the oil that they're currently refining, where would that end
[5:14] Speaker 1: up going? How is this all going to reshape global
[5:17] Speaker 1: trade flows.
[5:18] Speaker 3: Yeah, there's some rewiring that would happen now. Worth noting
[5:21] Speaker 3: the oil market is incredibly flexible, and we've seen that
[5:24] Speaker 3: over the past few years with sanctions on Russia and around.
[5:28] Speaker 3: For example, what the Gulf Coast refiners are currently processing
[5:32] Speaker 3: is a mix of heavy Mexican oil, heavy Canadian oil,
[5:35] Speaker 3: and to a lesser extent, Columbian oil, So that would
[5:38] Speaker 3: have to find a home elsewhere. There's some limitations set
[5:41] Speaker 3: up predominantly Canada, so Canada is basically pipeline wired to
[5:45] Speaker 3: the United States for the United States to consume heavy
[5:49] Speaker 3: oil from Canada. There has been development over the past
[5:52] Speaker 3: few years of the Translucent Pipeline being able to send
[5:55] Speaker 3: oil from Alberta out via the West Coast towards Asia,
[5:59] Speaker 3: but that has a limit. So there could be so
[6:01] Speaker 3: rewiring where you could see oil from Canada going through
[6:05] Speaker 3: pipelines in the United States and then being exported out
[6:08] Speaker 3: of the Gulf Coast to wherever is willing to buy it,
[6:10] Speaker 3: as the Golf Coast then starts to take cheaper Venezuelan
[6:13] Speaker 3: oil instead, and you've seen this response in Canadian oil stocks.
[6:18] Speaker 3: So the market has not been very excited for Canadian
[6:21] Speaker 3: oil producers given that there might be a competing grade
[6:23] Speaker 3: for their biggest client.
[6:25] Speaker 1: You keep saying that Venezuela and oil will be cheap,
[6:27] Speaker 1: and at the same time, however, we're hearing on news
[6:29] Speaker 1: reports that's going to take a lot of money to
[6:32] Speaker 1: rebuild Venezuela's wants very robust oil infrastructure. How much would
[6:37] Speaker 1: refiners have to be able to make from Venezuela and
[6:39] Speaker 1: oil to make it even worth their while to restart
[6:42] Speaker 1: those pumps.
[6:43] Speaker 3: Yeah, So there's a difference between existing supply and then
[6:47] Speaker 3: bringing back newer supply. So existing supply is about a
[6:51] Speaker 3: million barrels per day. Maybe twenty years ago, Venezuela was
[6:55] Speaker 3: producing two and a half million barrels per day and
[6:57] Speaker 3: at its peak just over three million barrels per day.
[7:00] Speaker 3: So what I'm talking about is that one million boos
[7:02] Speaker 3: per day of existing supply. And there's two things to
[7:05] Speaker 3: take into account here. One is where can you buy
[7:08] Speaker 3: it or can you even buy it? If you have
[7:10] Speaker 3: a captive market and you're not allowing others to purchase,
[7:13] Speaker 3: then the buyer is going to ultimately set the price
[7:16] Speaker 3: for this, and that means the United States buyers will
[7:18] Speaker 3: set the price for Venezuelan oil. The other part of
[7:21] Speaker 3: it is building out new production and that is where
[7:25] Speaker 3: the really expensive part comes into play. And there's a
[7:28] Speaker 3: ton of guestimates out there. The break gave it estimates
[7:31] Speaker 3: for a Venezuelan barrel, which is highly unknown because the
[7:34] Speaker 3: data is so per is in the region of forty
[7:37] Speaker 3: five to eighty dollars per barrel, depending on which agency
[7:40] Speaker 3: you ask. So that's pretty big of a range when
[7:43] Speaker 3: you think about the risk that is also involved in
[7:45] Speaker 3: investing and developing those fields. Who can you sell it to?
[7:49] Speaker 3: You don't even know the off take price because of
[7:51] Speaker 3: my previous point that you might just have one buyer.
[7:54] Speaker 3: So if you're a big oil company, you might prefer
[7:57] Speaker 3: to invest in like neighboring Guyata or in the US permium,
[8:00] Speaker 3: where prices are more in the range of let's say,
[8:03] Speaker 3: thirty five to sixty five dollars per barrel, But it's
[8:06] Speaker 3: a much safer investable. You know what you're getting. You know,
[8:08] Speaker 3: you can sell it out into the market, there's no
[8:10] Speaker 3: restrictions on it. So those incremental barrels are where it's
[8:13] Speaker 3: going to be. Really you know, there's a huge question
[8:15] Speaker 3: mark of whether it's worth it or not.
[8:17] Speaker 1: President Donald Trump is talking a lot about bringing Venezuela
[8:20] Speaker 1: and oil back to the United States, and there's actually
[8:22] Speaker 1: a flotilla of ships headed for Venezuela to bring back
[8:25] Speaker 1: to the US Venezuela and oil. So what does all
[8:28] Speaker 1: this mean for the US oil industry specifically.
[8:31] Speaker 3: Yeah, that's a really interesting point because over the past
[8:34] Speaker 3: few years, the US oil play has become, you know,
[8:37] Speaker 3: the king of the field, right. They have expanded production hugely,
[8:41] Speaker 3: but all of that expansion, or most of that expansion,
[8:43] Speaker 3: has been light oil. So if we think about the
[8:45] Speaker 3: Strategic Petroleum Reserve in the US, it used to be
[8:48] Speaker 3: predominantly heavy oil because US refiners love that. Now it's
[8:52] Speaker 3: predominantly light oil, and they do not love that. So
[8:55] Speaker 3: oil coming from Venezuela to the United States could, in theory,
[8:58] Speaker 3: go into the strategic Petroleum reserve and correct that balance
[9:02] Speaker 3: to a certain extent, or it could go to the
[9:04] Speaker 3: refiners if they're willing to buy it. Now. So what
[9:06] Speaker 3: you're seeing is is maybe ten eleven I think it's
[9:09] Speaker 3: eleven ships currently on their way to bring oil from
[9:12] Speaker 3: Venezuela chartered by Chevron and that would get you about
[9:16] Speaker 3: I mean, there's estimates depending on how much each ship
[9:18] Speaker 3: is filled, but about five or five and a half
[9:21] Speaker 3: million barrels of oil that could be brought back, let's say,
[9:24] Speaker 3: to the US to put that into context, and the
[9:26] Speaker 3: Strategic Petroleum Reserve, about fifteen million barrels was added to
[9:31] Speaker 3: the SPR last year, so it's not an insignificant amount.
[9:34] Speaker 3: But the SPR is about four hundred and twenty million barrels,
[9:37] Speaker 3: so in the grand scheme of things, it's small, but
[9:40] Speaker 3: it's the kind of oil that the SPR has been
[9:42] Speaker 3: missing over the past few years, so this could be
[9:45] Speaker 3: a good solution. And I think that is where you're
[9:47] Speaker 3: going to see more of the oil going to. And
[9:49] Speaker 3: it's currently sitting in storage in Venezuela, reaching tank tops
[9:53] Speaker 3: but nowhere to go. So if it's actually not moved,
[9:56] Speaker 3: you might see repercussions further upstream where you have to
[9:59] Speaker 3: switch off or try. They've run down some of the
[10:01] Speaker 3: production in Venezuela.
[10:03] Speaker 1: David, thank you so much for coming in and talking
[10:05] Speaker 1: with me today. I've been reading your team's work all
[10:07] Speaker 1: week and it's so great to be able to speak
[10:08] Speaker 1: with you about what's going on in Venezuela.
[10:10] Speaker 3: Yeah, thanks for having me, and I'm sure we'll have
[10:12] Speaker 3: more to talk about it in the coming week Sundays.
[10:14] Speaker 3: Thanks Callla.
[10:24] Speaker 1: Today's episode of Switched On was produced by Cam Gray
[10:27] Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a
[10:31] Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This
[10:34] Speaker 1: recording does not constitute, nor should it be construed, as
[10:37] Speaker 1: investment a vice, investment recommendations, or a recommendation as to
[10:41] Speaker 1: an investment or other strategy. Bloomberg ANNIAF should not be
[10:44] Speaker 1: considered as information sufficient upon which to base an investment decision.
[10:47] Speaker 2: Neither Bloomberg Finance LP nor any of its affiliates makes
[10:50] Speaker 2: any representation or warranty as to the accuracy or completeness
[10:54] Speaker 2: of the information contained in this
[10:56] Speaker 1: Recording, and any liability as a result of this recording
[10:59] Speaker 1: is expressly disc

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