Energy & Environment

Oil Markets React to Situation in Venezuela

Monday’s oil price uptick was a reaction to the possibility of U.S. sanctions on Venezuela’s oil sector, which so far haven’t happened.

Oil markets are keeping an eye on the political situation in Venezuela.

As that country’s president moves to broaden his powers, oil prices landed above $50 per barrel this week for the first time in a couple months.

The U.S. has sanctioned Venezuela’s president, but so far, not its oil sector. But Monday’s price uptick was a reaction to the possibility that it could. Prices fell back below $50 per barrel on Tuesday.

Chris Ross, a University of Houston professor and former oil and gas consultant, says the up-and-down shows that global markets aren’t too worried, yet.

“This is a good time to intervene in Venezuela aggressively,” he says. “In other times, it would have had a much bigger impact on the market.”

While Venezuela is a big oil exporter, Ross says other countries could step in to fill the gap if there was a sudden disruption to the Venezuelan supply. Countries like Saudi Arabia have some flex room, because they’ve already been cutting their oil output as part of a deal to stabilize prices.

Still, with U.S. Treasury Secretary Steve Mnuchin saying more sanctions are still an option, Ross says global markets are watching for further action from the U.S.

“Venezuela is not producing anywhere near the level that it used to, but they’re still a major producer, and they’re material,” he says.

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Travis Bubenik

Travis Bubenik

Energy & Environment Reporter

Travis Bubenik reports on the tangled intersections of energy and the environment in Houston and across Texas. A Houston native and proud Longhorn, he returned to the Bayou City after serving as the Morning Edition Host & Reporter for Marfa Public Radio in Far West Texas. Bubenik was previously the...

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