How could US’ landmark 65 billion barrel Venezuelan oil deal impact oil prices and could this put the OPEC in trouble? In an exclusive conversation with Times Now Digital, Peter McGuire, Oil Expert & CEO-Australia, Trading.com says he expects oil prices to soften and the OPEC indeed could be in trouble as a result of the magnitude of this deal. Given below is a short excerpt of the full interaction.
Q. US President Donald Trump has termed the new Venezuela oil deal as historic. He says the US will gain control of over 65 billion barrels of their oil reserves. Now, what does this deal really mean for global oil reserves altogether? What does it mean for the rest of the world?
A. When you look at the number, 65 billion barrels of crude, that’s just, it’s again, it’s just mind blowing. The accord covers 17 strategic fields of proven reserves of Venezuela. So how does it look? What does it smell like? How does it taste? The interesting point I thought was on a number of points. One, the US is going to get access to that and it’s going to be at cost price. In other words, what they retrieve it out of the ground or out of the ocean for, what it’s drilled at. So it’s not as though it’s going to be 100 dollars per barrel. I don’t know the actual costs. I’m not sure if even Venezuela would know the actual costs of what they retrieve oil at considering that they want to build out this whole exploration, and you’ve got major oil companies going to be participating in this from the likes of Chevron and all the way through, it’s immense. It’s the only the early part of it. This is going to be extraordinary for the US as far as crude reserves in the future are concerned and naturally would drive down energy costs significantly for the US consumers.
Q. So what does this oil deal mean for China, Russia, OPEC and India then? Well, I don’t know what it means for China because I think it’s too early and it’s very difficult to speculate and to to really have a thought on it because this is the announcement’s just been made. It’s got to work its way through the market.
It’s got to be digested, it’s got to be explored and it’s got to look at timelines, the horizon and what’s going to impact as far as Chinese supply, other countries naturally. Are there going to be other exporters that are really going to jump in and cover any shortfalls? And I wouldn’t be surprised if that’s the case. The likes of Iraq and large producers possibly Russia stepping up to the plate if they need to increase their production. I think the US will be a major oil exporter across the world. I think that’s where it’s going from all forms of energy, natural gas, course, know, LNGetc and I would say this deal, it’s going to dramatically increase their footprint.
What does it mean for OPEC? I won’t be surprised if Venezuela pulled the ripcord and followed the UAE and exits. I wouldn’t be surprised. It might be much sooner than what many traders would be anticipating. I wouldn’t be surprised if it was sometime in September because of the announcement of this deal, but I could be wrong.
