About The Author

Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

The Trump administration put maximum pressure on state bad actors like Iran and Venezuela. The Biden administration put minimum pressure on Iran and Venezuela. The Biden administration freed up money to Iran and tried to reengage them to get back into the ill-fated JCPOA deal.  How did that work out? You make the call. Today Iran is threatening a preemptive strike against Israel for defending themselves against the terror group Hamas. Iran has taken billions of dollars and put it into the coffers of Hamas and Hezbollah. So, if you don’t succeed with one rogue regime, why not work with another?

Now after months of negotiations and appeasement of Venezuela’s Maduro Regime, the current administration is looking to lift sanctions on Venezuela’s oil exports in exchange for a promise by Nicolas Maduro to allow free and fair elections in 2024. Oil prices broke on the news even though this is not going to mean any extra oil in the near term. Venezuela’s oil production is running about 2.3 million barrels a day. Their exports are at 700,000 barrels a day and already the Biden administration has been turning a blind eye to sanctions on their oil because let’s face it, the world needs heavy oil.

Chevron, with the Biden administration’s blessing, has been working with Venezuela for months. So to think that this announcement is some type of breakthrough would be an exaggeration. Even the timing announcement seems to be more of a political stunt to get oil prices down in the short term. I think it’s also interesting that the announcement was made the same day that there are reports that Venezuelan president Maduro has plans to go to Russia to meet with Vladimir Putin. Who knows, maybe Putin will give him a better deal.

Can the Biden administration trust Maduro? Especially when it comes to free and fair elections. This is the same President to seized power in 2018 in an election that was viewed to be fraudulent in the first place. Maduro has also barred opposition candidates from running in the election.

The Wall Street Journal wrote that, “Venezuelan opposition politician María Corina Machado wants to challenge the country’s authoritarian president, Nicolás Maduro, at the ballot box. The effort may be hopeless. His regime has barred the conservative, pro-business politician from holding office. Pro-government motorcycle gangs mount roadblocks against her caravan when she campaigns, social-media videos show. State TV plays surreptitious recordings of her private phone calls in an apparent effort to embarrass her. Fearing arrest, close aides have fled Venezuela.”

There are larger issues surrounding the biggest threat to global oil markets in a generation. The oil markets continue to be on the edge as they wait to see what Israel’s next move might be in this war against Hamas. Biden, along with other politicians from the United States, plans to visit Israel in a show of support.

There is speculation on why Israel has not launched its full-fledged assault on Gaza. Many believe it’s because they want to plan it very thoroughly. Many believe it’s because they think there’s a chance to save the hostages before they invade. Others think it’s because of humanitarian reasons, they want to make sure that this assault has the least amount of collateral damage involving the fewest number of innocent civilians. This is in stark contrast to Hamas who love to attack and torture civilians. That’s what they do.

In the big picture, Saudi Aramco CEO Amin H. Nasser is warning that there are only three million barrels of spare capacity in the oil market today. In other words, if Iran’s oil is taken off the market, we are going to face a major supply deficit in the near term. In the long term, things look bleak.

The Saudi CEO is also warning that if we don’t start investing in oil and gas, global oil production will drop anywhere from 5 to 7 million barrels of oil a day in a year. Oil products like heating oil seem to take the biggest hit on the Venezuelan story. Heavy sour oil does produce a lot of diesel so there was some relief.

Dan Molinski at the Wall Street Journal writes that, “the touted energy transition away from fossil fuels is yet to be seen in EIA data on new, natural gas-fueled power plants in the U.S., with new capacity this year expected to be well above earlier forecasts, 54% higher than last year and one of the strongest years since 2009. “So far in 2023, 10 natural gas-fired power plants have come online,” the EIA says, noting six more are on the way for a total of 8.6 gigawatts of new capacity compared with 2022’s 11 new plants and 5.6 GW of capacity. The latest 2023 tally of 8.6 GW of new capacity is a 15% increase from the EIA’s projection in February for 7.5 GW of new capacity.

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Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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