00:00 Julie
Let’s turn to the oil market because oil is coming back after hitting the lowest level since 2021. Crude prices fell below $55 a barrel on Tuesday. And this comes as President Trump is ordering a blockade of sanctioned oil tankers entering and leaving Venezuela. Jake Conley of Yahoo Finance has been following it all. Jake, you were talking I mean, just yesterday we were talking about the prices below from 2021. And now President Trump um, kind of changing the calculation. See, what effect does this have? We spoke through her.
00:43 Jake Conley
Yes, so you look at the prices this morning. WTI, the US benchmark rose about 1.3% after a 2% jump. Brent, the international benchmark, same thing. Clearly a reversal from yesterday’s near 3% decline. Incident incident here is the blockade. Whether it will have an impact, I think it will have to play out over the next few days, but you look at this in the United States, obviously a bit of a jump on US oil prices, but Venezuela only accounts for about 1% of US oil imports. So it’s really not a big factor in the US market.
01:21 Jake Conley
Globally, it also sits on the largest proven reserves in the world. It is not a huge global exporter though. So again, whether this is going to have a long tail, I think it’s hard to say.
01:34 Julie
And we know about the tankers coming in and out of Venezuela, like how many are sanctioned by, you know, when we talk about sanctioned, what are we talking about? Russia primarily or what
01:50 Jake Conley
These are tankers that were involved in Iranian trade, some with Russia, some with China. It kind of depends, but you’re looking at a little over 100 roughly for the amount of tankers that will probably be affected by this. In the last few days, we have already seen four tankers going to Venezuela turn around in the middle of the ocean and go back. One of these was sanctioned, three of them were not. So what you’re seeing is even companies that are not covered under sanctions are already saying, I don’t know if I want to take this risk of the ship’s cargo crew. Maybe it’s not worth it.
02:22 Julie
But to your point, like the broader and you and I have been talking about this for the last few days, the broader supply demand picture is not positive for oil prices. It’s good for people who drive and want lower gas prices. Um, so how do we figure out how this fundamentally changes this picture? And of course we don’t know for how long either.
02:45 Jake Conley
Hmm. Yeah, that’s why I say it’s hard to stay with the long tail of Venezuela news is going to be because the dominant market narrative, Julie, you’re right, is that huge wave of oversupply that’s coming down the pipe. The IEA has that linked to about 3.8 million barrels per day next year, which will push prices if you look at street picks down into the 50s, if OPEC doesn’t stop producing, maybe even until the 40s or 30s, which will have a real hit globally and here in the United States on the shale producers.
03:22 Jake Conley
Whether the Venezuela news really has an impact will depend on what comes next. Because this is an aggressive step forward. A few weeks ago, the United States turned back a crude oil tanker bound for Venezuela. A week ago, they caught one. Now with this blockade, whether this will have that tail tail, again, it’s really going to depend on what this signals to the market about US aggression, but that dominant narrative is going to remain the oversupply and just this huge supply demand imbalance that we’re looking at.
03:55 Julie
When we see an increase, I say it’s only one day, but if we see an increase, how quickly does that translate into US prices at the pump? Like what should we be seeing there or are they pretty much going to stay pretty low?
04:12 Jake Conley
It’s hard to say exactly how quickly it will appear, but if you look at gasoline prices in the United States, the price of oil makes up about 40 to 50% of that. So any significant jump will have an impact. How quickly that ripples out versus how much the market kind of adapts and says, okay, there’s no tail here, prices will go back. very hard to say.
04:36 Jake Conley
but it could have an impact, especially if prices remain a bit inflated. However, you talk to any analyst on the street, pretty much unanimously they are looking for prices to drop in the next few months. So what is the impact of the pump, it is very difficult to say now.
04:56 Julie
Yes, we will be watching as those events unfold in Venezuela. Thanks, Jake. he appreciates it.
05:01 Jake Conley
Thank you Julie.