The US raid on Venezuela could significantly impact the oil market. The price of crude oil, which directly influences American consumer prices at the pump, is expected to be a key focus in the aftermath of the raid.
While the commodity doesn’t trade over the weekend, future price fluctuations will likely be influenced by how the situation in Venezuela affects the global oil supply. Three main factors suggest that the impact on oil prices may be limited in the near term.
President Donald Trump announced on Saturday that the US plans to tap into Venezuelan oil reserves. This increased production could further depress already low crude oil prices. As the chart below illustrates, crude oil prices have significantly dropped since the beginning of last year.
US companies that commence drilling in Venezuela will face a dilemma: the more oil they contribute to the world’s existing surplus, the lower the prices will fall, reducing their profits from drilling.
Also Read: After Venezuela, Trump Says ‘Something Must Be Done About Mexico’
As per the report by the Insider, the decisions these companies make will ultimately shape the future price of oil and what consumers pay.
The US assault on Venezuela is not just a geopolitical move, but also a strategic maneuver in the global oil market. With the US planning to tap into Venezuelan oil reserves, the global oil supply could see a significant increase.
This could further depress the already low crude oil prices, affecting not only oil companies but also consumers. The decisions made by US companies commencing drilling in Venezuela will be crucial in shaping the future price of oil.
As they grapple with the dilemma of contributing more oil to the world’s existing surplus and seeing prices fall, their choices could have far-reaching implications for the global oil market.
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This article Oil Is Market To Watch as Venezuela Raid Raises Stakes originally appeared on Benzinga.com
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