Rolling coverage of the latest economic and financial news, with gold and defence company shares also higher today What role could the US play in Venezuela’s ‘bust’ oil industry? The oil price remains in the red this morning, with Brent crude now down 1% at $60.15 per barrel. Analysts are in broad agreement that while the Venezuela attack is unlikely to boost demand for oil, it also won’t lead to a rapid surge in supply. The question is, will traders focus on the potential for future Venezuelan oil flooding the market, which could tank the oil price, or will they focus on how much investment will be needed to get Venezuela to pump more oil? Right now, Venezuela pumps less than 1 million barrels per day, at its peak in 1998, before socialist dictators took control, it was pumping out nearly 3.5 million barrels per day. To get back to this level will take hundreds of billions of dollars in investment, which President Trump has said will partly come from US oil companies. However, the type of investments needed including upgrading old and decaying infrastructure, drilling new oil wells and building more refineries to process Venezuela’s heavy crude oil. Optimizing resource-rich Venezuela to generate the income needed to turn the country around could take until 2030 and beyond, according to some oil analysts. Thus, any decline in the price of oil at the start of this week could be short lived. “The reported capture of Venezuelan president Nicolás Maduro might be a geopolitical shock, but for markets it’s not an oil-price earthquake. Venezuela accounts for roughly 1% of global supply, and even in a best-case political outcome, restoring production would take years. Most of the disruption risk is already priced in, meaning this is a slow-moving structural story rather than a trigger for sustained oil price moves. “For investors, the earliest impact is likely to appear in US refining, where heavy Venezuelan crude fits existing infrastructure. Refiners with exposure to complex facilities may see improved economics at the margin, while Canadian oil sands producers face increased competition over time. Continue reading...