PRICES RISE AMIDST GEOPOLITICAL TENSIONS AND STRONG DEMAND

El Taladro Azul

M. Juan Szabo [1] y Luis A. Pacheco [2]

Published  Originally in Spanish in  LA GRAN ALDEA

 

Renewed geopolitical tensions in the Middle East and the Russia-Ukraine conflict pushed the oil market upward. At the same time, signals of increased supply from OPEC+ member countries and mixed economic data in the U.S. balanced this dynamic. Crude oil prices closed the week with significant gains, the strongest in three months in terms of Brent crude, but with daily fluctuations reflecting the perception that there is an excess supply and lukewarm demand—concerns that have not materialized to date.

Key Factors in the Global Energy Market

The key factors that affected the behavior of the global energy market were:

• Decline in crude oil inventories in the U.S.
• Interruptions in Russian refined product exports
• Resumption of Kurdish exports from Iraq to Turkey
• Increased drilling activity in the U.S.
• The inability of OPEC+ countries to open the announced production volumes
• 
  

GEOPOLITICS

Russia, the world's third-largest oil producer, extended its gasoline export ban until the end of 2025 while introducing partial restrictions on diesel exports, catalyzing the week's price rally. Russian Deputy Prime Minister Alexander Novak announced these measures as a consequence of repeated Ukrainian attacks on refineries and fuel storage infrastructure. The attacks have reduced Russia's refining capacity and generated fuel shortages, leading to fuel rationing.

These restrictions eliminate approximately five hundred thousand barrels per day (500 Mbpd) from global markets, creating an immediate supply deficit that other companies are trying to cover. The impact extends further, as on Friday, Ukrainian drones targeted the Tingovatovo pumping station (1,000 km from the Ukrainian border) on the Almetyevsk pipeline, a vital supply route to Russian refineries in the western part of the country. Pumping was interrupted, and Moscow is now considering cutting crude production due to the damage caused and problems with its exports in the international market due to sanctions.

In a new extension of the conflict, Russia continued its tactic of testing or challenging Europe and NATO with incursions into the airspace of at least six European Union (EU) member countries. NATO has activated its air forces, within its protocol, forcing Russian aircraft and drones to leave the territory. 

However, NATO Secretary General Mark Rutte endorsed on Thursday the comments made during the week by President Trump that NATO member countries should shoot down Russian aircraft and drones if they enter their airspace, if such a measure were necessary. Russian authorities, who seem to seek escalation in their stance to divert their population's attention from the internal crisis, commented that this would be a declaration of war. The statements from the Alaska summit, just a few weeks ago, have already become another mockery by President Putin of the West.

Another event that affected the oil market, this time downward, was the resumption of exports from the Kurdish region of Iraq via Turkey. Indeed, Iraq reactivated crude shipments from the Kurdish region through the Kirkuk-Ceyhan pipeline after more than two years of suspension. Initially, one hundred eighty thousand barrels per day (180 Mbpd) are being sent, possibly increasing to 230 MBPD. This provides an additional supply to the market that, although modest, could help reduce the lag in the crude opening announced by OPEC+ countries.

Middle East Situation

In the Middle East, the violence and displacement in Gaza, although intense, continue without affecting the oil market, beyond reminding us of the importance of energy security. Israel executed a massive attack on Houthi bases in Yemen in response to several drones launched from that country against Israel, one of which caused considerable damage in Eilat, southern Israel.

During the UN General Assembly celebration in New York, President Trump met with various world leaders to seek an early end to the war in Gaza and free Israeli hostages. Over the weekend, a 21-point plan that would be acceptable to the parties was revealed. There is talk of releasing all hostages, a staged withdrawal of Israeli forces, and an international government formed by Arab countries. The details have not been verified, nor is it known if they have been shared with Hamas.

UN General Assembly

The UN General Assembly was a kind of political theater, with system failures perceived as sabotage, dramatic and accusatory speeches, and an audience using their absence as an instrument of protest. Even as in the case of President Petro of Colombia, using the opportunity to challenge and insult American institutions right on the street. At the end of the event, what remains clear is that the institution is ineffective and bureaucratic: a stage where much is said, little is heard, and less is achieved.

FUNDAMENTALS

The physical fundamentals of the oil market continue to weaken the narrative promoted by some analysts that declining demand and growing supply would keep the next 12 months with oil surpluses and, consequently, downward prices.

Indeed, the traditional indicator of the demand/supply balance, the level of commercial crude inventories, published weekly by the Energy Information Agency (EIA), indicates that inventories fell by six hundred thousand barrels. At first glance, this decline is a low number, but in the context that crude imports increased during the week by seven million barrels (7 MMbbls), it is evidence of healthy demand. Incidentally, gasoline inventories also fell by more than one million barrels in the same period.

On the other hand, Baker Hughes reported an unusual increase in drilling rig activity (+7), an activity that has been declining for most of the year. The increase focuses on conventional oil basins, which suggests that efforts are concentrated in areas of lower decline to achieve limited production increases.

OPEC+ Production Gap

The most relevant element in determining the movement of world supply in the foreseeable future is the gap between the actual production of OPEC+ countries and the announced production increase. Let's remember that the International Energy Agency (IEA) has predicted, based mainly on OPEC+ announcements, a scenario with growing global inventories in the second half of 2025, with an average oversupply of more than two million barrels per day (2 MMbpd).

Global Demand

India's oil demand in September 2025 maintains an upward trend and is projected to surpass China as the primary driver of global oil consumption growth; India is rapidly approaching an import of five million barrels per day (5.0 MMbpd). It is important to note that this oil import increases, eventually, in response to high liquefied natural gas (LNG) prices and to take advantage of Russian oil imports despite U.S. sanctions.

Meanwhile, China's crude imports during the rest of 2025 seem destined to remain around 11.2 MMbpd, slightly below the nearly two-year high reached in June. However, a possible increase in purchases for strategic oil reserves could raise the amount, and purchases that also benefit from Russia’s need to sell its sanctioned crude.

In summary, the net effect of all elements that moved oil market fundamentals in one direction or another is positive and provides a floor for the price increases caused by the impact of regional wars.

PRICE BEHAVIOR

A week of solid growth in oil prices. The increase in geopolitical risk, mainly due to the direction of Russia's activities, neutralized the nervousness of overproduction announcements. Physical oil market indicators also provided the foundation for these price increases.

Thus, at market close on Friday, September 26, the benchmark crudes, Brent and WTI, were trading at $70.13/bbl and $65.72/bbl, respectively, 5% higher than the previous week's close.

VENEZUELA

Geological and Currency Earthquake

To the concern about the political and economic situation this week, an unpleasant surprise from nature was added. The insistence of high-ranking civilian and military officials that a "gringo" invasion of the territory is imminent has the population on edge. To this is added a deteriorated economy that punishes the most humble and has found in the "gringo threat" a convenient excuse. Fortunately, the supposed invasion looks unlikely to occur as the regime is peddling.

As if this were not enough, a sequence of three earthquakes and hundreds of aftershocks shook the western part of the country, creating widespread panic, mainly where the epicenter was located, on the eastern coast of Lake Maracaibo. Regional seismic movements are generally caused by the displacement of the Caribbean tectonic plates and the South American plate and their relationship with the Boconó and Oca-Ancón faults.

Conspiracy Theories vs. Real Concerns

Generalized nervousness is a breeding ground for conspiracy theories of all kinds. In the case of earthquakes, a TikTok video and news spread by the X platform circulated on social media, suggesting that there is a cause-and-effect relationship between the presence and potential activity of the self-elevating drill brought by the Chinese company Concord to Lake Maracaibo and the earthquakes that occurred this week—an irresponsible rumor, without any technical foundation: worthy of the pseudo-experts who inhabit the networks.

However, a situation that is indeed of concern, and that has not been much mentioned, is the integrity of the containment wall on the eastern coast of Lake Maracaibo. The dike was built decades ago, using Dutch technology, by Shell, to protect the coastal towns that suffered subsidence due to oil extraction and ended up below the lake level over time. We are unaware of the maintenance PDVSA gives to the dike. Still, if it is similar to the rest of the facilities, it could represent a high-risk situation in case of earthquakes like those that occurred during the week. PDVSA should assure the area's population that it is fulfilling its responsibility.

Currency Crisis

The country is indeed going through a real cataclysm: the currency crisis. Economic authorities have been unable to control the runaway devaluation of the monetary sign, despite dedicating increasingly larger amounts of foreign currency to auctions via cryptocurrencies, designed to narrow the gap between official exchange rates and the parallel market. At the end of the week, the gap stood at 68% and the official rate was approaching 175 Bs./$. As foreign currencies offered at the official rate are reduced in favor of auctions at higher exchange rates, it gives the impression that the official rate could converge with the parallel one.

The accelerated devaluation of the bolívar and the issuance of inorganic money to finance public spending catapult inflation that no one dares to publish, but is increasing again. Inflation plus dollarization reduces the purchasing power of salaries and wages in bolívars, making the basic basket inaccessible to most of the population, deepening the humanitarian crisis. As long as foreign currency income is limited and insufficient, every initiative only alleviates the economic problem. temporarily

Diplomatic Relations

In his letter a few days ago to Donald Trump, Nicolás Maduro described the communication channel with Richard Grenell, the White House special envoy, as "impeccable" and reaffirmed his willingness to maintain bilateral dialogue. Analysts read this as a desperate attempt to re-involve the American emissary in a negotiation process and sidestep Marco Rubio's hawks, before it's too late. In any case, Maduro's letter was dismissed by the White House spokesperson.

Likewise, the Venezuelan defense minister, General Padrino López, announced an operation to clean Sucre State of drugs. The campaign is designed to try to counter accusations of narcoterrorism, without realizing that they contradict the regime's previous statements denying the presence of drug trafficking on national territory.

OIL OPERATIONS

National Production

Crude production during the last week averaged eight hundred fifty-seven thousand barrels per day (857 Mbpd), distributed geographically as follows:

•         West                             222       Chevron:          109

•          East                              120

•          Orinoco Belt                  515      Chevron:          121

•          TOTAL                           857     Chevron           230

 

Chevron License Impact

Chevron's activity shows that its new OFAC license is a restricted authorization compared to the original version (LG41). When LG41 was granted in 2022, the production of the PetroBoscan joint venture was artificially limited to about half of its real potential. Hence, reopening that potential did not require much effort, inflating the real effects of the license in the industry's reactivation, for purely political purposes.

On the contrary, the new license took effect with production in the four joint ventures (JV), which were very close to their potential and without drilling activity, limiting the incremental economic impact that some expected. In any case, the major limitation is a consequence of the restrictions imposed by the new license. As the end of September approaches, it is clear that the volumes exported by Chevron to the U.S. are less than half of the previous volume. The royalty and tax payments, paid in kind, are less attractive than under the LG 41 and do not impact the economy as they did at the beginning of the year.

Refineries and Petrochemicals

National refineries processed 223 Mbpd of crude and intermediate products, with a yield in terms of gasoline of 73 Mbpd and diesel of 76 Mbpd.

In the petrochemical sector, one of the Ammonia-Urea trains at Fertinitro in the José petrochemical complex was shut down due to operational problems; the plant will supposedly come back online next week.

Exports

In the first 25 days of the month, around 620 Mbpd of crude were exported, with two destinations: China, 510 Mbpd, and the U.S., 110 Mbpd.

A shipment scheduled for Cuba was replaced by a Russian crude shipment currently unloading in Cuba.

We estimate the weighted price of exported crude at $32.8/BBL.

[1]: International Analyst

[2]: Nonresident Fellow Baker Institute

 

OIL PRICES OSCILLATE IN RESPONSE TO CONTRADICTORY SIGNALS

El Taladro Azul

M. Juan Szabo [1] y Luis A. Pacheco [2]

Published  Originally in Spanish in  LA GRAN ALDEA

 

During the first part of the week, bullish news kept oil prices in a narrow band. The upward forces are the understandable result of the recent interest rate cut by the Federal Reserve (FED), the uncertainty surrounding Russian exports due to continued attacks on their infrastructure, possible additional sanctions by the European Union (EU), and the decline in commercial hydrocarbon inventories in the United States.

However, on Friday, for reasons that are difficult to identify with certainty, the specter of oversupply reappeared as a result of OPEC+ announcements and supply increases in other countries, generating the sentiment that a supply excess will inevitably materialize next year. Neither argument is robust, but the market again values them as accurate, reducing prices by more than 1.2%, below the previous week's close.

Ironically, this sense of imminent overproduction coincides with a "position flip" by the International Energy Agency (IEA), which now suggests that hydrocarbon investments must increase considerably to avoid a medium-term energy crisis. The agency probably seeks to avoid being co-responsible if another crisis materializes, as in 2021. Major oil companies understand this well: they are increasing their global exploratory activity, especially in deep waters.

GEOPOLITICS

During the week, geopolitics continued influencing risk perception in international trade and the global oil market. International tensions and the evolution of major economies added uncertainty about the stability of the supply-demand equation. Conflicts in Europe, the Middle East, and other regions have marked the unstable tone of the market.

USA - United Kingdom Relations

Donald Trump always captures media attention, and this week was no exception. His visit to the United Kingdom unfolded amid a ceremonial pomp rarely seen, even in the stodgy British monarchy. The United Kingdom, after Brexit, is a nation that continues to search for a purpose. Its economic prospects are uncertain, its global influence has diminished, and it faces enormous internal political pressure.

The British ruling class, including sectors of government, the financial sector, and the media, confronts an environment marked by common themes with their American cousins: immigration, climate change, demographic change, Ukraine, and the rise of a populist right, among others. The current Labour Party administration, which is nominally left-wing, finds itself having to make political contortions to avoid missing out on the benefits of being in the US's gravitational field (read: tariffs) while not alienating its voters.

This visit is their public and formal recognition that their future security and relevance are now more tied to the agenda and goodwill of the United States, and less with their allies in Europe, with whom they must maintain a complex balance. By offering a royal welcome, the United Kingdom indicates to Washington and the world that they are choosing a side. However, like everything in politics, it's a choice that will be nuanced by its interests: investments, employment, and internal opposition, among others.

Tensions with Russia

On the other hand, President Trump says he is disappointed with Putin and his actions in Ukraine, and claims to be willing to impose sanctions on Russia, provided that the EU stops buying Russian LNG, natural gas, and oil. This forces EU leaders to try to reach a consensus to replace energy consumption from Russia, which is not easy. The EU's energy chief, Dan Jorgensen, is confident that "very soon" an agreement will be reached to end Russian energy entry to the bloc in 2027, a date that does not satisfy American expectations.

Jorgensen negotiated with Energy Secretary Chris Wright in the context of talks to end the war in Ukraine. They discussed strategies to gradually eliminate Russian energy imports, particularly LNG, to reduce European dependence and support Ukraine. Brussels is weighing its nineteenth sanctions package against Moscow, with plans to advance the Russian LNG ban, as Europe still depends on Russia for almost a fifth of its gas.

Despite Russian signals to attract investments, ExxonMobil does not plan to return to the Russian oil industry, its CEO Darren Woods told the Financial Times on Thursday, noting that what is being carried out are conversations with Russia to recover the value of assets expropriated for $4.6 billion.

In any case, Russia's participation in the oil market is limited by the partial degradation of its refining system and export infrastructure due to Ukrainian attacks and financial limitations to increase its production. Economic sanctions have forced Russia to implement a complex, costly, and risky transportation system, using a ghost fleet increasingly in Western authorities' crosshairs. An immediate result has been the reduction in India's purchases of Russian crude.

Continuing with Russian recklessness to provoke and test NATO's capacity, three Russian MiG-31 fighter jets entered Estonia's airspace over the Gulf of Finland "without permission and remained there for a total of 12 minutes," the Estonian government reported. Italy, Finland, and Sweden deployed fighter jets as part of NATO's mission to reinforce its eastern flank.

Multiple Fronts for Israel

In the Middle East, Israel has been active on three fronts. Advancing the takeover of Gaza City, keeping Hezbollah at bay to prevent its recovery, and defending itself from drones launched by the Houthis from Yemen. The fourth front, unrelated to military activity, is diplomacy, having to face criticism and threats of sanctions from countries that were once considered friends. In the field of international opinion, Israel does not have the same success it has in confrontations against terrorist groups, including Iran.

 Its military strategy is leaving Israel diplomatically isolated, only counting on the U.S. as a secure ally, and with the relative silence of Sunni Arab countries that feel Israel is executing a job that could fall to them. Several countries, including the United Kingdom, Canada, and Portugal, announced they will vote in favor of recognizing the Palestinian state. Israel considers these decisions as a prize to Hamas and other terrorist groups.

FUNDAMENTALS

Given the uncertainty in demand growth and potential increases in oil supply, inventory movement is the best indicator of the real balance of market physical fundamentals. Unfortunately, estimating the real volumes of global inventories is almost impossible, as relevant information contains opaque elements. China's oil inventories are not published, Russia's are not credible, and other important countries like Japan and Korea publish very late. The rest must be estimated by empirical methods that often amplify base errors. This opacity in data can lead to abrupt price movements and suboptimal decisions by producers and consumers, increasing market volatility. The industry and market have resorted to using information published by the Energy Information Administration of the Department of Energy (EIA) as an "extrapolable" indicator because it deals with the first economy and world power.

United States Inventories

This week, for example, the EIA report shows a drop of more than nine million barrels (9 MMbbls) in commercial crude inventories with little change in strategic reserves (SPR) and a decline of 2.3 million barrels in gasoline. In part, the drop corresponds to lower crude imports (-3 MMbbls), but the figure confirms a trend that keeps inventories at the lower end of the 5-year range and shows a reduction of 40 MMbbls in recent months. This indicates that U.S. oil demand is still strong.

Completing the North American picture, the United States and Canada are maintaining high crude production, at 13.2 and 5.8 million barrels per day, respectively. This reflects a perception of relatively low prices and oil uncertainties.

Drilling activity in both countries continues to decline slightly, compensated for in certain areas to meet local energy requirements. Similarly, fracking crew activity (an indicator in "shale" basins) is reducing compared to last year. Under current market conditions, we do not see incremental supply contributions in the United States or Canada for the year.

OPEC+ and Its Challenges

Perhaps the most significant potential contribution to supply and uncertainty corresponds to OPEC+ plans and works; the expanded cartel is trying to dismantle production closures accumulated since the pandemic era (2020). This process began in April of this year and has had its problems. The 2.2 MMbpd that should be upping global supply has run into the fact that a good part of the nominally closed production capacity has eroded, either due to the energy decline of reservoirs or the mechanical decline of wells.

Only some OPEC+ countries have increased their production (1.35 MMbpd, in the latest count); other members have remained below their quotas, reducing the strategy's net effect. In fact, OPEC+ has had problems determining each member's real production potential. To solve this problem, OPEC+ ministers have requested the OPEC secretariat to develop a mechanism to evaluate each member's maximum sustainable production capacity. Based on the methodology OPEC finally establishes, OPEC+ will set baselines: production levels from which each member makes cuts or increases. OPEC+ ministers will make a conclusive decision when they meet at the end of this year.

These complexities suggest that the production increase announced by the group might not be entirely a direct price war, but rather a strategy influenced by factors such as increased sanctions against other oil producers and possible consultations with Washington to manage global supply and prices.

Latin America

Production increase projections in Latin America have also not been met, although they are developing normally. In Brazil, production increased in July to 3.8 MMbpd, but retreated to 3.7 MMbpd in August; it is expected to reach the peak of 3.8 MMbpd by year-end. Meanwhile, in Guyana, production from the Yellowtail discovery began using the FPSO Guyana One. The process of gradually increasing output from this unit is in full development. In August, production increased from 650 to 725 MBPD, and it is expected that by year-end, Guyana's output will reach a new record of 845 MBPD.

Argentina, another country that achieved production increases, reached a production record of 811 MBPD in July. For August, preliminary numbers indicate maintenance of July's level. For the year-end, the objective has been set at 830 MBPD, with more than 60% coming from unconventional exploitation of Vaca Muerta shale.

Investment Perspectives According to the IEA

In an unusual but not unexpected turn of events, the IEA indicated that the world will need to spend $540 billion per year to satisfy current demand and avoid an oil crisis in 2050. Its forecast is part of a report that analyzed more than 15,000 fields and the speed at which their production is declining: "production from current fields is declining at an alarming rate," added the IEA, requiring immediate action from the industry. Its executive director, Fatih Birol, has been emphatic in affirming that the sector must "run much faster just to stay in place," a concept he had opposed with the same vehemence before this report. However, ambiguously, the IEA reiterates in the same report that the world would not need to invest in new oil and gas projects if fuel demand fell in line with the 1.5°C warming limit for 2050 (its Net Zero scenario).

Impact of Interest Rates

Finally, the recent interest rate reduction by the Federal Reserve (FED) has had important—though mixed—effects on the oil market. On one hand, lower rates tend to stimulate consumption and investment, which could increase energy demand in the medium term, especially if additional cuts materialize during 2025. There was no perceptible price uptick, as the oil market had already discounted the 25 basis point reduction.

PRICE BEHAVIOR

The expected interest rate cut by the U.S. Federal Reserve, the fall in inventory levels in the United States, the risks and limitations of Russian exports, and the partial non-compliance with production openings announced by OPEC+ have not been sufficient to shore up oil prices.

Thus, at market close on Friday, September 20, the benchmark crudes, Brent and WTI, were trading at $66.68/bbl and $62.68/bbl, respectively, similar to the previous week's close.

VENEZUELA

Supplicant Diplomacy

The situation between Venezuela and the United States in September 2025 has reached an unprecedented level of tension, marked by accusations of narco-terrorism, military deployments, and contradictory diplomatic maneuvers.

Military officials, diplomats, and analysts affirm that one of the main objectives of the military force deployed by the White House in the Caribbean is to increase pressure to dismantle drug cartels, particularly the Cartel of the Suns, which directly affects Nicolás Maduro. Senior officials of the Trump administration qualify Nicolás Maduro as an illegitimate leader and accuse him of directing the actions of criminal gangs and drug cartels.

"We are not going to allow a cartel, operating or posing as government, to operate in our own hemisphere," declared Secretary of State Marco Rubio on Fox News this week, adding that Maduro had been charged in a U.S. court and was "a fugitive from American justice." Maduro responded to the American military deployment with his own military deployment, which they called "Sovereign Caribbean 200," mobilizing more than 2,500 military personnel, warships, and militias in and around La Orchila island in the Caribbean.

Also, from Argentina, White House special envoy Richard Grenell reappeared in the media, suggesting it was never too late to negotiate with Maduro's regime; an opinion clearly contrasting with those expressed by the rest of the Trump administration. Grenell's intervention could reflect different perspectives within the U.S. government, or Maduro may use it as a "messenger pigeon" to stop the imminent military threat. In any case, three vessels, supposedly transporting drugs, were eliminated with lethal force in the Caribbean Sea, without any legal procedure being pursued. In tune with Grenell's comments, Reuters reported that Maduro had sent a letter to Trump, requesting to resolve differences through direct negotiation and denying any involvement in drug trafficking. During the weekend, the Caracas regime published the letter.

Economy and Cryptocurrencies

On the economic side, the novel use of the USDT cryptocurrency, despite having shown some success, was replaced by DAI. DAI is a cryptocurrency defined as a decentralized "stablecoin" linked to the value of the U.S. dollar. It is designed to maintain parity close to $1 and is probably a tactic to move operations as far as possible from potential intervention by the U.S. Treasury Department. The fact is that it has not achieved the penetration that USDT had.

The new scheme’s objective of mitigating the gap between different exchange markets has not been successful, and the gap has again approached 60%. The official exchange rate was allowed to slide until it reached 165 Bs./$ at the week's close.

Foreign currency income was slightly higher in September, probably due to Chevron's activity. For now, Chevron's process of producing and taking Venezuelan crude to the United States corresponds to a fraction, approximately one-third, of the volumes handled under LG 41. Therefore, foreign currency income and debt deduction expectations will be much lower than in 2023 and 2024

.

In summary, the Maduro administration's procedure wavers between challenging the United States' military superiority, trying to dismantle the narco-terrorism narrative, and at the same time trying to negotiate and wave the olive branch.

Oil Operations

Crude production during the last week averaged eight hundred fifty-six thousand barrels (856 MBPD), geographically distributed as follows:

• West 222 Chevron: 109 • East 120 • Orinoco Belt 514 Chevron: 120 • TOTAL 856 Chevron 229

National refineries maintained their processing level at 230 MBPD of crude and intermediate products, with a yield in terms of gasoline of 76 MBPD and diesel of 78 MBPD. In the petrochemical sector, continuity in operations was also achieved.

Crude exports so far this month point to a volume of about seventeen million barrels (17 MMbbls). In the first half of the month, 90 MBPD were sent to the Gulf Coast to American refineries and about 520 MBPD to the Far East.

We estimate that the weighted price of exported crude is in the order of $31.7/BBL.

It was revealed that Alejandro Betancourt was detained in the United Kingdom at the request of the Central Instruction Court No. 5 of Spain's National Court. Some of Betancourt's companies appear as partners in various joint ventures, such as PetroZamora and PetroCedeño, although we do not expect an impact on the operations.

Citgo

Southern District of New York Judge Katherine Polk Failla published her decision on Friday regarding the validity of the collateral for PDVSA 2020 bonds. Polk ruled that the bonds, which had expired five years ago and expired five years ago and claimed as invalid by representatives of Venezuela, were issued correctly according to her interpretation of Venezuelan law. Venezuela's representatives have declared they will appeal this new ruling. In any case, the possible execution of the pledge (50.1% of Citgo Holding shares) depends on modifying an OFAC license (General License 5S).

In light of the ruling in N.Y., the hearing being conducted separately by federal appeals court judge Leonard Stark in Delaware was temporarily suspended but then resumed without a decision on who should be declared the winner in the auction of the shares of Citgo Petroleum's parent company. Judge Stark must now consider Judge Polk Failla's decision and other elements to adjudicate the long-protracted auction, a decision that will surely also be appealed.

 ¹ International Analyst

² Nonresident Fellow Baker Institute