IEA vs. OPEC: The Market Chooses Pessimism

El Taladro Azul

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

Published  Originally in Spanish in  LA GRAN ALDEA 

The International Energy Agency (IEA) has once again undermined the oil price floor with its latest report. The report projects, on the one hand, a significant supply surplus for the year and, on the other, a reduction in demand.

These demand and supply forecasts directly contrast with the monthly report published by OPEC, but the market used the preponderance-of-evidence mechanism—that is, it assumed the optimistic case was weak and that barrel prices would weaken.

Indeed, OPEC's demand/supply forecasts may be more encouraging, but they were overshadowed by rumors that the global cartel, OPEC+, was leaning toward placing additional crude on the market starting in April, which also coincided with a larger-than-expected increase in U.S. commercial inventories, according to the Energy Information Administration (EIA).

Munich Security Conference

On the other hand, U.S. Secretary of State Marco Rubio's statements at the Munich Security Conference had a significant impact. Rubio presented a conciliatory but firm stance, inviting Europe to align with the Trump administration's vision on tariffs, immigration, and security. The U.S. official emphasized that the U.S. wants allies who can "defend themselves" so that no adversary tests NATO's collective strength. He also expressed the importance of defending the values that had fostered the successful transatlantic collaboration.

Similarly, German Chancellor Friedrich Merz revisited past mistakes, particularly complacent policies in the face of environmental pressures, which he addressed with "crude realism," and described a strategic shift for Germany. Both diplomats agreed that the "Post-War World Order" was no longer applicable.

Market Fundamentals

Despite widespread predictions of overproduction, global supply, based on information from OPEC and producers themselves, barely grew in January, largely due to OPEC+ underproduction of nearly 400,000 barrels per day (400 Mbpd). The only countries that met their quotas were Saudi Arabia, the United Arab Emirates (UAE), Kuwait, and Iraq. The production increase in Brazil, Argentina, and Guyana in January was about 240 Mbpd, which, together with contributions from the U.S. and Canada, did not offset the decline from OPEC+ countries.

The unusual increase in U.S. commercial inventories of 8.5 million barrels, far from being taken as an indicator of falling demand, results from the fortuitous combination of higher imports and lower crude exports, along with a lower level of domestic refining. Meanwhile, favorable economic results in the U.S., such as reduced inflation, higher-than-expected job creation, and a reduction in unemployment from 4.7% to 4.6%, were overlooked in the weighting done by oil market actors.

Short-term demand for Saudi Arabian oil in China is soaring after the Kingdom earlier this month reduced its official selling prices (OSP) for Asia to the lowest level relative to regional benchmarks in more than 5 years. The Saudis are eager to increase their market share in the world's leading importing region, amid assumptions of global oversupply and the steep discounts at which Russian oil is sold in China.

Thus, during the week, the oil market has been very selective about the information shaping its perception and, clearly, on the fundamentals side, has chosen the somewhat pessimistic IEA projections on demand growth for 2026, reducing demand by 80,000 barrels per day compared to its forecast a month ago. Likewise, it is being carried away by IEA supply forecasts that clearly exceed, at least, the realities of January 2026.

Geopolitics

The oil market is going through a phase of volatility, marked by a struggle between geopolitical risks to supply and the threat of a global supply surplus. Tensions between the U.S. and Iran have reintroduced a geopolitical risk premium, somewhat reduced since diplomatic negotiations began, which so far have had no success. The presence of two U.S. aircraft carriers and their support group in the Middle East is a message that always moves political risk indicators. The mere announcement of the Gerald Ford aircraft carrier's deployment from the Caribbean to the vicinity of Iran, by itself, puts the region on incremental alert.

On the Russian-Ukrainian front, diplomacy and pressure have achieved little; the conflagration continues without expectations of significant change (1,450 days). The Russians are focused on affecting Ukraine's energy infrastructure: hundreds of people have died from hypothermia. Meanwhile, Ukrainians have returned to their drone attacks on Russian refineries: this time it was the Volgograd refinery that had a total shutdown after suffering a fire caused by drones.

The other issue that tends to affect somewhat disproportionately is news about OPEC+ internal deliberations, suggesting that some countries, such as Saudi Arabia and the UAE, prefer to resume oil production increases starting in April 2026. The decision would be made at the end-of-March meeting, but the news, though unconfirmed, generated negative sentiment, especially given the IEA’s continued projection of a production surplus of around 3 million barrels per day in 2026.

In summary, geopolitics has exerted mixed pressure on the oil market, acting as a counterweight to signals of weakness in global demand.

Crude Oil Price Dynamics

Rumors, announcements, and reports from OPEC, IEA, EIA, and news agencies managed to disorient once again the perception of the oil market, which is already predisposed to react to any news, and capitulates once more under the pressure of numerous projections, exaggerated in our opinion, of growing supplies and limited demand. Crude oil prices have suffered a significant decline, retreating nearly 3% mid-week, which brought prices below the previous week's close.

Thus, the Brent and WTI marker crudes, at market close on Friday, February 13, 2026, traded at $67.75/BBL and $62.89/BBL, respectively, reflecting a minor 0.4% reduction from the previous week.

VENEZUELA

Democratic Transition or Directed Auction

There is little doubt that the stabilization and recovery stages outlined by Secretary Marco Rubio during one of his appearances before the U.S. Congress overlap. In the whirlwind of events occurring in the Latin American country, it is difficult to distinguish which steps or measures belong to which stage.

New Oil Opening

The fact is that the hydrocarbon industry remains the main protagonist in the relationship between the White House and the Venezuelan regime. The "express" reform of the Organic Hydrocarbons Law has been followed by the issuance of OFAC licenses (GL 46, GL 49, GL 50), whose explicit purpose is to pave the way for U.S. and other countries' companies to contract with the Venezuelan State to operate in Venezuela's oil sector.

This rushed and, clearly, poorly structured "neo-oil opening" was reinforced during the week with the visit of U.S. Energy Secretary Chris Wright, the highest-level U.S. official to visit Venezuela in many years.

Visit of Energy Secretary Chris Wright

The visit, carefully choreographed to satisfy both parties' expectations, began in Caracas with meetings at the Miraflores Palace and was followed by a visit to oil operations and the signing of long-term energy cooperation agreements, evoking the Chinese-Venezuelan agreement from a couple of decades ago, without direct financing but with alternative financial mechanisms such as Exim-Bank.

The operational areas chosen for the visit were the PetroIndependencia production field, in the Orinoco Belt, operated by Chevron and whose development is of recent date. Most of the wells and infrastructure were drilled and built in the last 24 months; it is perhaps the only field in the country with such conditions.

So Secretary Wright, an expert in shale oil development, saw surface facilities at PetroIndependencia (pads, tanks, lines) that had nothing to envy of Permian Basin operations in Texas, even though the subsurface is very different. They also visited the PetroPiar crude upgrading facilities in José, on the Caribbean coast, operated by Chevron. It should be noted that of the 4 upgraders installed at the José Complex, PetroPiar's is the only one in operation.

Although Wright and his entourage, like the facility operators, wore the mandatory safety clothing and equipment, Ms. Rodríguez broke the rules, perhaps because no one dared to call her attention to it.

Assignment of New Oil Blocks

Meanwhile, operations throughout the country continued normally, and it was announced that, under the protection of the new Hydrocarbons Law, additional blocks would be granted to the companies Chevron, Repsol, and Maurel & Prom. The mechanism or legal justification for assigning new areas is not very clear and evidences one of the most important shortcomings of the new legislation, which, as many have pointed out, has a worrying discretionary component.

Also, the Shell and BP companies benefit from the new OFAC licenses (GL 50), although these are related to offshore natural gas developments: 1. Dragón in northern Paria to be supplied to Trinidad to fill the liquefaction plant now operating at half capacity, and 2. for the development of shared deposits on the Deltana Platform (southeast of Trinidad).

Economic and Exchange Rate Stabilization

The most important impact of the oil export stabilization process has been the flow of foreign currency through the mechanism overseen by the U.S., whereby about $500 million enters the country each month, part of which the BCV auctions, maintaining some control over the foreign exchange market, something it had completely lost last year. In contrast, money trading desks handle relatively smaller amounts of foreign currency, which will change when Chevron and, eventually, other private oil companies begin to operate as they did under general license 41 in 2024.

Likewise, a recovery in public spending and stabilization of monetary financing are observed. All this, obviously, is the result of a better-weighted price for the Venezuelan basket, which for January and so far in February approaches $50/BBL, a marked contrast to what was obtained last year.

Perspectives on Production and Elections

It was noteworthy that, in interviews following the visit, Wright mentioned that, in addition to being able to increase production by 40% this same year, which is clearly perhaps too optimistic, he also agreed with María Corina Machado in the appreciation that free and democratic elections could be held in a relatively short time.

A poll of Venezuelans, published in the Financial Times, revealed that 70% of respondents think things are improving, approximately the same percentage that would vote for MCM if there were elections.

Amnesty Law and Release of Political Prisoners

As for the much-announced Amnesty Law, its progress and spirit have not been very flattering. Despite certain democratic gestures in the National Assembly, while listening to opinions from jurists, NGOs, and universities, among others, differences and grudges from the past surfaced, and the law's approval was postponed. Even the "opposition to the regime" bloc strongly opposed hardline Chavista suggestions that those amnestied should first recognize their crimes before benefiting from amnesty. This approval could become complicated.

The release of political prisoners also does not have the same speed or, perhaps, the same U.S. push as oil events; in particular, very few military political prisoners have been released.

In the territorial order, the Venezuelan army has begun displacing the Colombian guerrilla toward Colombia, probably another request originating in the north.

Oil Operations

It was reported that an oil tanker was boarded and seized in the Indian Ocean after evading the American quarantine around Venezuela. It is the tanker Aquila II carrying 700,000 barrels of Merey crude, allegedly destined for China.

Oil production remained stable last week, with a discrete increase from Repsol in the West offset by a similar reduction from operator Concord in Lake Maracaibo due to an accident involving its drilling rig, which warranted closure.

Production and Export Data

This week's production was 878 Mbpd, geographically distributed as follows:

-   West: 252 Mbpd (Chevron: 102 Mbpd)

-   East: 112 Mbpd

-   Orinoco Belt: 514 Mbpd (Chevron: 134 Mbpd)

TOTAL: 878 Mbpd (Chevron: 236 Mbpd)

In domestic refineries, 203 Mbpd of crude and intermediate products were processed, yielding 72 Mbpd of gasoline and 65 Mbpd of diesel.

February exports appear to maintain the same level as January. Extrapolating from the first half of the month, an export rate of around 740 Mbpd could be achieved, including diluent, without inventory contributions. Chevron is projecting to export 250 Mbpd to the U.S. A shipment of nearly 2.0 million barrels departed for India.

Venezuelan basket prices have remained at $54/BBL.

[1]: International Analyst

[2]: Nonresident Fellow Baker Institute

A MARKET SPECULATING ON GEOPOLITICS

El Taladro Azul

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

Published  Originally in Spanish in  LA GRAN ALDEA

 

To see the oil market react to unfolding events, sometimes in contradictory ways, should not be a surprise. After all, the market trades not only on fundamentals but also speculates on expectations, whether well-founded or not.

During the now-elapsed first week of February 2026, the market experienced a trend reversal after reaching six-month highs. Driven by signs of geopolitical de-escalation, prices recorded their first weekly decline in 7 weeks. However, late on Friday, the market rebounded after the first round of talks between the U.S. and Iran stalled, and additional sanctions were imposed on tankers and companies involved in Iranian crude exports.

Russia-Ukraine Peace Negotiations

In the same vein, the Trump administration is maintaining economic pressure on the Kremlin to accept a negotiated solution with Ukraine. The White House has set the ambitious goal of achieving a peace agreement between Russia and Ukraine by March. During a second round of trilateral peace talks in Abu Dhabi this week, there were no signs of progress, although an exchange of 314 prisoners of war was concluded, the first of its kind since October.

Ukrainian President Volodymyr Zelensky told reporters on Saturday that the United States had proposed a new round of talks in Miami within a week, to which Kyiv had agreed. According to Reuters, if an agreement is reached, it would be submitted to a referendum by Ukrainian voters, who would vote simultaneously in a national election, according to anonymous sources.

Cautious Forecasts for 2026

Despite the many geopolitical uncertainties, the Energy Information Administration (EIA) and some major banks are being cautious about oil for the coming year; they observe the fundamentals (rising inventories and moderate geopolitical risk) and continue to forecast prices averaging below $60 per barrel in 2026; according to the EIA, the increase in crude oil production and the rise in oil in floating storage outweigh the effect of potential disruptions in oil exports driven by tensions in Russia and Venezuela.

Global Production and Supply Factors

In the U.S. and Canada, oil production remains affected by winter shutdowns. At the same time, the increase in rig activity reported by Baker Hughes is concentrated exclusively in the natural gas sector, driven by seasonal demand. Minor contributions from Russia and Mexico to the global oil supply serve as a mitigating factor against the projected overproduction in the first half of 2026. In particular, Russia could be affected by India's decision to substitute Russian crude with Venezuelan crude and by the reduction of the Russian oil "price ceiling" to $44.1/BBL in February, a measure aimed at reducing Russia's oil revenues and intensifying pressure on its exports.

Global Demand Behavior

In this regard, crude purchases by China continue to show a modest uptick, driven by the central government's interest in boosting product exports and strategic inventories. India's demand maintains its forecasted growth, while increases observed in the Middle East and Latin America bring demand closer to OPEC's forecasts than to those of the International Energy Agency (IEA).

Price Volatility

The intersection of overproduction projections and the changing dynamics of geopolitical activity led to a weekly decline in oil prices, though a Friday rally was interrupted by the weekend closure. This volatility is largely attributed to the start of nuclear energy talks between Iran and the U.S. in Oman, which reduced fears of supply disruptions from the Middle East and lowered the geopolitical risk premium that had driven prices. However, that trend reversed upon learning of the meetings' failure.

As things stand, the Brent and WTI benchmark crudes, at the close of markets on Friday, February 6, 2026, were trading at $68.05/BBL and $63.55/BBL, respectively, reflecting a reduction of around 1.8% compared to the previous week.

Note: at the close of Monday, February 9, Brent crude was recovering, with gains of nearly 1.7% for the day.

CUBA

After Maduro, Cuba?

On this side of the world, the situation in Cuba has reached a critical point, with international warnings of a possible economic and humanitarian collapse. In 67 years since the Castro insurgency, numerous predictions have projected the end of the Cuban revolution. Still, time and again, the Cuban regime has shown its resilience and, despite having become a practically unviable country, through repression and social control, the regime survives, albeit seriously weakened.

Energy and Humanitarian Crisis

The UN warned that the Caribbean country faces collapse if it fails to meet its energy needs, particularly for oil. Supply from Venezuela was interrupted in January following the capture and extraction of Nicolás Maduro, and Mexico, which had been supplying part of the demand, also recently stopped its exports to the island.

Blackouts on the island exceed 20 hours daily in many areas, affecting vital services such as hospitals, water pumping, and food refrigeration. Cuba's electrical sector faces a significant deficit, often exceeding 1,800 megawatts, due to aging infrastructure, fuel shortages, and inadequate investment. The government implemented a four-day workweek, reduced working hours, and offered online university classes to conserve energy. Recently, the Cuban government announced that there is no aviation fuel, which could worsen the shortage of goods.

Search for Solutions

The accumulation of decades of mismanagement, ideology, corruption, and the U.S. blockade has left the Cuban State at its most vulnerable moment since the triumph of the Revolution in 1959 and with very limited options. Indeed, there is already talk that Cuba's president, Díaz-Canel, is seeking a negotiated solution to the situation and has initiated secret meetings with the U.S. in Mexico.

VENEZUELA

Changes and Internal Conflicts... and the Transition?

Economic Stabilization and Petroleum Cash Flow

After an unthinkably dynamic January politically, Venezuela continues to surprise, some surprises welcome and others not so much. In the economic sphere, the late 2025 oil quarantine, followed by the removal of Maduro and his wife, was closely followed by the reorientation of Venezuelan crude sales to premium markets under U.S. government "tutelage," which enabled the establishment of a protected cash flow controlled by the U.S. Treasury. Foreign currency proceeds from these exports have entered the BCV and been auctioned in the foreign exchange market, partially mitigating the bolívar's devaluation and slowing the uncontrolled growth of inflation.

January exports ended up in the U.S. market, but in February, we see a diversification of destinations towards Asia and Europe. Indeed, India's largest private refinery, Reliance Industries, is again buying Venezuelan crude: 1.9 million barrels will be shipped from the José terminal in February. Likewise, Repsol formalized a barter of Spanish diluent for Venezuelan crude.

Hydrocarbons Law Reform

Also, in a rushed manner, a reform to the Organic Hydrocarbons Law was presented, discussed, and approved in the National Assembly (AN). The liquid hydrocarbons law reform has been widely analyzed by jurists and oil analysts, laypeople and experts, and most agree in characterizing it as a much less statist law and more attractive for private investment, but with important limitations regarding the participation mechanisms allowed and, above all, with great discretion granted to the executive branch that would give opacity to the contracting and flexibilities that the law establishes for present and future investors.

The maximum "Government Take" under the new law is considerably lower than the nearly 90% under the 2006 Law. However, in each case, negotiations to reduce that burden depend on executive discretion and therefore take away formality and solidity from the contractual offer.

It is worth noting that, unlike most legislation worldwide, the "restoration of the original economic balance," a concept introduced by the approved reform, is an obligation of the executive rather than a prerogative. In any case, a new law will probably be required for Venezuelan hydrocarbons to be competitive and provide the legal security necessary to attract the massive investments required for the country's development.

New Licenses and Investment Expectations

We understand that, as a result of this new legislation, OFAC has received some requests for licenses to operate in Venezuela from OFA. We believe OFAC may be considering issuing a general license, like LG46, covering primary activities (exploration and extraction). Based on this accelerated process, the interim government has met with Repsol and Maurel & Prom, and expectations of increased oil activity have emerged.

Another aspect, little commented on but, in our opinion, worrying, is the "express" formalization of the many contracts concluded under the so-called "anti-blockade law." Contracts granted, by definition, with much opacity, and that would not only control an important part of quality reserves but also limit a new administration's capacity to restructure the oil industry optimally.

Political Dynamics and Transition

In the political sphere, things have also moved at a dizzying pace. The United States chargé d'affaires, Laura Dogu, met with the Rodríguez brothers upon her arrival in the country and promised to work for Venezuela's development. For its part, the AN began discussions on the Amnesty Law, a complex law that, like everything in this situation, could become a double-edged sword.

Rumors persist of disagreements between the Rodríguez brothers and Diosdado Cabello, but the matter has not been confirmed. It was also reported that Alex Saab and Raúl Gorrín had been detained, according to various media outlets, including Reuters, and that their whereabouts are unknown.

The process of releasing political prisoners continues, albeit slowly; Jorge Rodríguez visited the families of inmates in Zone 7 in Boleíta and promised that all would be free next week. It later turned out the event had been a propaganda stunt. The re-imprisonment of opposition leader Juan Pablo Guanipa, less than 24 hours after his release from prison, demonstrates the fragility of the regime's promises and evidences its intention to continue inducing unease in the population.

Venezuelan leader María Corina Machado, for her part, indicated that she wants to return to Venezuela and thought it was possible to hold elections before the end of the year. We think her return would be part of a concerted strategy with the White House to activate the population and energize the political transition from within the country.

Although it had been reported that U.S. Energy Secretary Chris Wright was in Venezuela on Friday to review oil activity, the visit, at the time of writing this note, remains uncertain.

Despite the rapid and multiple changes designed to stabilize the economy and restore oil activity, described as the first two phases of the Marco Rubio Plan, no activity aimed at promoting the political transition to democracy is known... for now. The changes that have occurred have given the impression of a relaxation of repression, judging by the incipient union protests, calls for student protests, and the release of important opposition figures.

Petroleum Operations

Oil production tends towards normalization and even shows a slight uptick as some companies prepare to obtain OFAC licenses. In particular, Chevron is already shipping larger volumes to the U.S.

Reuters reported at least one land rig departing from the port of Houston bound for Maracaibo.

Production and Export Data

This week's production was 875 Mbpd, geographically distributed as follows:

-   West: 251 Mbpd (Chevron: 104 Mbpd)

-   East: 112 Mbpd

-   Orinoco Belt: 512 Mbpd (Chevron: 131 Mbpd)

TOTAL: 875 Mbpd (Chevron: 235 Mbpd)

At national refineries, 212 Mbpd of crude and intermediate products were processed, yielding 76 Mbpd of gasoline and 62 Mbpd of diesel.

February exports appear to maintain the same level as in January. If a monthly export of 840 Mbpd were achieved, Chevron would export 30% of the total.

We estimate the Venezuelan basket price has remain

OVERSUPPLY FEARS MITIGATED BY GEOPOLITICAL TENSION

El Taladro Azul

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

Published  Originally in Spanish in  LA GRAN ALDEA

 The oil market concluded January 2026 with an unexpected price increase, thus recording its first positive monthly balance in the last six months. This result occurs despite forecasts of a supply surplus for the year and, in apparent response, to decisions by producing countries to maintain control over their production, factors that have significantly influenced market sentiment in the final days of the month.

 

The market remains nervous about the possibility of a U.S. attack on Iran, which has reinforced the supply risk premium. Additionally, the capture of Nicolás Maduro in Venezuela in early January and the evolution of the situation in Caracas, detailed in the corresponding section, have generated uncertainty about supply in the hemisphere. The bullish sentiment was also reinforced by the fact that U.S. supply remains affected by winter storm Fern, which reduced crude production by more than 500,000 barrels per day (500 Mbpd).

 

OPEC+ Decisions

OPEC+, led by Saudi Arabia and Russia, reaffirmed its November 2025 decision to pause production increases during the first quarter of 2026 to avoid market saturation. At the same time, OPEC+'s Joint Ministerial Monitoring Committee (JMMC) reviewed crude oil production data for November and December 2025. It noted general compliance by OPEC countries and non-OPEC countries participating in OPEC+. This stance is expected to help counter the International Energy Agency's (IEA) forecasts, which predict a record surplus of up to 4 million barrels per day for this quarter.

 

Ukraine Conflict

U.S. President Donald Trump announced this past Thursday that Russian President Vladimir Putin has accepted a temporary cease-fire in the periodic bombings that destroy Ukraine's energy system, in the middle of winter. This would be an agreement between the parties in conflict to suspend attacks against their respective energy infrastructures, but differences arose over the moratorium's timeframe. Uncertainties about the next step in talks to end the nearly four-year war remain unresolved.

 

Impact on Cuba

A not entirely surprising situation is occurring in the geopolitical sphere of the American hemisphere as a consequence of developments in Venezuela. The conditions imposed by the U.S. for managing Venezuelan exports do not allow the shipment of crude or products to Cuba. Other potential suppliers, such as Mexico, have disengaged from meeting Cuban demand in the face of threats of additional tariffs being imposed on their exports to the U.S. So Cuba finds itself between a rock and a hard place: the "rock" is the internal political and economic crisis and the lack of foreign currency. In contrast, the "hard place" is the tightening of the external siege—a serious situation to watch closely.

 

Price Behavior

In light of all these events, prices rebounded as the market tried to understand President Trump's shifting rhetoric, who first promised "fast and violent" action against Iran and then spoke of dialogue, adding volatility to the upward trend during the week. The gradual return of suspended production in Kazakhstan did not prevent Brent crude from breaking through the $70/BBL ceiling, albeit temporarily.

 

In any case, Brent and WTI benchmark crudes, at the close of markets on Friday, January 30, 2026, were trading at $69.32/BBL and $65.21/BBL, respectively, reflecting an increase of more than 5% from the previous week and almost 15% higher than the close of 2025.

 

At the close of this note, the week's gains were on track to disappear, showing the market's high volatility and the uncertainty of the geopolitical situation.

 

VENEZUELA

Haste Makes Waste

Less than a month ago, the Venezuelan regime sold itself as the paradigm of a 1960s revolution, with an anti-imperialist discourse in which the U.S. was the devil (Chávez dixit). The relaxation of economic sanctions and the change of administration following the capture of Nicolás Maduro on January 3, 2026, have drastically transformed the situation and, as a consequence, have changed the flow of Venezuelan crude exports in the short and medium term, but that is only part of the changes occurring under the "tutelage" and/or pressure of the Trump administration.

 

Stabilization and Recovery Phases

Indeed, the Trump government’s Stabilization and Recovery phases are being implemented in tandem. The reorientation of export destinations toward the North American market has already begun to generate a sufficient flow of foreign currency to halt the devaluation rate of the Venezuelan monetary unit. However, it must be noted that administrative issues in managing the last $200 million affected the auction schedule, widening the gap between exchange markets again.

 

The continuity of these mechanisms could result in a form of exchange rate stabilization, as occurred in 2024, and lead to a recovery in consumption levels.

 

Plans to export more crude volume to markets with better prices by suspending shipments to Cuba (until now sent free or almost free) and to China (pending debt service) will materially increase the amounts received from hydrocarbon sales. However, Chinese debt service will require particular arrangements and negotiations.

 

Reform of the Organic Hydrocarbons Law

On the political side and with a speed never before seen in the history of national parliaments, the Partial Reform Law of the Organic Hydrocarbons Law was approved unanimously and sent to the acting president for signature and publication in the Official Gazette.

 

Following the announcement of the law's approval in the National Assembly, OFAC issued a general license, GL 46, which essentially suspends sanctions applicable to U.S. actors and allows the export, refining, storage, marketing, and transportation of Venezuelan crude and products. These formalizing operations were already taking place.

 

For many analysts, the new Organic Hydrocarbons Law (LOH), with the approved modifications, ends the cycle of the nationalized industry that began on January 1, 1976, with the entry into force of the Organic Law that Reserves to the State the Hydrocarbons Industry and Marketing (LOREICH). The new law allows the primary activities of the hydrocarbons industry (exploration and production) to be carried out by private entities, even through contracting, in the case of Joint Ventures (JV). JVs and PPCs (productive participation contracts) will have 180 days to adapt to the terms established in the new law.

 

In any case, most improvements regarding the reduction of royalties and comprehensive taxes, the rights to market crude, and the determination of the income tax level applicable to each business involve a high degree of executive discretion. The discretionary element will limit the country's appeal to new companies considering investment. However, it may encourage companies already in the country that are recovering funds owed to them by PDVSA to continue their programs and even agree to additional investments. Incidentally, control and approval by the National Assembly over new contracts are eliminated: only the business details will have to be reported; in other words, the process is the exclusive power of the executive branch. According to the new law, operating companies will pay royalties, the integrated tax, and income tax to the state company that will act as the Treasury's agent.

 

However, the new model is not without tensions. Doubts persist about its constitutionality, especially regarding public interest contracts, international arbitration, and the elimination of parliamentary control, among other issues. Additionally, the new law maintains broad discretion in the Executive's hands, introducing uncertainty about the transparency and legal stability of the rules of the game.

 

Operating Licenses and New Investments

We understand that Chevron has a new OFAC license that more closely resembles General License 41 (GL41) granted to them by the Biden Administration, and that Chevron tankers are loading crude at Venezuelan terminals. Still, this increase in dollars has not yet manifested at exchange desks.

 

U.S. Secretary of State Marco Rubio announced that Venezuela will present a monthly foreign currency budget to determine the flow of foreign currency from controlled accounts to Venezuela. This reinforces the message of supervised government that Caracas wants to minimize.

 

In light of these changes, British oil majors Shell and BP, which had already been working with the regime, are seeking U.S. licenses to develop gas fields in Venezuela and shared deposits between Venezuela and Trinidad and Tobago, which, in any case, are governed by the Organic Law of Gaseous Hydrocarbons.

 

Changes in the Political Sphere

In the political sphere, things are happening with the same haste. On January 30, 2026, Venezuela's acting president, Delcy Rodríguez, announced sending a General Amnesty bill to the National Assembly. This measure seeks, among other things, the release of hundreds of political prisoners and the definitive closure of gloomy detention centers, such as El Helicoide, which would be transformed into a social center. The proposed law intends to cover political confrontation events that occurred between 1999 and the present, excluding serious crimes such as murder and human rights violations. It is worth remembering that in 2019, the National Assembly, with an opposition majority, had enacted an Amnesty Law, but it was declared unconstitutional by the Supreme Court, controlled by Chavismo. Different winds are blowing through the corridors of power.

 

Foro Penal, a Venezuelan NGO, reported on February 1 new releases in Venezuela, bringing the total to 310 cases since January 8, when it was announced that a "significant number" of detained people would be released. However, the figure remains far from the more than 800 reported by the authorities.

 

The Bolivarian Armed Forces recognized Delcy Rodríguez as commander-in-chief, apparently an unprecedented detail for an interim president, of which there haven't been many either. Could this be an indication of Maduro's permanent absence, paving the way for elections?

 

Meanwhile, María Corina Machado has been very busy, holding meetings with Marco Rubio, representatives from both parties in the U.S. Congress, and leaders from the European Community. Her return to Venezuela is beginning to emerge. On the other hand, her team has commented little on the new laws that have been aired in the National Assembly.

 

The big question Venezuelans are asking is whether this is a process of guided transition to democracy and the re-institutionalization of the country or just a stage-managed scheme to buy time and stay in power. For now, cautious optimism prevails.

 

Oil Operations

Trading companies Vitol and Trafigura are handling exports of inventories accumulated since late December and January 2026, as well as exports previously carried out by PDVSA. For this operation, shadow fleet tankers loaded with Venezuelan crude are being unloaded in Curaçao, the Bahamas, and Saint Lucia, from where they are marketed by Vitol and Trafigura's chartered fleets. Marco Rubio clarified that once the situation normalizes, PDVSA will return to managing its exports under agreements with the U.S.

 

For the first time in many years, Citgo acquired Venezuelan crude through traders, and diluent began arriving at José from the U.S.

 

Baker Hughes, like other U.S. oil service companies, announced it was preparing to resume operations in Venezuela.

 

Production and Export Data

This week's crude production was 861 Mbpd, geographically distributed as follows:

 

West: 242 Mbpd (Chevron: 104 Mbpd)

East: 112 Mbpd

Orinoco Belt: 507 Mbpd (Chevron: 128 Mbpd)

TOTAL: 861 Mbpd (Chevron: 232 Mbpd)

 

Chevron mentions that it planned to increase its crude exports to the U.S. to nearly 300 Mbpd, equivalent to a formation production of 260 Mbpd (the rest is diluent).

 

In domestic refineries, 216 Mbpd of crude and intermediate products were processed, yielding 75 Mbpd of gasoline and 61 Mbpd of diesel.

 

It is difficult to estimate the actual export for January due to the use of ports and intermediate storage in the Caribbean. In any case, the crude sold is nearly 800 Mbpd.

 

Prices for the Venezuelan basket during the last week averaged $56/BBL, a significant increase reflecting international prices.

 

 

¹ International Analyst

² Nonresident Fellow Baker Institute

GEOPOLITICAL HEAT AND COLD WEATHER ENERGIZE HYDROCARBON PRICES

El Taladro Azul

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

Published  Originally in Spanish in  LA GRAN ALDEA

 

The beginning of the year in the oil market has been anything but boring. Following the U.S. military intervention in Venezuela and announcements that the White House would "administer" the South American country's oil industry, President Trump announced a naval deployment toward Iran's coasts in response to the intensification of the Islamist regime's repression against its dissidents.

 

The market reacted by raising geopolitical risk premiums, as not only Iranian crude production but also transportation routes from that region were at stake. Winter in the northern hemisphere also demonstrated its capacity to affect energy markets. Predictions of a major freeze led to a significant increase in energy prices, particularly natural gas prices.

 

GEOPOLITICS

Tensions with Iran

President Trump announced that he had ordered the USS Abraham Lincoln carrier strike group to head toward Iranian waters. The president commented that "maybe we won't have to use it," but that they were sailing in that direction "just in case." Iranian intelligence interprets the military movements ordered by Trump as a credible threat.

 

Some agencies report that Iranian Supreme Leader Ali Khamenei is hiding in an underground bunker in Tehran. The report indicates that his third son, Masoud Khamenei, handles daily office activities, while his other son, Mojtaba Khamenei, maintains contact with senior regime officials.

 

Russia-Ukraine Conflict

Although the Russia-Ukraine war sometimes seems to disappear from news headlines, the truth is that, one year after President Trump's inauguration and his promise to end the four-year-old conflagration, the conflict continues to claim lives and destroy infrastructure on both sides of the battle line.

 

The first three-way peace talks between Russia, Ukraine, and the United States concluded in Abu Dhabi without apparent progress. The two-day talks ended after waves of Russian airstrikes targeted Ukraine's energy infrastructure and a Ukrainian missile attack against energy infrastructure in Belgorod.

 

Situation in Kazakhstan

Kazakhstan's "Tengizchevroil" company halted production at its Tengiz and Korolev oil fields due to power supply problems caused by fires in two transformers. The shutdown forced the operator to declare force majeure; according to Reuters reports, the production interruption could last up to 10 days.

 

On the other hand, oil from the Kashagan field, also in Kazakhstan, has been diverted to the domestic market for the first time due to bottlenecks at the CPC terminal in Kashagan on the Black Sea, following severe damage to the terminal's equipment from Ukrainian drone attacks.

 

FUNDAMENTALS

OPEC+ Production Policy

At the beginning of the year, OPEC+ reaffirmed its commitment to keep production increases frozen in January, February, and March 2026 to offset low seasonal demand and high supply from countries outside the organization, according to its statement. This position is more than a tactical market-balancing measure given OPEC+'s limited short-term production capacity. Furthermore, any change in that strategy would undermine its closed production potential and weaken its influence on prices.

 

Russian Production

Regarding Russian oil production, Deputy Prime Minister Alexander Novak announced that production in 2025 decreased by nearly 1% to an average of 10.3 million barrels per day (MMBPD). This figure contrasts with OPEC secondary sources measurements, which estimate Russia's production at 9.3 MMBPD, representing a material difference in ongoing global overproduction estimates.

 

Winter Weather Impact

The extreme cold wave hitting the Northern hemisphere has driven up residential heating demand, affecting fuel prices, especially natural gas. On January 23, 2026, the price stood at $5.35/MMBTU, up more than 40% in one month. The weather situation is being closely monitored, as the phenomenon could disrupt oil and gas production due to facility freezing. Flight cancellations and road difficulties also impact liquid fuel consumption.

 

Inventories and Demand

Natural gas inventories, according to the Energy Information Administration (EIA), have dropped significantly. In contrast, commercial crude inventories increased by 3.6 million barrels (MMbbl), which reduces the climate's effect on prices, at least in crude's case.

 

While these uncertainties batter the supply side, demand appears to be consolidating to the point that the International Energy Agency (IEA) increased its oil demand projection for 2026 by 80,000 barrels per day (Mbpd), to 950,000 barrels per day.

 

The agency also notes in its latest report that supply growth did not materialize as predicted. In fact, global oil production decreased by 350,000 barrels per day in December, according to the IEA. And it wasn't the first monthly decline. The agency noted that December's total of 107.4 million barrels per day was 1.6 million barrels per day less than September's record. In other words, global oil production had been declining during the last quarter of 2025.

 

Oil Prices

So the oil market weighed all these changes and concluded that geopolitical pressure was worrisome enough to overcome concerns about supply excess. Thus, at Friday's close on January 23, Brent and WTI benchmark crudes traded at $65.88/bbl and $61.07/bbl, respectively, up 2.8% from the previous week.

 

VENEZUELA

DELCY RODRÍGUEZ, A BRIDGE OR A DEAD END?

In certain Caracas political circles, there is an attempt to draw an analogy between General López Contreras, Vice Admiral Wolfgang Larrazábal, and Mrs. Delcy Rodríguez. We are told that Mrs. Rodríguez, just like the 20th-century military figures, is the transitional figure who will allow Venezuela to leave behind the dictatorship of which she is part.

 

López Contreras and Larrazábal are figures of transition and opening from the military establishment toward civilian rule. Delcy Rodríguez is a figure of preservation and ideological ossification of the current civilian-military power, managing an apparent transition, supervised by external pressures: we do not yet know the result of that experiment, but the regime's performance in these years does not give much hope. It may be that Mrs. Rodríguez and her circle end up surprising us or, more likely, their own colleagues will discard them.

 

Economic Stabilization Phase

The political and economic events resulting from U.S. intervention continue to happen at an unusual speed. The so-called stabilization phase is underway, as announced by Secretary of State Marco Rubio. The disposal of floating crude inventories and ordinary production occurs as a result of restoring the export process. The financial flow called the "Chevron model," which private oil companies have used, appears to be normalizing.

 

PDVSA's production and accumulated inventories are being liquidated through large "traders" at the behest of the U.S. government. Vitol and Trafigura are already authorized and in full activity. Apparently, sales of this crude can be placed in various markets, including the U.S., Europe, and, ironically, China, although the latter is yet to be confirmed.

 

Financial Flow and Sovereign Funds

Income from the sale of PDVSA volumes is deposited directly into a protected account at the Central Bank of Qatar, from which it flows to Venezuela to two "Sovereign Funds" created to control the destination of funds. Meanwhile, income from sales managed by private oil companies (currently Chevron) is handled through private banking, with foreign currency equivalent to royalties, taxes, and the local component of costs and investments entering the foreign exchange market. The fact is that about $300 million of the total $500 million has already reached the BCV, resulting from the "supervised" sale of approximately 12 million barrels.

 

The effect of positive expectations, reinforced by the foreign currency inflows, allowed the differential between the official and parallel rates to narrow to 30%, as parallel market quotes fell by half. The effect should be reflected in goods prices and inflation.

 

Oil Revenue Projection

It is important to understand that 2026 revenues will increase due to higher production volume, about 130,000 barrels per day on average. But the most significant increase is due to the change in export destinations. All crude will be sold at market price, without the discounts or intermediation expenses that the Venezuelan regime used until now to circumvent sanctions. Total oil revenues for 2026 would be around eighteen billion dollars ($18,000 million) at today's prices, 70% higher than those of 2025.

 

Relations with International Institutions

In parallel, Treasury Secretary Scott Bessent announced that sanctions would begin to be lifted and that he would use his good offices to restore relations between the International Monetary Fund (IMF) and the World Bank (WB) with Venezuela. Relations with the IMF are of immense importance for the country's potential reconstruction. Still, they do not seem easy, despite the enormous weight the U.S. holds within this multilateral organization.

 

Indeed, International Monetary Fund Managing Director Kristalina Georgieva stated at the Davos meeting that the IMF is willing to support Venezuela, but needs its main shareholders to recognize the country's leadership and for legitimate authorities to request IMF assistance.

 

Georgieva, in an interview with Reuters, said that despite there having been almost no communication with deposed President Nicolás Maduro's regime since 2019, the IMF has been "closely monitoring the economy" of Venezuela to assess its trajectory; Venezuela is many years behind in delivering the information the Fund requires for its assessments. But, Georgieva stated, "we understand the pressing situation. If the opportunity arises to support the Venezuelan people, they can be sure that the IMF will be there."

 

The official maintained that she is concerned that 8 million Venezuelans have fled the country in recent years, a proportion of the population greater than Ukraine's emigration due to Russia's invasion, which has drastically reduced the country's economy. "Inflation is rebounding. We are concerned that hyperinflation will reappear in Venezuela," Georgieva stated.

 

Earlier Thursday, IMF spokesperson Julie Kozack said in a regular briefing that the IMF would follow the same protocols for engagement with other countries that have experienced irregular changes of government and would assess whether countries with majority votes recognize Venezuela's government as legitimate.

 

Reform of the Organic Hydrocarbons Law

Another surprising development was the presentation of the modification to the Organic Hydrocarbons Law to the National Assembly, apparently one of the requirements the White House made of Delcy Rodríguez. The law was approved with more difficulty than glory in the first "discussion" and is now ready for "public consultation" and discussion of each article before formal approval.

 

The law seeks, in principle, to modify articles of the current 2006 law that hinder private investment. Perhaps the most important change from Hugo Chávez's 2006 law is the recognition that private companies can carry out primary activities (exploration and production) both through Joint Venture schemes and through production-sharing contracts, and the relaxation of the articles that prevent these investors from operating directly.

 

However, the reform maintains, even in what it seeks to make more flexible, a high degree of State discretion. Similarly, in other fundamental aspects, such as the level of royalties per project and crude marketing, as well as potential sanctions on private parties, the State establishes itself as a discretionary barrier and thereby opens the door to influence peddling and corruption.

 

In sum, although applauded by many economic sectors, the proposed reform is a timid attempt that we do not believe will resolve the problems of exacerbated statism that led to the sector's destruction. It is also striking to observe that the political opposition does not participate, by design or absence, in this discussion, one of the most important of all, leaving a space that will later be very difficult to reclaim.

 

Human Rights and Political Transition

A key and worrying aspect of the accelerated political process underway is the continued violation of human rights. It is impossible to imagine a real transition under repression, censorship, and opacity. The mass release of political prisoners announced by Jorge Rodríguez has not been as expected; it has been drop by drop, and those released have not regained their freedom, as they are subject to precautionary measures of appearing before courts, prohibition from leaving the country, and limitations on speaking freely. No less important is the continued violation of the rights of political exiles, who, by definition, are excluded from designing the country's future.

 

Uncertainty About the Transition Process

The main uncertainty in most Venezuelans' minds is the lack of clarity about the path to a genuine transition to a legitimately elected government. Some observers maintain that the process will be relatively quick, as the White House seeks tangible results before the midterm elections, when control of both chambers of Congress is at stake. On the other hand, there are comments that U.S. supervision could last for years due to the lack of concrete announcements about the democratization process following Trump's meeting with María Corina Machado.

 

We must wait for events to unfold; not even a month has passed since they deposed Maduro, and the "express channel" of the economy has yet to be traversed. Now is the time to recover fundamental freedoms, indispensable to deposing tyranny and legitimizing the republic.

 

OIL OPERATIONS

Return to the International Market

Venezuelan crude is returning to oil markets without the sanctioned connotation. Trading companies Vitol and Trafigura are in charge of reestablishing routes to Europe: the tanker Poliegos has loaded 1 million barrels for Italy, while, in parallel, they supplement the volumes that Chevron has been supplying to refineries on the Gulf Coast of America, selling crude to Valero and Phillips, among other refining companies.

 

Operational Activities

Operational activities are returning to a tense normality by reducing inventory levels, and work is underway to restore closed production. As expected, the response is slower in the Orinoco Belt fields.

 

International Contractors

International service contractors are preparing for increased activities, initially from licensed companies and, eventually, from those who decide to invest in country risk, such as Venezuela's. SLB CEO Olivier Le Peuch said the company is well-positioned to rapidly expand its business in Venezuela, given its role as the only international oil services provider with an active operational presence in the country, providing services to Chevron under that company's license. Halliburton has stated the same.

 

Production Figures

This week's production was 854,000 barrels per day (Mbpd), geographically distributed as follows:

 

West: 240 Mbpd (Chevron: 102 Mbpd)

East: 112 Mbpd

Orinoco Belt: 502 Mbpd (Chevron: 124 Mbpd)

TOTAL: 854 Mbpd (Chevron: 226 Mbpd)

 

Refining and Export

In domestic refineries, 220 Mbpd of crude and intermediate products were processed, yielding 76 Mbpd of gasoline and 62 Mbpd of diesel.

 

There is no official information on exports; we can only estimate that approximately 12 million barrels from accumulated inventory (380 Mbpd) were shipped through "traders," along with 200 Mbpd of fresh production, and that Chevron transported 180 Mbpd to the U.S., for a total of around 760 Mbpd. We estimate that the average price achieved is close to $51/bbl.

 

 

¹ International Analyst

² Nonresident Fellow Baker Institute

TRUMP PRESSURES IRAN AND VENEZUELA, THE MARKET REACTS

El Taladro Azul

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

Published  Originally in Spanish in  LA GRAN ALDEA

 

In what appears to be a return to the 1970s, the oil market is experiencing volatility driven by political instability in producing countries, particularly Iran and Venezuela. Geopolitical and climatic factors are thus counterbalancing projections of supply surplus that have been weighing on prices.

Equally significant, production growth estimates are not being met either within or outside OPEC, while demand continues to grow, driven partly by the expansion of China's strategic reserve and improved global economic performance, including in the United States.

Geopolitical Volatility

President Trump's shifting decisions regarding the Iranian crisis and what appears to be his growing influence in Venezuela have had significant repercussions on market expectations. Mid-week, amid a possible U.S. military intervention in Iran to halt the Islamic regime's brutal repression of opposition protesters, prices exceeded $66/bbl (Brent); however, the cancellation of that attack eliminated much of the initial increase.

Similarly, the conflict between Russia and Ukraine continues to affect the market. Russia carries out ongoing attacks against Ukrainian cities and civilian targets to weaken population morale, while Ukraine directs its offensives against the Russian energy system, seeking to undermine its economic capacity. These recent actions have damaged the Caspian Pipeline Consortium (CPC) maritime terminal at Yuzhnaya Ozereevka on the Black Sea, reducing Kazakhstan's export capacity by approximately 10% following Ukrainian drone attacks.

Oil as Strategy

The oil market and the entire region are closely watching developments in Venezuela, though without reaching definitive conclusions, given the complexity of assessing the net impact on the global oil balance. The White House is promoting production growth in Venezuela, though without a clear timeline.

The recent U.S. involvement in Venezuela, particularly regarding oil, is likely strategically designed as a counterweight to OPEC+ energy policy, especially concerning Persian Gulf countries that have shifted from a strategy of price-reactive production cuts to one aimed at recovering market share in the Americas (United States, Brazil, Guyana, and Canada).

This strategy, implemented during 2025, has achieved partial victories, but at the cost of prematurely exhausting much of its spare production capacity. The redirection of investments toward natural gas projects, energy transition, and long-term developments has also impacted production, which, at the beginning of the year, is below announced levels.

Geopolitical Balance

Long-term supply commitments by these countries to China, together with integration into Asian trading systems, have strengthened commercial interdependence without affecting existing security ties with the United States. This situation exemplifies a hedging strategy that prioritizes flexibility over exclusivity in international alliances, which appears to be the best response to the White House's new geopolitical vision.

Market Summary

In summary, the oil market has responded dynamically to geopolitical events in Iran, Venezuela, and other relevant areas, in a context of abundant but increasingly tight supply, sustained demand, and supply that falls short of expectations. At the close of Friday, January 16, Brent and WTI crude traded at of $64.13/bbl and $59.34/bbl, respectively, up approximately 1% from the previous week.

VENEZUELA

Genuine Will for Change or Flight Forward?

Venezuela is currently experiencing a crucial moment in its long oil history. Although it possesses one of the world's largest proven oil and gas reserves, it suffers from having dismantled its industry and is now unable to transform that potential into sustainable production, economic growth, political stability, and international confidence. According to President Trump's statements, U.S. intervention will bring significant changes to the country, particularly to its oil industry.

The Chavista establishment appears to be reacting to U.S. pressure by promoting political and legislative transformations that the country had been demanding for decades, unsuccessfully. It remains to be seen whether this will have the support of the Chavista base and, particularly, the military forces.

U.S. Tutelary Control

The Trump administration quickly implemented a mechanism through oil that closely resembles tutelary control. The argument is that to avoid civil war and stabilize Venezuela's political and economic situation, it was preferable to exercise such control through Delcy Rodríguez, who assumed functions proper to the head of state by mandate of the Supreme Court of Justice, apparently to minimize questions about her legitimacy. Naturally, the narrative from Delcy Rodríguez and the new regime emerging with her is that Venezuela is a sovereign country and that its relationship with the U.S. is purely transactional, ataimed to bringing Venezuela out of its international isolation.

In any case, while the regime puts on the mask of institutions once again, following the military intervention of January 3 and Maduro's forced removal, authorities declared a state of exception and ordered the detention of individuals allegedly supporting the U.S. incursion, thus intensifying repression and reactivating the so-called revolving door of political prisoners.

Controversial Legislative Reforms

In parallel, both the legitimate opposition and international actors called for recognition of Edmundo González's electoral victory, while labeling Delcy Rodríguez's inauguration as illegitimate. The U.S. government ignored these calls, and on January 5, 2026, the legislature corresponding to the 2026-2031 period was installed under Chavista control. This new National Assembly, whose legitimacy is also questionable, announced it would undertake profound legal reforms, including modifications to the Electric System Law and the Organic Hydrocarbons Law, the latter of which is considered partially responsible for the lack of competitiveness in the national oil sector.

Commercialization Under U.S. Conditions

Despite the Caracas regime's boasts of sovereignty, the fact is that the announced commercialization of Venezuelan crude at market prices, under conditions defined by the White House, has already begun. The oil is destined for the U.S. market, and trust funds have been established to accumulate proceeds from these sales to protect against creditor lawsuits. Treasury Secretary Scott Bessent promised to repeal the associated sanctions and to hold meetings with the World Bank and the IMF to reestablish relations with Venezuela.

Likewise, according to Reuters and Bloomberg, Chevron's license terms were revised, OFAC licenses were granted for commercial operations involving Venezuelan crude, and administrative mechanisms were established to manage fund flows to the BCV. Simultaneously, the process of reopening the U.S. embassy in Caracas began, and CIA Director John Ratcliffe made an official visit.

Stabilization Prospects

Various economic actors in Venezuela, as well as the U.S. administration, believe the country is moving toward a stabilization phase as the initial step in the transition plan presented by Marco Rubio. Meanwhile, elements of the second phase are being developed, focused on reactivating the oil industry.

However, immediate results are expected only from Chevron's activities and those of other previously licensed companies, as the rest of the potential investments will depend on the competitiveness of the announced legal reforms and the legal and personal guarantees provided in future oil block contracting processes. Overall stability and regime legitimacy remain determining factors in investment decisions.

It is also possible that the already negotiated natural gas projects in Trinidad could be revived despite the new uncertainties introduced by the new stability, though this may seem a contradiction in terms.

The Uncertain Political Future

Finally, the question arises whether the current stabilization will seek to prolong the tenure of a delegitimized government or, in a third phase, lead to a democratization process that respects the popular will expressed in July 2024 or to new general elections.

Integration into the U.S. Energy System

Within the framework of U.S. efforts to rapidly integrate Venezuelan crude into its energy system, it is reported that consideration is being given to substituting it with lighter crude for storage in the Strategic Petroleum Reserve (SPR), while Venezuelan crude is destined for Gulf of Mexico refineries.

Additionally, the Central Bank of Venezuela (BCV) has been authorized by OFAC to receive the first revenues from the sale of previously blocked crude, allocating up to $500 million to imports for the agro-industrial sector, which will benefit the foreign exchange market in the new context.

Nicolás Maduro already seems to be merely a worn and yellowed page in Chavista history, at least in the book of his until recently comrades, followers, and partners.

OIL OPERATIONS

Oil activities during this past week focused on normalizing processes seriously affected by the naval blockade and the subsequent rush to redirect shipments to the U.S. market.

Production fields have been reopening with varying results. In the West, almost everything affected was recovered, while in the Orinoco Belt, in the east of the country, recovery has been slower.

Weekly Production

This week's production was 843 thousand barrels per day (843 Mbpd), geographically distributed as follows:

• West: 238 Mbpd (Chevron: 102 Mbpd)
• East: 112 Mbpd
• Orinoco Belt: 493 Mbpd (Chevron: 126 Mbpd)
• TOTAL: 843 Mbpd (Chevron: 228 Mbpd)
• 
  

Refining

National refineries processed 218 Mbpd of crude and intermediate products, yielding 76 Mbpd of gasoline and 62 Mbpd of diesel.

Exports

No official information exists on export volumes. We can only estimate that approximately 20 million barrels of stored crude will be liquidated, in addition to what Chevron routinely transports to the U.S. market. This corresponds to approximately 830 Mbpd of crude exports in January. We estimate the average price achieved in this crude sales process at $49.6/bbl.

[1]: International Analyst [2]: Nonresident Fellow, Baker Institute