M. Juan Szabo [1] y Luis A. Pacheco [2]
Published Originally in Spanish in LA GRAN ALDEA
After almost eight months of being sworn in as president, with the promise that he would end the Russia-Ukraine war in twenty-four hours, Donald Trump finally twisted President Putin's arm (or vice versa?) and they agreed to meet in Alaska last Friday. This summit between the United States and Russia represents a diplomatic milestone and a historical irony.
The meeting took place not by chance in a territory that the Russian Empire sold to the United States in 1867, amid a war with the British Empire for control of Crimea—a sale that Russian nationalists consider a "historical error." And speaking of historical ironies, it's worth remembering that in 1967, Alaska was the scene of the largest oil discovery in American history, Prudhoe Bay, in the North Slope basin. Since then, the North Slope has produced more than eighteen billion barrels of oil, more than Brazil's total proven reserves.
The week was marked by low commercial transactions, price fluctuations within a narrow range, and all interest centered on the meeting between Trump and Putin. Crude oil prices remained depressed, waiting for the results of the Alaska summit. Even the buoyant liquefied natural gas business showed close attention to indications coming from the summit, due to the direct relationship between Russian gas supply to Europe and U.S. LNG exports.
However, those who expected a sudden agreement between Trump and Putin only saw a well-choreographed ceremony on the military airport runway, with red carpets and a non-accidental display of American military power.
Without knowing the details of what was discussed behind closed doors, the most obvious interpretation of both presidents' announcements is that Putin maintained his initial demands for annexation of Ukrainian territory and keeping NATO away from the reduced Ukraine's border, in exchange for vague promises. For his part, we imagine Trump sought to lower aggression levels toward Ukraine and an immediate ceasefire until details of a lasting peace are negotiated.
The American position was probably framed with an offer to lift sanctions and new economic opportunities, which Russia badly needs. But after three hours of negotiations, the summit ended abruptly, without major announcements. President Trump said he would communicate with President Zelensky and the European leaders. On Saturday, it was learned that Zelensky would be received in Washington on Monday, the 18th, a meeting that a group of European leaders will attend. The markets had already closed, so the reaction will be known on Monday, perhaps with a slight strengthening of prices due to the dissipation of hopes for détente in Eurasia, or possibly quite the opposite.
Note: At the last minute, it was reported by Washington that the meeting between European leaders and President Trump was positive. However, there was no conclusive information about the path forward regarding peace in Ukraine. There is talk of a tripartite meeting between Trump, Zelensky, and Putin.
FUNDAMENTALS
OPEC+ Production
According to the OPEC monthly report, OPEC+ only increased production compared to June by 335 thousand barrels per day (335 Kbpd) and just over 700 Kbpd compared to April. This is in contrast to production opening announcements, which in theory should be approaching 2.0 million barrels per day (2 MMbpd). Saudi Arabia and the United Arab Emirates (UAE) led the increase corresponding to July, with 170 Kbpd and 109 Kbpd, respectively.
OPEC's monthly report maintains its demand predictions and makes a minor revision regarding supply for 2025. For 2026, the report increases demand by 100 Kbpd relative to its last projection and reduces supply by a similar amount. The report extensively argues all these projections, but we must always remember that they are simply projections based on a set of premises and within their own agenda.
IEA Projections
The International Energy Agency (IEA) 's predictions are more daring. The agency points out that global oil supply will increase more rapidly than expected this year and next as OPEC+ members continue to increase production and supply increases from outside the group.
It's noteworthy that OPEC+ supply increases for 2025, as used by the IEA, exceed OPEC's projections. Their supply projection for 2025 was also somewhat surprising, rising by 2.5 MMbpd, 400 Kbpd more than they had forecast a few months ago. For 2026, they projected a supply increase of 1.9 MMbpd, but four months before the end of 2025, the global OPEC+ and NON-OPEC increase barely reached 1.1 MMbpd.
The IEA report argues: "The latest data shows weak demand in major economies and, with consumer confidence still depressed, a sharp recovery seems remote." This customary divergence between the IEA and OPEC does not contribute much to market stability, although it's fair to warn that IEA projections have not materialized in recent years.
Inventories and Global Demand
U.S. commercial crude inventories increased by 3 million barrels compared to last week; however, they do not indicate a turning point regarding the trend of staying low (they are at the floor of the five-year average), since during the week, 7 million more barrels of crude were imported than the previous week. Gasoline inventories decreased by 0.8 million barrels.
China's oil imports in July increased 11.5% compared to the same month last year, as state refineries maintained high operating rates. However, in June, incoming volumes slowed month-to-month after reaching their highest level in almost two years. The world's largest crude oil importer imported 11.1 MMbpd in July, according to General Administration of Customs data published on Thursday.
India's oil demand will grow by around 200 Kbpd in 2025, continuing to be the locomotive of global demand. Argus Media estimates India's oil demand could double from 2024, reaching 13.7 MMbpd by 2050.
U.S. Production and Natural Gas
The U.S. continued to be a constant in the oil equation, with crude production stabilized around 13.2 million barrels per day, and rig activity unchanged, as reported by Baker Hughes; the number of drilled but uncompleted wells (DUCs) also indicates a marked reduction. Drilling activity in the U.S. hydrocarbon sector is oriented toward natural gas, driven by increased U.S. liquefied natural gas (LNG) exports. Exports have reached maximum levels this year, with an increase of more than 20% compared to the same months of 2024, thus consolidating the country's position as the world's largest supplier in this area. This resurgence of LNG exports also serves as a geopolitical lever in the Russia-Europe chess game we have commented on.
U.S. natural gas demand has also increased among commercial and industrial users, contributing to total U.S. gas consumption rising 5% compared to the previous year and reaching new historical highs. Gas prices for major consumers have also shown notable peaks since 2024, but remain below previous records reached between 2022 and 2023.
Renewable Energy
Meanwhile, and perhaps reflecting the Trump administration's new orientation, the pace of new solar, wind, and battery system capacity entry in the U.S. has slowed nationwide this year, impacting confidence in the clean energy sector. However, continued growth outside of Texas and California can encourage alternative energy developers.
Wind energy capacity growth has been steadily slowing in recent years due to rising component and labor costs and difficulties finding new suitable sites for wind farms. This year's 1.8% expansion in total U.S. wind capacity is the smallest annual increase in that country's wind energy footprint since at least 2010.
Battery energy storage systems (BESS) have been the fastest-growing segment of the alternative energy space in recent years in the U.S., and continue to expand faster than wind and solar farms in 2025.
GEOPOLITICS
The Trump-Putin Summit
The most important geopolitical event, which raised expectations worldwide, was the summit between Presidents Trump and Putin. The meeting was in Alaska, where all external details were carefully managed to ensure a very polished summit, while more information about what was discussed had minimal dissemination.
For those who expected the birth of a new relationship between the two powers, Russian Chancellor Sergei Lavrov's outfit upon his arrival in Alaska surely did not go unnoticed. Lavrov wore a t-shirt with the acronym "CCCP," the initials that identified the collapsed Union of Soviet Socialist Republics (USSR). The new Stalin statue, installed in May at Moscow's main metro station, is not the only revealing symbol of what Putin and Lavrov have in mind for Russia and its neighbors.
In any case, after three hours of negotiations, Trump said that he and Russian President Vladimir Putin had not reached an agreement to resolve Moscow's war in Ukraine. However, he described the meeting as "very productive."
"We agreed on many, many points," Trump said at a joint press conference with Putin. "We haven't achieved a couple of important points yet, but we have made progress." "So there's no deal until there is one," the political version of American baseball player Yogi Berra's famous phrase: "It ain't over 'til it's over."
In brief comments while sharing the stage after their meeting, Putin said he and Trump had reached an "understanding" on Ukraine and warned Europe not to "torpedo the nascent progress." For his part, Trump has stipulated that if no agreement is reached that leads to peace in the region, the economic consequences for Russia would be material; European leaders agree on this. Trump also announced he would meet with Zelensky and other European leaders to inform them of the meeting.
For Putin, the Alaska meeting was a propaganda and political success, since for it to happen, Trump delayed the economic sanctions he had threatened to impose if there were no credible efforts from Moscow to end the fighting. Surely, Putin conveyed his demands to President Trump, which will now be presented to Europeans, trying to reverse the pressure to make concessions from Putin to Zelensky. Meanwhile, Russian forces are regrouping for a major offensive.
Active Military Conflicts
Regarding military confrontations, Russian harassment of Ukrainian cities continued even during the presidential summit. Ukraine also scored a critical success with a drone attack that hit the Syzran oil refinery in Russia's Samara region, causing multiple fires at the facilities. This is one of Rosneft's circuit refineries, which supplies aviation fuel to Russian forces. Another drone attack caused a fire at the Druzhba pipeline station on the Russia-Ukraine border. This pipeline system, which is more than 5,000 km long, supplies oil to European countries. Without any territorial achievement, Ukrainian forces have managed to affect oil infrastructure, which has essential effects on Russia's internal market balance, exports, and military supply.
Trade War and Sanctions
In the trade war scenario, Trump stated he would postpone imposing tariffs on countries like China for purchasing Russian oil following his talks with Putin. Previously, he had threatened sanctions on Moscow and secondary sanctions on countries like China and India that buy Russian crude. This means Russian oil will continue to flow, possibly a bearish factor for oil prices. However, the oil market will await progress from the meeting that Trump and Ukrainian President Volodymyr Zelensky will hold in Washington on Monday.
Middle East Escalation
In the Middle East, as we had mentioned, Israel's security cabinet voted to expand the war in Gaza, marking a significant escalation at a time when the country finds itself under intense national and international pressure to end the conflict.
The cabinet approved plans to capture Gaza City in the north of the territory, as part of Israel's objectives to destroy Hamas and rescue hostages held by militants. However, the measure generated fears that new fighting would only endanger captives and worsen an already grave humanitarian crisis. The five-month plan would be carried out in several phases, beginning with taking Gaza City "while distributing humanitarian assistance," according to the Prime Minister's Office (PMO).
The PMO also reported that the security cabinet had adopted "five principles to conclude the war," which included Hamas disarmament, return of hostages, Gaza demilitarization, establishment of Israeli security control over the enclave, and creation of "an alternative civil administration that is neither Hamas nor the Palestinian Authority." Hamas indicated in a statement on Friday that it would resist any Israeli offensive, warning Israel that "it won't be easy at all."
Tensions with India
Trump's intense pressure on India for purchasing Russian crude has been interpreted in India as retaliation for a combination of several problems that have generated tension between the Trump administration and Modi's government, probably: India's opposition to Trump's public statements attributing credit for mediating the recent conflict between India and Pakistan; lack of trade concessions to open India's agricultural market to U.S. exports; and an attempt to pressure Russia to end the war in Ukraine.
U.S.-China Tariff Saga
The tariff saga between the U.S. and China continues. Trump signed an executive order to extend the entry into force of tariffs on Chinese products by another 90 days, while negotiations between the two superpowers continue. Several talks have occurred between the two countries in Geneva, London, and, recently, Stockholm. The new tariff extension was the expected result after the latest round of negotiations that took place in Stockholm at the end of July.
As part of Trump's trade war, the United States imposed tariffs of 145% on Chinese products last April, while China raised its tariffs to 125% on U.S. imports.
After a meeting in Geneva and a call between Trump and his counterpart, Xi Jinping, China approved the export of rare earths to the U.S., which canceled "restrictive measures" on Beijing, such as chip export controls.
Meanwhile, Trump urged China to quadruple its soybean purchases from the United States, something some analysts interpreted as a condition for extending the truce. The hypothetical sanction on Beijing for importing oil from Russia, given the Kremlin's refusal to stop the war in Ukraine, threatened to derail the process.
PRICE DYNAMICS
Oil prices continued to be volatile, moving in a band between $65/bbl and $67/bbl in terms of Brent crude. As feared, the meeting results were inconclusive, and uncertainty remains until early next week. In any event, we don't believe the conflict solution is near, unless low oil prices and increasingly empty Russian coffers force Putin to reconsider his objectives of returning Russia to its former "grandeur."
The OPEC+ crude opening process, concentrated and slow compared to announcements, also disoriented the market, helped by Fatih Birol and the IEA's forecasts of an oversupplied market.
At market close on Friday, August 15, Brent and WTI benchmark crudes were trading at $65.85/bbl and $62.80/bbl, respectively, a loss of more than 1.1% in Brent terms compared to the previous week's close.
VENEZUELA
One Step Forward and Another Back
The Nicolás Maduro administration celebrates the return of American oil company Chevron to operational and commercial activities in Venezuela—the paradox of a "revolutionary" government welcoming "exploitative imperialism." But not everything is joy in the presidential palace in Caracas. The other side of the coin, with the dollar sign, is the determined actions of the Trump administration against the "Cartel of the Suns" and other criminal organizations like "Tren de Aragua," which pressure Nicolás Maduro, particularly due to the high reward offered for his surrender to U.S. authorities. This week, pressure increased with the announcement of U.S. military force deployment in the southern Caribbean Sea, with the declared objective of controlling drug trafficking gangs.
Generally, analysts value Chevron's return and perhaps other oil companies as a lifeline for the economy, probably extrapolating from the effects of more than two years of activity under general licenses 41 and 44A. We believe there's an important difference between those past licenses and the one Chevron currently holds in terms of foreign currency income and process transparency.
We'll have to wait for Venezuelan crude exports to Gulf of Mexico refineries to regularize, to determine what volumes of crude Chevron will move, and its intervention in the foreign exchange market. It's not unreasonable to think the oil volume will be less than before, and the foreign currency contribution to the exchange mechanism will also be less. If that were the case, dismantling the anti-sanctions policy the government has applied in the last 5 months would encounter certain obstacles, complicating the transition from reducing the economy to a more expansive economic policy. If we also factor in that everything depends on the discretion of officials in Washington, the economy will continue to be founded on swampy ground.
In preparation for this uncertain oil situation, SENIAT collections have increased, mainly from VAT, allowing the financing of increased public spending with less monetary emission.
Chevron's activities could also be less aggressive than previously regarding investment levels in production potential generation, due to less PDVSA debt recovery and greater uncertainty regarding country risk. In principle, at least, we don't see a restart of the drilling campaign, so production from Joint Ventures (JVs) operated by Chevron will tend to maintain their production but not increase materially.
Oil Operations
The first two tankers chartered by Chevron after the OFAC license came into effect, the Canopus Voyager and Mediterranean Voyager, were loaded with Hamaca crude at the José terminal in the east of the country, and Boscán crude at Bajo Grande, respectively. Both ships will arrive at their U.S. destination on August 21. Hamaca crude had not been exported since Chevron suspended its operations in early April 2025.
Crude production during the last week averaged eight hundred forty-eight thousand barrels per day (848 Kbpd), distributed geographically as follows:
Production by Area (Kbpd)
- West: 213
- East: 120
- Orinoco Belt: 515
- TOTAL: 848
National refineries processed 220 Kbpd of crude and intermediate products, with a yield in gasoline terms of 75 Kbpd and diesel of 77 Kbpd.
In the petrochemical sector, methanol plants operate at limited capacity due to natural gas availability. Fertinitro is operating and producing 3,100 metric tons per day (mt/d). The Super-Octanos plant has not been able to start up due to limitations in natural gas supply at the José complex.
This week's crude exports are behind schedule; six tankers have been dispatched, four to the Far East and two to the U.S., for a total of 7.8 MMBBLS, equivalent to 520 Kbpd. The weighted price of exported crude is $31.84/BBL.
CITGO
The federal court in Delaware approved on Thursday the rescheduling of the sale hearing originally scheduled for next week, where the decision on the final winner of an auction for shares of Venezuelan refinery Citgo Petroleum's parent company was expected. The change is due to two unsolicited offers received from hedge fund Elliott Investment Management and trader Vitol.
A new date for the final hearing will be set once the court receives comments from special master Robert Pincus, the parties in the process, and creditors, according to Delaware Judge Leonard Stark's order. The court plans to hold an in-person hearing on Monday to hear from the parties. Pincus requested a postponement of the final hearing on Wednesday, with support from several creditors and bidders. Gold Reserve, which seeks the judge to confirm its subsidiary's offer as the auction winner, declared to the court that it opposes any schedule change. The emerging offers have increased disagreements among parties, further complicating the case, which we must not forget now includes satisfaction of PDVSA 2020 bondholders, still in litigation in a New York court.
[1]: International Analyst [2]: Nonresident Fellow Baker Institute
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