Saturday, January 10, 2026

WTI -- January 10, 2026

Locator: 49865WTI.

Question: on the margin, what is the #1 driver for the price of oil? All things being equal, the marginal price of oil (reflected in daily / weekly / monthly changes in price of Brent / WTI) is China's imports. From where was it alleged that China was getting a lot of its oil; and if not necessarily now, in the future? Answer: Venezuela. So, if the Chinese have lost access to Venezuelan oil what does that mean for global price of oil? 

On another note: someone is reading the blog. Every time I point something out, hours later, someone posts that note on x. Exhibit A, link here, this was "discovered" about an hour after my initial post:


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Price Of Oil 

WTI: huge jump at end of week. Now at $59.12.  

Two major events right now:

Venezuela:

  • short term: 
    • huge amounts of Venezuelan heavy oil being re-directed to US
    • heavy oil makes up very small proportion of US oil requirements
    • huge advantage for some US refiners
    • Venezuelan heavy oil will simply displace Canadian heavy oil
    • all things being equal will have little effect on price of oil / gasoline in US (short-term) 
    • pressure from Trump 
      • with price of oil where it is, and headed lower, there's no way US companies are going to commit billions of dollars to Venezuela -- no matter how much pressure they get from the president
      • and the president has said he wants the price of oil be lower -- thus making it even more unlikely that US oil companies would commit billions to Venezuela
      • right now, there's already talk that US oil companies may have to decrease their dividends 
  • long-term (10+ years)
    • could make a difference for Venezuela
    • will make little difference for rest of the world
    • "wrong" kind of oil
    • more than enough oil in more politically stable countries
    • Saudi Arabia effect: 
      • Saudi Arabia will do what it can to prevent Venezuela from upsetting the apple car 
      • Saudi Arabia can export five grades of oil, from heavy to light, depending on demand
      • right now, demand is for light oil and that represents the majority of Saudi export oil 
    • some oil companies could benefit but the golden era of oil is over 

Iran:

  • exports a lot of natural gas 
  • exports less than two million bopd 

Lesser issues:

  • Guyana: probably less concern now about Venezuela's intentions;
  • Permian: different type of oil entirely;
  • Russia: could be negatively impacted - but again 10+ years from now
  • China: will need to look for other sources of oil --- which could provide floor for price of oil