Even a US Blockade of Venezuela Isn’t Spiking Oil Prices

From OPEC powerhouses and US shale producers to countries like Guyana, global producers are drilling more oil and driving down prices. And with the potential for a ceasefire in Russia and pressure on Maduro in Venezuela, even more oil could flood the market in 2026.

On today’s Big Take podcast, host David Gura sits down with Bloomberg oil trading reporter Alex Longley and Opinion columnist Javier Blas to discuss the forces driving the oil market right now, how they’re impacting different countries and why even lower prices could be on the way.

Read more: The World Is Awash With Oil and Prices Are Poised to Keep Falling

Hosted by: David Gura Produced by: Julia Press Reported by: Alex Longley and Javier Blas Edited by: Jeff Grocott Fact-checking by: Rachael Lewis-Krisky and David Fox Engineering by: Katie McMurran

Senior Producer: Naomi Shavin Deputy Executive Producer: Julia Weaver Executive Producer: Nicole Beemsterboer

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:09):
The US has intensified its blockade of Venezuela by trying
to intercept a third oil tanker off the country's coast.
These actions could put pressure on President Nicholas Maduro's government,
as Maduro faces calls to step down. At least ninety
five percent of the country's overseas revenue comes from oil sales.
Whenever there are winds of conflict involving oil producers, oil

(00:32):
markets tend to react strongly, but on Monday, Brent oil
prices rose only moderately, from over sixty dollars on Friday
to over sixty two dollars on Monday. That's in part
because these days, Venezuela's exports account for less than one
percent of global oil demand. There are many other countries
flooding the market.

Speaker 3 (00:52):
With oil, whether you look in the US, whether you
look at OPEC produces in the Middle East, whether you
look at countries you don't necessarily think of it sort
of long storied oil producers like Guyana. The general story
of oil production over the last couple of years has
been that it has grown incredibly quickly.

Speaker 2 (01:07):
Alex Longley is an oil reporter at Bloomberg based in London.
At a time when affordability has become a political watchword
and it feels like everything is up in price, Alex says,
oil is a notable exception.

Speaker 3 (01:20):
And that's sure if dasoline prices at the pump, that's sure,
if crude prices traded by oil traders or derivative traders
across the globe.

Speaker 1 (01:27):
Three years ago, we were trading above one hundred dollars
per barrel.

Speaker 2 (01:31):
That's heavier Blast, a columnist for Bloomberg Opinion, who writes
a lot about energy, we.

Speaker 1 (01:36):
Are trading now. If we look at the US benchmark,
a West Texas intermediate around fifty five dollars per barrel.
So the price of oil has has gone down by
fifty percent over the last two and a half three years.

Speaker 2 (01:48):
These days, gasoline at the pump is less than three
dollars a gallon in the US on average, the first
time it's been that low since twenty twenty one.

Speaker 1 (01:56):
And if we look at adjusted by inflation, what is
really what matters. The price of oil is not very
different to what it was around twoenty twenty five years ago.
It paints me almost saying because I make a living
writing about energy and oil prices and how important they
are to the global economy. But at current prices, central

(02:19):
banks don't need to think about oil, governments don't need
to think about oil. To be honest, drivers and families
can't really go on that business without having to think
about oil because it's cheap.

Speaker 2 (02:38):
I'm David Gera and this is the big take from
Bloomberg News today on the show, what's behind this glut
of oil which has led to lower prices and how
conflicts involving Russia and Venezuela could impact them. When you
see oil around fifty five or sixty dollars a barrel,

(03:00):
you might wonder about demand, whether electric vehicles and clean
energy might be driving down prices, but Bloomberg Opinions Heavier
Blast says that's not the case.

Speaker 1 (03:10):
The reality is that demand is actually not bad. It's
an all time high considering what is happening in the
global economy is growing as much as we will expect.
What has been the main driver of the price weakness
is the supply, and that is coming from everywhere. It's
coming from Texas and New Mexico in the United States

(03:30):
and new shale regions it's coming from opic countries like
Saudi Arabia and Iraq, and it's coming from new big
players in the market like Guiana and Brazil. After a
period of very high prices around twenty twenty one twenty
twenty two, we are beginning to see the market reacting.
And the market is reacting the way it does, bringing

(03:51):
a lot more supply, and that's what's really driving the
price down.

Speaker 2 (03:56):
Alex You've written that supply could exceed consumption by four
million barrels a day, and I wonder if you could
help us think about that quantity. How much oil are
we talking about? How would you explain that to somebody
who isn't following this day in the day out.

Speaker 3 (04:08):
Perhaps the simplest way is, think of the biggest ships
that can carry oil in the world. They carry two
million barrels. If supplies exceeding demand by four million brows
a day, two giant supertankers of oil. Imagine those rocking
up off the coast of Texas or off the coast
of the UK. Here two of those appearing every day
for three hundred and sixty five days in the year. Firstly,
it's a physical impossibility, but it tells you something about
the scale of the numbers. Now, if you talk to

(04:30):
oil traders privately, they have smaller numbers than that. For
the most part, I think four million brows a day
for the whole year would be the kind of the
high end of what people are expecting. But even the
lower end of what people are expecting is in any
market a very very oversupplied market, still.

Speaker 1 (04:44):
A lot of it. It is already in the water, it
is already in oil tankers, and is heavy in front
production area as to consulsian areas. It takes only about
less than a week for some of the oil from
the North Africa to reach Europe and refiners rus But
if the oil is going, say from Brazil all the
way to China, that's gonna take forty to forty five days.

(05:07):
But what we don't know is what is going to
happen when that oil reaches destination. Is it going to
be consumed or is it going to go straight into
a storage? And the most likely situation that we're going
to have is that come January February, that oil is
going to go straight into a storage, and is when
we are going to see a price that it's gonna

(05:28):
have to go down because you need to incentivize that
historian process, and for that we need lower prices than today, Alex.

Speaker 2 (05:37):
I remember during the pandemic, oil prices went up, and
when they came back down, the prices at the pump
what I was paying for gas didn't come down as much.
Release It didn't seem that way. What's different about this.

Speaker 3 (05:48):
Time, Firstly, it depends on where you are in the world.
In the US, the response at the pump is much
more reactive. It takes a bit of time, but you'll
still see it come down. Here in the UK, for example,
and in many European countries, a giant amount of what
you pay at the pump is of course tax, rather
than the actual price of the barrel itself. I think
the other things that we have to keep in mind
this time that are different is how far oil could

(06:09):
fall in the coming period. And twenty twenty was a
period when we all worked from home for at least
a few months, and in some countries years we all
stayed at home, no one flew, no one drove, and
that was what kind of took the floor out of
the oil market. This time is very different. This is
an oversupply, but there is a natural flaw here, and
as Xavier has talked about previously, oil prices are already

(06:29):
very cheap, so you can kind of start to ask
the question of how far as we fall into the fifties,
how much further can we fall. Yes, we might see
oil with a foe handle, but you don't hear people
talking about, for example, the twenties or even really the thirties.

Speaker 2 (06:41):
Let's talk a bit about winners and losers. Who's benefiting
from these lower oil prices? And Alex I'll turn to
you first, Tavier, moment to go mention Guiana. Who is
winning out here? Who's this good news for?

Speaker 3 (06:50):
Well? I think there's a few things, and perhaps the
best place to start is sort of the buyers of
sanctioned oil. You mentioned before that kind of twenty twenty
two price shock that we in the West felt very acute,
But there were countries continuing to buy oil that is
now sanctioned where those inflationary pressures were nowhere near as large.
So the country's continuing to take oil that is under
some form of restriction, whether it's India buying Russian oil,

(07:11):
whether it's China buying Venezuela, or Iranian oil. They have
long been feeling the benefits of lower prices in this
higher level of supply. We've already touched on drivers at
the pump. That's another clear area of wind and as
time goes by, I think you're likely to see that
in things like airfares as well. Add in to that
as well, struggling emerging nations finally starting to get a
benefit of lower prices for their economies. And on top

(07:32):
of that, you have, as you said, the new producers
countries where there is an oil windfall that didn't previously exist.
That's a slightly more nuanced case. But if you weren't
producing any oil five years ago and suddenly you're producing
a million bowls a day, there's a clear benefit to
that no matter what, even if prices are falling.

Speaker 2 (07:48):
Have your how about losers shed a tear here for
the multi billion dollar oil companies.

Speaker 1 (07:52):
Well, certainly big oil is going to lose some money.
Anyone that is pumping oil or leave around the regions
where oil is thinking about West Texas, Southeast New Mexico, Oklahoma, Alaska,
South Dakota, all of them are gonna be suffering. Open
producing countries. Soudi Arabia, they are tightening the belt big time.

(08:13):
And then all these new American producing countries that they
are producing a lot more so they are still they
have the higher volumes, but they were not expecting to
receive the price of oil just going into the fifties.
So you are Brazil, Guiana, you know, it's not great
news for them. But I think that the biggest loser
here is gonna be the countries in the Middle East,

(08:34):
Soudi Arabia, Kubei, Qatar, the United Arab Emi days. They
are producing more oil, but the larger volume doesn't really
upset the lower price, and those countries are in need
of a lot of money, particularly Saudi Arabia. So I
would say that the biggest loser here is Saudi Arabia.
The second loser is going to be Texas.

Speaker 2 (08:57):
Let's talk a bit more about Saudi Arabia and Texas
and ticking with the Middle East through. It sounds like
when prices are this low, it kind of sets off
a chain reaction that has a kind of profound effect
on investment and production. Can you just describe the way
that customarily unfolds and we see prices as slow for
such a sustained period of time.

Speaker 1 (09:14):
Well, companies start cutting everything. They're gonna start spending less
on drilling, less on building pipelines, less on exploring for
new oil fields, and they're gonna start firing people at
the office. They're gonna cut the amount of traveling, They're
gonna cut the paper clips that the personal assistants are using.
You start really as rink in the oil industry. And

(09:36):
a lot of that is a one off. It can
be reversed. So you are doing less drilling, you could
increase drilling next year. You can't reverse that very very quickly.
The problem is when oil companies start to cut into
what I would say the bone, firing geologies, firing the
people who are gonna find the next oil field five
ten years from now, which is going to bring the

(09:57):
supply in the twenty and thirties. If we see that,
then we are going to damage the oil industry for
the years to come.

Speaker 3 (10:05):
It's also interesting, I think we've seen the first wave
of those cuts. Have kind of done everything they can,
particularly in the majors, to shield their oil and gas businesses.
They've moved money away from things like renewable and power.
As Haavier says, to kind of prevent that cutting down
to the bone. But logic dictates that once you've stripped
everything else sits, it's the oil and gas that comes next.

Speaker 2 (10:25):
Alex As we move from the Middle East to Texas
to US shale, what are those shale producers saying about
their prospects here in the medium to long term?

Speaker 3 (10:33):
I would say different things depending on whether you talk
to them publicly or privately. We have sort of comments
that there's a lot of lobbying going on to the
US administration about how far prices are going to fall
and what that could mean in the long term in
terms of getting crews back onto fields and how quickly
you can do that. If and when prices rallied down
the line after this drop, you have an entire tariff environment,

(10:54):
right that is affecting the price of steel. The fundamental
costs of the things that help you reoil out the ground.
You need to drill it and then put it in
pipes and then exports it. And if the cost of
doing all that goes up materially, so does your break
even cost. And that means you're well struggles to be
profitable as price is full. In the same way it
would have done a few years ago.

Speaker 2 (11:15):
Coming up, we go back to Venezuela, how global conflicts
could impact oil prices going forward, and what it would
mean if prices get even lower. The story of the

(11:36):
current global market for oil is one of both oversupply
and unpredictability. From Russia and Iran to the US, China
and Venezuela. Geopolitical conflicts involving the market suppliers have created
a climate where major disruptions can arise quickly and without warning.
Case in point, the US blockade against Venezuela. That blockade

(11:57):
refers to sanctioned oil tankers coming in and out of Isela.
US official telling ABC News the Coastguard tried intercepting a
vessel that's part of Venezuela's quote illegal sanctions of asion.

Speaker 3 (12:08):
There are a number of dark fleet vessels that have
not been sanctioned by the US. Now over the weekend,
the Trump administration boarded a vessel that was not sanctioned.

Speaker 2 (12:16):
Here, I'm curious about countries that are facing international sanctions.
There are these hidden oil shipments, and I'm curious if
you could explain to what they are and how they
factor into this broader energy picture.

Speaker 1 (12:26):
It's quite amazing, because when you are talking about hidden
oil shipments, you are still talking about an oil super
tanker which is about three hundred and fifty meters long
by sixty meters wide. So it's not the kind of
thing that you could hide. And obviously it shows up
on every satellite a picture that you know, different governments

(12:47):
have taken at at all times. But there are bezelts
that they have changed hunts multiple times that we don't
know who the ultimate owner of those oil tankers are.
They are bestelts that at times are using flag that
doesn't even exist or is not really registered on the
country that they pretend to be flying the flag. They
don't have insurance, they have a lot of fake paperwork,

(13:11):
and those tankers are used to shift oil out of
the way from Venezuela, Iran and Russia into the global markets,
and by that I mean mostly China. China is the
big buyer of those barrels.

Speaker 2 (13:25):
Have you're picking up on geopolitics, We've got the conflict
in Ukraine continuing, Russia under sanction as a result of that.
Then off the coast of South America you've got now
a blockhade in place. How do these stand to affect
the price of oil here in the months to come.

Speaker 1 (13:43):
Well, I mean that is the big headline race that
oil traders talk about. You could have your best modeling
of the global economy, your best modeling or supply and demand,
but you cannot really anticipate what President Trump in the US,
President put In in Russia and Persida Maduro in Venezuela
are gonna do and how that's gonna play out. If

(14:04):
we think that the situation between Russia and Ukraine, the
world is going towards a solution. Perhaps no immediately, but
there is at least a process that is going on
and negotiation. I think that the market is expecting that
probably we are not gonna see any more sanzios or
any enforcement of sanzios, and therefore supply from Russia should
probably be as as it is today, up and down

(14:28):
a bit. Venezuela. The production is so small in Venezuela's
about a million dollars a day used to produce three
and a half that even if Venezuela was to go
to zero, it will not really change the global market
that much. But Venezuela is a massive race long term
for more oil. If Maduda goes and there is no

(14:49):
damage to the oil fields, those are too big. If
but let's assume that Maduda goes and the opposition gets power.
Most likely international oil companies get invited into the and
over time Venezuela can produce a lot more oil than today.
I think that if we see act in Venezuela in
which Madudo goes, the market is gonna sell and he's

(15:13):
gonna sell hard.

Speaker 2 (15:14):
Alex, let me have you take a bite of that
as well. So if President Trump had this kind of
pie in the sky outcome whereby Venezuela opens up, it's
producing more oil. Maybe if there's a deal with Russia
those sanctions are lifted, we have this world that's a
wash and cheap oil. It's only going to get cheaper.
Play that out for us if you would sort of
what that would look like.

Speaker 3 (15:33):
Well, I think when I talk to whether it's traders, investors,
people involved in companies in the oil market, there are
two things that come up with that. On the Venezuela side.
The first question is, well, if Maduro does go, what
does the post Maduro world look like? And no one
really has an answer for that at the moment, But
I think clearly there there is a short term risk
of a small supplier squeeze and a long term risk

(15:54):
of a large increase in production if there was a
smooth transition there. But again it's a massive if the
Russian side. You ask people, what would you do if
there was a peace deal tomorrow? Would you go back
to dealing with Russia? Again, the question is, well, what
does the world look like tomorrow after this peace deal?
Has everyone lifted sanctions? Has just the US lifted sanctions?
Have the US and the UK lifted sanctions but not
the EU? And within that you kind of get a

(16:16):
sense of the difficulty Western companies would have in going
back to sort of dealing with Russia. Very quickly, we
had the Total CEO on TV saying, I've diversified my
business towards the US and away from Russia. I need
long term stability. It's unlikely I'd go back there anytime soon.

Speaker 4 (16:31):
We were quite in the big universa in Russia almost
fifteen billion dollars in this moment. There was some reasons.
We have made a big write off of four assets there.
So you know, the world is big. So today we
have shifted from Russia through the.

Speaker 3 (16:46):
US However, there is a lot of Russian oil on
the water, and if all of that oil becomes unsanctioned
or unrestricted, what you effectively get is a giant release
from emergency oil reserves, which is what happened in twenty
twenty two. Right. Price has got very high, and governments
across the world said these prices are too high. Will
release some urgency oil stocks, flood oil onto the market
so that we can lower prices at the pump. Again.

(17:08):
All this Russian oil at sea, if sanctions are lifted,
is effectively a giant version of that, and I think
that's the interesting thing to watch in the coming months.
It won't be a wholesale the deal is done, we
go back to life before the invasion of Ukraine, but
it will really create the possibility to kind of remove
some of the sand in the gears of the Russian
oil machine and get that oil flowing to market a
lot quicker than it had been previously.

Speaker 2 (17:30):
Have your last question to you President Trump at the
White House touting cheap gas prices, saying he wants gas
to get even cheaper. I'm curious if this pricing dynamic holds,
if oil remains cheap or gets cheaper. How does that
play out for the US and for other consumer economies.

Speaker 1 (17:48):
While it's relief for consumers, relief for families, it really ease,
particularly in America. Is different in Europe and in the
European Union and the Eurosone and the UK because of
the role of taxation in gasoline. But it will really
unblock a path to lower interest rates, which is what
I think ultimately Trump is interested. Trump only wants cheap

(18:11):
oil because he thinks that as one prerequisite to get
lower interest rates at cheaper price of the money. And
I think that he's fixated on that. He has put
a lot of emphasies on trying to control the Federal Reserve,
and I think he's going to keep pushing until he
gets exactly what he wants, and for that he needs

(18:32):
to sustain the prices at current levels or even push
it lower.

Speaker 2 (18:41):
This is the Big Take from Bloomberg News. I'm David Gerra.
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