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After President Trump last year kept most of corporate America constantly adjusting to changes in U.S. tariff policy, some may have hoped for more stability in 2026.
That’s unlikely, as the U.S. capture of Venezuela’s President Nicolás Maduro immediately made clear at the start of the year.
The WSJ Leadership Institute’s CFO Journal checked in with Wall Street Journal columnist Greg Ip, who wrote about what he considers low-reward stakes involved in the U.S. intervention in Venezuela.
Trump seems focused on the benefit to U.S. oil companies, which stand to recover billions in expropriated assets and new access, but Ip writes that even that “potential revenue isn’t transformative.” Here’s a condensed, edited version of our conversation:
Greg, interesting column this week on what American interventionism in Venezuela may mean for U.S. business and the wider world. You seem skeptical about what this attempt to control Venezuela’s oil reserves may mean for the U.S. A few questions from us, on behalf of our CFO and C-suite readers:
Why do you think the direct economic benefit to the U.S. of controlling Venezuela's oil is modest?
The numbers aren't big enough. The 50 million barrels of oil Trump says the U.S. will get are worth at most $2.5 billion. That would cover less than a day's worth of interest on the national debt. Venezuela will need years of very expensive investment to boost production. Optimistically, that could yield $15 billion in annual revenue for oil producers two years from now. That's small relative to oil companies' existing sales, and the U.S. economy.
Will control of Venezuela benefit consumers, and Trump, via lower oil prices?
At the margin, yes, but perhaps not enough to make much difference. Venezuelan crude is well suited to many U.S. refineries, so that could help bring down gasoline prices. Still, there was a good chance oil would have fallen to Trump's $50 a barrel target even before Maduro was captured because the world is so well supplied right now. Ending sanctions would release more Venezuelan crude, at the margin, but significant increases will take years.
Given that the U.S. and Venezuela will jointly have so much of the world's reserves, can Trump now dictate, or at least influence, oil prices?
Not really. As Bob McNally of Rapidan Energy Group tells me, you influence prices by controlling supply. The U.S. hasn't controlled its own supply since the early 1970s, under the Texas Railroad Commission.
Today, U.S. producers respond to their own economics and price signals. For Venezuela to hold down future prices by increasing supply, it would need spare capacity. But to have spare capacity means it must first withhold production. It's conceivable it may do so because it is still part of OPEC. But it's hard to see why any president would ever condone Venezuela withholding production, and thus having the capacity to surge production later.
✏️ Share your thoughts: Do you think oil should be central to U.S. foreign policy moving forward? Join the conversation at the end of Greg’s column or by hitting Reply to this newsletter.
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