US completes first Venezuelan oil sales

Key takeaways:

• Venezuela’s oil industry remains in poor shape despite the world’s largest proven reserves, and current production is not meaningful in global supply terms.

• The country’s investment outlook remains mixed: US administrations have made many promises, major oil companies have responded cautiously, while risk tolerant players and parts of the financial sector, including private equity, show more interest.

• Political stability is difficult to ensure, and investor confidence hinges on clear fiscal terms and credible legal assurances.

• The 500 million dollar Venezuela oil deal can be read through a domestic US lens: a push for lower gasoline prices ahead of midterm elections, the fit with some US Gulf Coast refinery configurations, and a minor impact on Russia through shifting oil flows.

• The broader backdrop is a world moving toward spheres of influence, with the US focused on the Western Hemisphere, China in parts of Asia, and Russia in parts of Ukraine, marking a setback after a strong era of globalisation.