Joe Weisenthal: Can I ask a very basic question, which is, given all the hurdles that we've talked about to developing Venezuela's oil industry, and the vast amounts of capital and time that this will seem to need to take. Is this really about oil?

Gregory Brew: I don't think so. But I think for the president, it might be.

Joe Weisenthal: Explain. And let let me unpack that.

Gregory Brew: So, President, President Donald Trump does seem to think about oil a lot. He talks about it a lot, and always has done. I mean, this is you can go back and see his public record is someone who's been in the public eye for decades. And he talks about gasoline and oil quite a lot. It seems to be quite central to his view of the world, the global economy and domestic politics. And I think to some extent, his viewpoint is kind of locked in the 1980s, maybe the early 1990s. He sees oil as being sensitive, to geopolitical action. He sees it as being a resource that is coveted, that is important to have in large quantities. And he sees the price as being crucial. You have to keep the price of oil low. So you need as much oil on the market as you can, so that gasoline prices don't go up. That view is a little outdated at this point, particularly from the point of view of the United States. The US is now the world's largest oil producer. It produces more oil than any nation has done in history and is likely to remain so for the foreseeable future. The U.S. doesn't import nearly as much crude as it used to. Also, most of its crude imports now come from relatively safe places, Canada being first among them. Putting aside the any risk of, you know, disruption of the US, Canada bilateral relationship, the U.S. can get a lot of its crude from very safe, secure places. It doesn't need oil from Venezuela. And quite frankly, neither does anybody else. There's quite a lot of supply sloshing around. There's available supply from other sources that are cheaper, that are safer, that are more competitive. So framing this as a move to seize oil has always been a little bit hard for me to accept, except from the point of view of the president.

Joe Weisenthal: Specifically, what does the U.S. want?

Gregory Brew: Yeah, the official mind of the United States, right. As a as a policymaking, bureaucracy, as a as a as a great power. I think this was first and foremost about demonstrating U.S. primacy in the Western Hemisphere. You know, I do think there is a brain trust now that sees a resurgent Monroe Doctrine or Don Rowe Doctrine, whatever you want to call it, as being a priority. You know that the U.S. should shift its viewpoint away from places like Europe in the Middle East, and should concentrate its attention on the Western Hemisphere and doing this, putting a lot of pressure on a state that has been a US adversary. Putting aside the fact that it's an oil producer, you know, Venezuela has been anti-U.S. for a long time, putting a lot of pressure on this state, erecting an oil blockade, putting a bounty on the head of its president, and then flying in Delta Force to kidnap the president, take him out and put him on trial in the US, sends a very strong signal to everyone that the US is now going to be exercising its primacy in a much more aggressive way. And I think for the for for Trump, I think there's an allure in making this about, you know, materials and making it about energy and making it about energy security. But at the end of the day, as we've been saying, I don't think companies are going to get interested or involved any time soon. And gasoline prices are going to remain low for reasons that have nothing to do with what the US is doing in Venezuela.

Joe Weisenthal: Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal and.

Tracy Alloway: I'm Tracy Alloway.

Joe Weisenthal: Tracy, quite a start to the year.

Tracy Alloway: Yes. I mean, I was actually at this point I wasn't even predicted it. I wasn't even holding out hope that it might be a little bit quiet. At least for the first week of the year, I've just. I've given up on that, particular ambition. But you're right. We had some huge news breaking over the weekend. It's not just that it happened on the Saturday. And of course, we were talking about, the arrest of, Maduro. It's not just that happened on Saturday. It happened at five in the morning or so. They got to Saturday. So I woke up and I already had DMs. They're like, are you guys going to do an episode or an episode on what? What are you talking about? And then it's sort of five minutes. What? He's in custody. What happened? I don't understand that. At all. But, yeah, it's, sort of a a geopolitical, a genuine earthquake. I would say that sort of. It's a cliche that gets overused, but this feels like an earthquake.

Joe Weisenthal: Yeah, there are a lot of firsts involved here. So, like the first major U.S. intervention in South America since, like, I guess the 80s, the first time the US seems to have been this explicit about going into a country because of its oil reserves. Yeah, that was surprising.

Tracy Alloway: Yeah, that's the super interesting thing. It's like it's not clear that, you know, in the past at least, like, oh, it's about spreading democracy. And I think one of the, I guess funnier. And I'm putting that in quotes because none of this is like particularly funny per se, but it's like there's no pretense of like, oh, this opposition leader who just won the Nobel Prize that she's going to get a shot or anything like that. It's a very strange. It's so, it's still face value. My, my interpretation is Trump wanted Maduro gone and got Maduro gone. And the idea that they're going to dress it up in some obvious ideology or principle other than maybe dominating the hemisphere, does not seem to have entered the equation.

Joe Weisenthal: But, but. But. It might not be face value. And this is not right. This is not what we're going to talk about today. But there is a theory going round that it's not really because of the oil reserves. It's because of, rare earth mining in Venezuela, much of which was making its way to China through various means. To all kinds of no one. Yeah, that's a thing. There's like. No. Like. Yes. So you can imagine that telling Americans, you know, we've we've kidnaped a dictator and arrested him for drug trafficking and the bonus is you're going to get cheaper gas prices. That probably resonates a little bit more than like, well, we really needed, you know, some rare Earth like tantalum or something like that that you've never heard of.

Tracy Alloway: Yeah. No, I have, like, a million questions. I'm just trying.

Joe Weisenthal: So, so many people have a million questions also, like, I don't know, like, is this totally unprecedented in terms of you just snatch a foreign leader? I'm amazed that this could, like, happen. It seems like a possible like it seems like almost uneventful in the way, like they just went in and took a foreign leader. You think that they'd be fortified with thousands and thousands of guards and some impenetrable palace are evidently not all just sort of still a complete mystery of like, what exactly happened and what exactly it means and where it's going and all that stuff.

Joe Weisenthal: All right. The immediate reaction, though, in markets and the global economy was what does this mean for the oil?

Tracy Alloway: Yeah, yeah. Because supposedly Venezuela is the holder of the biggest reserve of crude oil.

Joe Weisenthal: Yeah. Something like 300 billion barrels is the number that you see, which again places that above noted exporters like Saudi Arabia. Right. But the issue is it hasn't actually been pulling much of that out of the ground for many, many years. It's been producing, I think like a million barrels per day. Right. The numbers that people are talking about to actually improve the Venezuelan oil infrastructure are staggering. So reserves mean nothing if you can't pull it out of the ground. If you don't have the infrastructure to do that, and then who's going to pay for it at a time when oil is below $60? I don't know how economical that. So many questions. Anyway. We don't need to just keep restating other, all the questions. Ask. Each other. That's why we now that's why we have guests on this show, because we'd like to ask them questions. Anyway. We're excited to say we really do have the perfect guest, someone we've talked to in the past, including an episode about, the oil reserves in Guyana, which, of course, is also part of this story because their neighbors and they have contested, some of their reserves are contested between the two countries. We're going to be speaking, of course, to Gregory Brew senior analyst at the Eurasia Group. So, Greg, thank you so much for coming on Odd Lots

Gregory Brew: Thank you so much for having me back.

Tracy Alloway: How did you find out? What was your Saturday morning like?

Gregory Brew: So my Saturday morning started very early as, all my mornings do now because I have a 15 month old at home. So I was making coffee and I was doing what I always do, which is, checking Twitter or whatever you call it. And I immediately saw, you know, cryptic, vague tweets about something that had happened that was shocking, that had to do with Venezuela. And after about five minutes, I saw that, oh, no, we went in and kidnaped the president, seized him, apprehended him. You know, rockets were fired, helicopters flew over Caracas. It was all very dramatic. And my immediate thought was, you know, what does this mean for oil markets? Then I remembered that it was Saturday morning. And we could get. Action. Yeah, for 36 hours until Asian markets opened. I thought, that's interesting. You know, these things always seem to happen on weekends now because whoever is pulling the trigger wants to make sure they put some space between themselves and, and the market reaction.

Tracy Alloway: Can I just say I had a blissful four hours between this actually happening and me finding out on Saturday morning because I had a friend over, we had an old fashioned sleepover, which was kind of fun, and I was serving her coffee, and we were just talking. And then, like, I showed her the door, immediately looked at my phone and was like, okay, well, that's the end of my nice, relaxing weekend.

Joe Weisenthal: Wait. That's right. More about that. That's incredible restraint to like, spend a morning with a friend without like half paying attention to the phone because.

Tracy Alloway: Thank you, thank you. I know it's unusual for you.

Joe Weisenthal: That would be very hard. Yeah, yeah.

Joe Weisenthal: All right, let's start with, like, let's let's look at some of our priors here. So Venezuelan oil reserves. I have seen some debate around that 300 billion number, particularly from John Arnold, the hedge fund guy. He was saying that this was a reserve figure that seemed to be magically produced by Chavez, the previous Venezuelan leader. And before that, the, proven reserves number, the one that had actually been audited, was a lot lower. So do we actually know that Venezuela has a lot of oil?

Gregory Brew: Well, you know, this this conversation could get very technical very quickly.

Joe Weisenthal: Go ahead. Please let we can yeah. Let's let's dive in. What are oil reserves?

Gregory Brew: So first you start with the technically recoverable reserves, i.e. you know, what is the oil in the ground. What have you discovered through a geological survey's through drilling test wells, etc.? From that point of view, Venezuela could have as much as a trillion barrels, within its territory in the Maracaibo Basin, the west, but also, most significantly in the Orinoco basin in the east and southeast of the country, which is where this very heavy, heavy, extra heavy sour crude is located. It's probably the largest continuous reserve of oil in the world. Its rivals would be the tar sands of Alberta and the Guevarra Field in eastern Saudi Arabia. So technically there is maybe a trillion barrels of oil there. But when we get down to what is recoverable, you know, the US Geological Survey, did a report on this in, I think, 2009, and the figure they landed on was between 400 and 500 billion barrels of what you could pull out of the ground. You know, if not, not counting on price, not counting on how much money you were willing to spend. Then we get to proven reserves. And proven reserves are a function of price, profitability, available investment, security, you know, assessing risks, how much you need to pay if you're an international oil company, how much you need to split with the national government, all of that. And that's where we get a much more fuzzy figure. You know, OPEC, they have figures on proven reserves. The Energy Information Administration of the United States puts out proven reserve figures on various countries. When it comes to Venezuela. There is that, that incident of the Hugo Chavez government radically upgrading the amount of oil that they said was recoverable in, I think it was 2007. The thing about that, though, is that at the time, Brant, crude prices were upwards of $100 a barrel, so the price of oil was very high. Cut to today where, you know, adjusting for inflation, the price is very low. It's $60 a barrel. But, you know, compared to the price in 2007, it's even lower than that. So saying that Venezuela has 300 billion barrels of oil that you could pull out of the ground right now just isn't accurate. The oil is there. But trying to get it out in the current market conditions, given all the risks involved, the security concerns, the upheaval in Venezuela, and then just the amount of money you would need to upgrade the infrastructure and to drill the wells, the figure is much lower than 300 billion. It's a lot. Neighboring Guyana, has proven reserves of around 20 billion barrels. And there's at least twice that in the McCabe basin in the west of Venezuela. So there is a lot of oil there. But whether it approaches 300 billion barrels is, is the subject of much debate.

Joe Weisenthal: When oil prices, when the oil market open on Sunday night, there really hasn't been much of a reaction. And I think it's sort of intuitive, which is that you could come up with any number you want 100, a trillion, 300 billion, 100 billion in the medium, the short term. What matters, I presume, is capacity to pump barrels and sell them. And one of the things that we've seen, we've seen the discharge of how Venezuelan oil production over the years has dropped off quite precipitously. And there are various sort of potential drivers, including maybe price, maybe sanctions. But also there's story that the, you know, the, the socialist government that that nationalized a lot of the oil infrastructure has let the oil infrastructure deteriorate. Give us your read. Like I know where I don't literally have a chart here, but if you could like have that chart, in your mind. Everyone imagine a chart of a line going down. Mostly down. Why don't you like, tell us the story of that chart?

Gregory Brew: Sure, sure. I love describing charts. And I'm also, you know, as as Joe well knows Tracy, you probably know as well. I'm a historian by training, so I love to go back in time and start at the beginning and the beginning. For Venezuela, oil is over 100 years ago. Venezuela is one of the oldest oil producers in the world. You know, first began to commercially produce crude in the 1920s, 1930s. For a while, you know, close to 30 years. It was arguably the second most important oil producer in the world and in the Western Hemisphere, because it was so close to the United States, it was sending a lot of its crude to the US. This was before the Middle East became a major concern in the 50s. And 60s. You know, Venezuela has been around for a long time. It's pumped a lot of crude. When we think about the chart for Venezuela oil production, it's actually, you know, it's it's less of a, collapse in the last 20 years. If you look at it, it's more of a w Venezuela crude output goes up and up and up from the 20s all the way up to the early 70s, where it exceeds 3 million barrels a day. That is, I believe, the historic peak for Venezuela output in, in the mid 1970s, Venezuela produced production starts to fall. It falls quite sharply. There are a lot of reasons for that, one of which is the Middle East. You know, they were facing much stiffer competition, cheaper producers, you know, they had to, investment was being cut. They had to drop production. So production falls from the 70s into the 80s. In the 90s it starts to climb again. And this has to do with PDVSA, the Venezuelan national oil company. For a long time, PDVSA was kind of unique when it comes to national oil companies. You know, we talk about Aramco and Saudi Arabia, the Iraqi Petroleum company, the Kuwaiti Petroleum company. Almost every, big oil producer in the world has a national oil company. Venezuela's PDVSA for a long time was run like a, capitalist enterprise. It was run on the basis of securing profit. It was, in the 90s. It was very good at, making deals with the international oil companies both from the west and elsewhere. So, in the 90s, you know, about 30, 35 years ago, Venezuela output starts to climb again. And in the early 2000, it gets, close to 3 million barrels a day, just as prices are peaking. You know, Venezuela is making a tremendous amount of money in the early 2000. It's, I think, got the, highest per capita, income of any South American country at the time. It's extremely wealthy. It's making a lot of money, incomes. Hugo Chavez and Chavez small. You know, this this, political ideology built around, a very large socialist welfare state, lots of, public enterprise national companies, but also a lot of authoritarianism, a lot of corruption, a lot of kleptocracy. And Chavez pushes further nationalization of the oil industry. The oil industry had already been nationalized. And now we could go down another rabbit hole and talk about the history of resource nationalism in Venezuela. But the industry had been nationalized in the 70s. What had been done in the 90s was, you know, more joint, deals with international companies bringing in international capital. Chavez closes that door and demands that all companies operating in Venezuela give PDVSA a 60% share. He demands, much higher royalties, much pulling much more money out of the existing deals. And as a result, production starts to fall because suddenly the investment is drying up. International firms aren't as interested in operating in Venezuela. They're pulling back. In the meantime, PDVSA is turning from a pretty well run oil company into, basically a piggy bank for Chavez and his, and his government. When it turns over to Maduro, it gets even worse. There's more mismanagement, more corruption. Meanwhile, Venezuela's oil fields, which are tricky to manage given the nature of the crude, the technical problems that you encounter, you know, the industry falls into disrepair in the in the in the 2000, the price collapses. The oil price collapses in 2014, 2015. This coincides with lots of protests against the Maduro government. You know, street uprisings, violent repression. Maduro is cracking down and Venezuela oil production just tanks. And at the same time, the US is putting sanctions on Venezuela, considerable sanctions in connection to Maduro's repression. So all of this coalesces into a story that has its peaks, it has its valleys. But when we get to 2025, Venezuela is sitting on this giant oil industry that has fallen into disrepair. It's producing a little bit less than a million barrels a day. It ostensibly has this massive reserve of crude oil that American companies actually have a lot of experience with dealing with Chevron, Exxon, the oil services companies, smaller U.S, mid-caps. All of them have been involved, or many of them have been involved in Venezuela over the last, you know, century. So they they know what's at stake down there. But they also know the risks, the costs. And I think they're going to be very wary of getting involved again, particularly as the situation remains so uncertain.

Tracy Alloway: Joe, I'm going to start a rival band called Heavy Sour Crude. It's going to be the complete opposite of. Music, I got to say. I don't know, pop. Okay. No, I don't I don't really want to do that. But, but, I'm going to think about it, By side project.

Joe Weisenthal: You could be in it.

Tracy Alloway: Yeah, I could be a Spanish voice having. A good voice, by the way.

Joe Weisenthal: Thank you, I really don't.

Tracy Alloway: Oh, yes you do. I've done karaoke there several times. You a very good voice.

Tracy Alloway: Okay. Off topic, Greg. Okay, here's a basic question. Given all the risks involved in Venezuela, and I remember my husband actually went to Venezuela once when he was a teenager, and the stories he told me were a little bit hair raising, including as soon as he landed, someone tried to steal his bag. And then he remembers going to a movie theater, and they were selling life insurance alongside the ticket to the movie theater. Again, all anecdotal. I can't exactly vouch for those, but given the risks of operating in Venezuela and the fact that you do have this heavy, sour crude that's, you know, difficult to refine, why is one question I always wondered why is Chevron even still there?

Gregory Brew: So I'll start by saying the oil industry, it it has a pretty expansive approach to time. Things take a long time, when you discover a field, when it's in greenfield stage where you drill test wells, where you expand and explore how big the reserve is from that point to actually producing oil in commercial quantities. It can be a decade, decade plus, particularly if it's maybe like an offshore field, like in Guyana or elsewhere. Then if you're a big, you know, relatively integrated, vertically integrated international oil company, you're going to have places that you want to send that crude, you're going to have refineries, and downstream assets that you're going to send the crude to. And when it comes to heavy, sour, from Venezuela or from Canada, refineries need to be built and optimized to take that crude, because otherwise it's not going to be efficient. Your refinery utilization isn't going to be where you want it to be. Your margins are going to be tighter. So Chevron spent a long time developing their position in Venezuela, which from various points of view does go back, I think to the I think to the 1940s is where Chevron first began, to expand its operations in the western basin, the Maracaibo basin. They've built refineries in the US Gulf Coast that are optimized to take Venezuelan crude. So the cost, the sunken cost for them is considerable. And that's where it kind of always comes down to. Right. Other IOCs were willing to pull out of Venezuela, cut their losses, go elsewhere. Chevron was it. And part of that was due to how much money they had spent. Part of that was due to their success at convincing the US government to allow them to remain right, granting them sanctions waivers, granting them special licenses to continue to operate. At the same time, they were able to leverage their position with the Venezuelan government and say, you need us. You need us to stay, because at some point things are going to get better and you are going to get, increased international interest and investments. And we were here first. And, you know, we we want to maintain this privileged position. So all of that has combined to keep Chevron in Venezuela when other companies were willing to pull back. And there's already been, I think, a response from Chevron following the Maduro, operation. They're talking about sending their their teams back in. They're talking about expanding their, their profile there. They're still very conscious of the security risks and the risks to personnel that exist, but they want to hold on to what they have and they want to expand it. And, you know, considering the costs, putting that to one side, Venezuela is still geographically a very attractive place to operate if you have lots of U.S downstream assets, if you have refineries in the Gulf Coast and you want to get heavy sour crude to them, Venezuela is a great place to get that crude.

Joe Weisenthal: Well, give us your read. On the political situation, I guess because there is I mean, I don't know exactly what the sort of political science definition of the term regime change is. We went in and took out the president, but the party has it looks like, at least for now, his vice president, Elsie Rodriguez, is assumed, at least on an interim basis, the presidency. There's no I mean, I thought it was really remarkable. Trump didn't even sort of like, make a nod to like, oh, the democratically elected leader in exile or whatever. And yet, the administration seems cool with, like, his people still being there. And as you just mentioned, the company is like, all right, we're already ready to send people back in to get back to work. Just like I assume everything's so fluid, I suppose. But what's your read on? Like the sort of short to medium political situation now in Venezuela.

Gregory Brew: So I think it's it's become very clear that from the U.S. point of view, getting Maduro out was the goal. Yeah. You know, overtaking the government. Knocking the government down, having it replaced by a completely new power apparatus, completely new regime bringing in the opposition, the Democratic opposition, that I don't think was ever on the cards. This was about removing Maduro. And and I think, you know, you could make the argument that some of it was personal for President Trump. He didn't like Maduro. Maduro had been, driving a hard bargain because they've been negotiating for months about what the U.S. can get from Venezuela and what kinds of concessions that Maduro could offer and Trump US apparently lost his patience and decided to do something pretty risky. But it turns, it turns out, was was very successful. The government that Maduro led, which incidentally, he inherited from Hugo Chavez, is still there. It's led by Delta Rodriguez and others. It still controls the military. It still manages most of the country. Parts of the country are slightly out of its control on are run by essentially drug cartels and militias further further inland. But the capital, the major cities, the oil fields are still under control of the government that used to be led by Maduro. What happens next, I think, depends on what kind of, modus vivendi is reached between Washington and Caracas. And some of that comes down to what it is that Trump actually wants out of this. I think the first goal was demonstrating U.S. power, and I think they've done that, signaling to, the rest of the world, but particularly the Western Hemisphere, that the US is now willing to use its power, much more assertively and aggressively than it has in the past. But that's not much. You know, what else could the US gain from having done this? And obviously now it's all talk about gaining access to the oil reserves and bringing in U.S. companies, but that's going to be very, very difficult to do. So I think in the short term, the first thing that Caracas is going to want to see from the US is lifting the oil blockade and allowing tankers to move. Most of those tankers are going to want to go to China because that's who's been taking most of Venezuelan oil. That might not be too difficult for Trump to accept, because Trump also wants to reach, modus vivendi with Beijing. He wants to have a better relationship with Jinping. That's also something that the administration has been trying to prioritize. But this this political situation in Venezuela, absent Maduro, doesn't appear to have changed at all. The regime is still there. It's not regime change. It isn't even regime decapitation, because Maduro was replaceable and they filled his shoes with somebody else. And the administration seems perfectly fine with that.

Tracy Alloway: What kind of chatter are you actually hearing from the oil majors, setting Chevron aside, what would it take to get like at Exxon? Who I understand is still owed money by the Venezuelan government, back into the country. What are they looking for?

Gregory Brew: So I think you can think of it in stages. So the first would be lifting the blockade. They would have to see that. They would have to see the U.S. saying publicly, Venezuela can export oil again, because no one's going to want to go in and spend money in Venezuela if they can't be guaranteed access to to foreign markets. Right. I think the US has been trying to signal that the blockade is about stopping sanction tankers, but it's been, it's been indiscriminate in the sense that it hasn't been specifically connected to what the US is clearly trying to do in Venezuela, which is, you know, remove Maduro and exert more pressure on the government. So the blockade would have to be lifted and then sanctions would have to be lifted. Right. Venezuela remains under heavy sanction. The Maduro government remains under sanction, and international oil companies, Western companies aren't going to want to go into a country where they're exposed to sanctions risk. They're just not going to be interested even if the price were to go up. And even if, the, the, the numbers started to make a little bit more sense, that's still too great of a risk, to take on at this time. The price coming up would also have to happen. Yeah. Right. The current market condition just doesn't justify spending billions of dollars developing fields. When, the price is at $60 a barrel, it's likely to fall even more. Yeah. If you look at, like, the new rig chart. Right. It's going down even in the U.S at $60 a barrel. I can't imagine that people are like, well, now we'll just open some facilities in Venezuela. Exactly. And yeah, compare it to I mean, again, we bring it up a couple of times, but Guyana Next Door has been a tremendously profitable place for Exxon to operate. The U.S onshore is still very attractive. It's safe. You know, there's they're you're not going to have, Delta Force coming in and pulling off covert operations in the Permian or, you know, in North Dakota. You know, no one's going to have to worry about that. So if you've got capital and you want to find somewhere to invest it, there are better places to do so. Yeah. And in Venezuela, add to all that, you know, the infrastructural problems, the technical problems, the heavy sour being, it needs to go through upgraders, it needs to be passed through diluent. It needs to be treated in a certain way for it even to be viable. Right. There's a lot of money and a lot of time, a lot of effort that would have to go in on top of all the geopolitical risks and the uncertainty and the market conditions.

Joe Weisenthal: Talk to us more about, Guyana. And, because the first time we had you on, I think that's what we, talked about and how much oil they have there. But I know that the Venezuelan government had claimed at least some part or all of their oil was actually theirs. Was there ever any legitimacy to this, to tell us about the backstory there and whether there's any whether this changes anything with that?

Gregory Brew: Well, I think, you know, upshot is we're probably not going to hear any more from Venezuela about threatening Guyana, given the tenuous position of the Delsey Rodriguez government. If it lasts, I think they're going to want to make friends, rather than enemies. Even though there was some pretty, you know, boisterous rhetoric initially, now the attitude seems to be much more we want to work with the U.S, we want sanctions relief. We want to lift the blockade. Pulling back from threatening Guyana is going to be a part of that. The historical claim, you know, like South America, territorial disputes are actually pretty wide ranging. Everybody seems to have a claim on everybody else, if they want to dredge them up, which the Maduro government decided to do, you know, last year and the year before, I don't think anybody took them seriously. Guyana is not in a position to defend itself, unfortunately, it's a very small country. But at the same time, I think they were confident that the US would back them up. China is also, involved in the Guyana offshore developments through Chinese national oil companies. They hold a minority share. And at the same time, Brazil, was willing to back up Guyana and was was pushing back very hard on Venezuela when Maduro was making those claims. So the territorial claim is historical, but there's not a whole lot to it. I don't think now that Maduro has gone, I don't think we're going to hear much more about it, but it's still going to sort of float in the ether. The other point that I would make is, you know, the market, as you noted, didn't care too much when this happened, right? Oil prices didn't really change. The whole attitude to this drama with the blockade and everything like it hasn't really affected prices. Part of that is because there really wasn't a sense that there was much risk to other sources. But Guyana is right there. And were things to get really bad. Venezuela internal instability, continuation of the blockade. The US could threaten to seize assets if it wanted to exert even more leverage over Caracas. That would increase the risk of escalation to affect neighboring oil producing countries. With Guyana being first on the list.

Gregory Brew: Can I ask a very basic question, which is, given all the hurdles that we've talked about to developing Venezuela's oil industry, and the vast amounts of capital and time that this will seem to need to take. Is this really about oil? I don't think so. But I think for the president, it might be. Explained. Let me unpack that. So, President, President Donald Trump does seem to think about oil a lot. He talks about it a lot, and always has done. I mean, this is you can go back and see his public record. He's someone who's been in the public eye for decades, and he talks about gasoline and oil quite a lot. It seems to be quite central to his view of the world, the global economy and domestic politics. And I think to some extent, his viewpoint is kind of locked in the 1980s, maybe the early 1990s. He sees oil as being sensitive, to geopolitical action. He sees it as being a resource that is coveted, that is important to have in large quantities. And he sees the price as being crucial. You have to keep the price of oil low. So you need, as much oil on the market as you can, so that gasoline prices don't go up. That view is a little outdated at this point, particularly from the point of view of the United States. The US is now the world's largest oil producer. It produces more oil than any nation has done in history and is likely to remain so for the foreseeable future. The US doesn't import nearly as much crude as it used to, or so most of its crude imports now come from relatively safe places, Canada being first among them. Putting aside the any risk of, you know, disruption of the US, Canada bilateral relationship, the US can get a lot of its crude from very safe, secure places. It doesn't need oil from Venezuela. And quite frankly, neither does anybody else. There's quite a lot of supply sloshing around. There's available supply from other sources that are cheaper that are safer, that are more competitive. So framing this as a move to seize oil has always been a little bit hard for me to accept, except from the point of view of the president. Specifically, what does the US want? Yeah, the official mind of the United States, right. As a as a policymaking, bureaucracy as, as a, as a great power. I think this was first and foremost about demonstrating US primacy in the Western Hemisphere. You know, I do think there is a brain trust now that sees a resurgent Monroe Doctrine or Don Rowe Doctrine, when you want to call it as being a priority, you know that the US should shift its viewpoint away from places like Europe in the Middle East, and should concentrate its attention on the Western Hemisphere and doing this, putting a lot of pressure on a state that has been a US adversary. Putting aside the fact that it's an oil producer, you know, Venezuela has been kind of anti-US for a long time, putting a lot of pressure on this state, erecting an oil blockade, putting a bounty on the head of its president, and then flying in Delta Force to kidnap the president, take him out and put him on trial in the US, sends a very strong signal to everyone that the US is now going to be exercising its primacy in a much more aggressive way. And I think for the for for Trump, I think there's an allure in making this about, you know, materials and making it about energy and making it about energy security. But at the end of the day, as we've been saying, I don't think companies are going to get interested or involved anytime soon. And gasoline prices are going to remain low for reasons that have nothing to do with what the US is doing in Venezuela.

Joe Weisenthal: Eric Levitz, who worked for Vox, had a good two years, like when we were younger. You know, we do these wars and people, they would say, this is about democracy. And people say, no, this is really about oil. This is like the first time or something. So this is about oil. It's like, actually we don't really believe this is about like some it's it's just very it's very surreal. As a, you know, you work for a geopolitical analyst shop. What's the buzz? What is the thinking on Greenland now, in the wake of this? Because, like, what, one thing that we've discovered is that just sort of like, if there's one thing that the events of the past week have shown is that extraordinary unilateral actions of any sort suddenly on the table. And so, look, if we could just go in and statue of Foreign Leader, then who knows, maybe one day we'll land over Greenland and say, this is all ours. Do you have like, odds of any sort of Greenland event happening in 2026 that would shock us and maybe a different era.

Gregory Brew: I don't think I have personal odds on it. I will say, you know that now that the US has done this, everybody is thinking about what Trump might do next. Yeah. And that gives that gives the US more leverage than it had a week ago. That puts that puts the administration in a position to say like maybe we will, do something with Cuba. Maybe we will do something with Colombia, maybe we will push the Danes to give us more access to Greenland, to give us more rights, to allow us to erect more bases. Or we could just annex Greenland directly, you know, see, see what you're going to do about that. I think now that there's so much uncertainty about how the US is going to use its power, that creates space for the US to make all kinds of new demands and get new concessions. Even if, you know, actually annexing Greenland is really not on the cards. You know, it's it's I don't think it's something that the administration wants to do, but it likes to threaten it.

Joe Weisenthal: Yeah. The, the the official like TikTok of how this went down as far as I know like hasn't really been reported anywhere but it it's hard to observe a story in which you snatch a foreign leader without suffering any casualties of your own, and not assume that there were quite a few people on the inside that knew this was coming, that had a de facto flipped, etc. every leader in our neighborhood who had some sort of, you know, tension with Trump must be terrified. Like, presumably they're all paranoid about who in their inner circle is really with them.

Gregory Brew: I think I think they have to be, I also think there's a kind of an underreported element here. Okay. Reported story. And that's the technical like the technological side of it, right? The US didn't just send in special operations teams and didn't just liaise with insiders within the Maduro government, to, you know, facilitate his removal, although they almost certainly did, they were almost certainly were members of Materials Inner Circle who collaborated and facilitated this removal. US aircraft jammed Venezuelan communications, Venezuelan air defenses were either destroyed, preemptively by, US aircraft or they were knocked out through cyber. Means the US reportedly used suicide drones for the first time. Which is something we're going to hear more about because this is an administration that's interested in using drones more aggressively. Trump bragged that they knocked power out in Caracas using cyber tool. I mean, it's it's not just the intent that the administration has. It's the capabilities. Right? The U.S, we always talk about the US being a global superpower. It is it's one of the only countries in the world that can do this. And if it wants to start doing it more, it's a risk that states around the world are going to have to take into consideration. There's also the element of what we don't know. We don't know all the capabilities that the US military has at its disposal, be it cyber, be it asymmetric, be it, you know, kinetic operations, nobody really we still don't have a fully, formed picture of what the F-35 can do against older generations of air defenses, older generations of aircraft. This opens up the aperture of, you know, what's, 21st century warfare looks like, and that's creating even more uncertainty and even more concern.

Tracy Alloway: Days into the new year. And we're already talking about suicide drones. Joe.

Joe Weisenthal: Yeah, I know it's going to be an insane year. I realize one thing we haven't mentioned in this entire conversation, I think, and that's probably a sign of the times, is we haven't talked about OPEC at all. And this was the other thing that happened over the weekend was there was an OPEC meeting where they talked about pausing or continuing to pause their, production quotas because of the low oil price. Does OPEC matter anymore? And have you gotten any sense of like what the major OPEC OPEC players are actually thinking about this Venezuela action?

Gregory Brew: Well, first I would say, you know, Venezuela is a marginal member of OPEC at this point, given how low its production has fallen. It's excuse from production cuts and production quotas because it's under sanction. Incidentally, Iran is in the same position as is Libya. Venezuela doesn't produce very much. Really. OPEC is the GCC plus Russia at this point through the OPEC plus alliance. Those are really the members that matter. And they do matter. I mean, what OPEC has done over the last year, progressively pulling back production cuts, putting more crude on the market, signaling that they're going to produce more, even with prices falling. That's a pretty deliberate strategy coming after years of trying to manage markets by cutting production, they've now signaled that they're okay with prices falling, as long as they're able to retake market share and also reduce the amount of spare capacity that's hanging over. I mean, in the last year, or in 2024, there was maybe three, maybe 4 million barrels of spare capacity that was just hanging over the market. And that's going to put a pretty, firm ceiling on prices when you have that much spare crude just lying on the sidelines. OPEC is trying to unwind that. They're they're comfortable with prices falling, I think in 2026 maybe as low as, you know, in the 50s. Per barrel for Brant. It's already in the 50s here in the US. The WTI price but OPEC is looking ahead. They're looking into 2027 2028. And they reckon that by that point they'll be coming out in a stronger market position. They'll have squeezed their competitors, including their competitors in the US, and they'll have a bigger chunk of the market and less spare capacity. That will put a ceiling on prices. And they reckon, you know, we'll have $50 crude in 2026 and then 80, maybe even $90 crude 2028, 2029, 2030. Needless to say, they don't see demand peaking anytime soon. They reckon the market's going to continue to grow, maybe a little bit more slowly than it has in the past, but it's not going to start declining, due to the energy transition or any other factor. That's the bet that OPEC is making.

Joe Weisenthal: So does this, event mean anything significant to some of Venezuela's or Maduro's friends? You know, Iran, China? Russia, etc.? Like, as you know, as obviously it seems like to, you know, China, they'll be able to they can get oil from other places, etc. but like, is there any real significance to that or will they just sort of like sort of ideological friends? Are there any real stakes for them?

Gregory Brew: So I I'll start with the Chinese. And one thing that got buried a little bit was that the there was a Chinese delegation in Caracas. Yeah. Yeah. Like the day before that was. Was so crazy for them. And you know, if you're China, if you're XI Jinping, and you are in the midst of a sort of soft rapprochement with the United States, right. Trump is going to go to China. They're going to meet in 2026. There's going to be sideline meetings. They're trying to manage their relationship. Trump wants a deal. And all of that. They don't want a confrontation. If you're in that position and you send a delegation to Venezuela, and then suddenly the US flies in Delta Force and kidnaps the president and they don't tell you beforehand, that's going to be alarming. The Chinese put out a statement where they they expressed their alarm in very explicit terms, regarding this action, I don't think it was necessarily that they love Maduro and they were, you know, mad that the US came in and took him. I think they were more mad that the US didn't tell them in advance that this was going to happen. But on the oil side, yeah, China can get their crude from from other sources, including Iran. You know, as as Joe, you probably well know and Tracy as well. I also cover Iran. Yeah. Racial groups. So I, I spent a lot of time thinking about Iran. And the Iranians are terrified right now. They're extremely paranoid, that the US because Trump's also been tweeting about the protests that are happening. He's been saying, you know, the US is going to get involved. The Iranians have been very worried that the Israelis are going to bomb them again. They're they're extremely concerned about that. There's their economy is doing very poorly. They're extremely worried that, you know, after doing Maduro, the US is going to turn on them. So they're they're signaling that they could do something. There's they're warning that they could attack preemptively. Tensions are rising in that quarter, on Russia, I don't think Putin is concerned. Venezuela was kind of a soft partner for Russia. They had dealings. They had, relations. There has been, I think, a certain amount of outreach from Moscow to Caracas towards the Delsey Rodriguez government. So they want to retain their relationship there. But I don't think they're shedding many tears about Maduro being being swept away. I also don't think Putin is worried that the US is going to try to do the same to him.

Joe Weisenthal: Can you put a sort of percentage likelihood on some sort of US action on Iran in the next, I don't know, month? Let's say

Gregory Brew: I would say low in the next month, below 50%. Public action. I don't think the US is going to start, you know, bombing Iran or sending troops in or anything like that. For a couple of reasons. One, I don't think Trump is interested in getting that directly involved. I think he threatens it. But I think there's still, a wariness of putting boots on the ground anywhere. The protests in Iran are very violent. They, are a clear demonstration of internal dissatisfaction and dissent towards the government. They're also fairly small, and they've been they've triggered a quite, active response from Iran's, police and internal security services. So they they don't it's it's not in the realm of, say, like Egypt in the, in the Arab Spring, where you had hundreds of thousands of protesters, you know, coming out, putting huge amount of pressure on a government, and facility and also, you know, turning the military, right. The Egyptian military switched sides. We're not even close to that in Iran. And I don't think Trump wants to get pulled into a potential quagmire doing stuff covertly. Is another matter. And that's where the Israelis really come into play. Israel has a lot of capabilities inside Iran, more so than the US. They're capable of doing a lot. At the same time, the Israelis have retained a posture where they say, if if Iran tries to rebuild their nuclear program and if they continue to build missiles, we will strike. We will take action, because those are the concerns that we have. And the Iranians are continuing to build missiles, and they are now today, January 6th, threatening to attack preemptively if the pressure continues to build. The tensions are getting very, very high there. I don't think the US is going to get directly involved, but the possibility of more Israeli action in the next month, is, is is certainly there. And I would say almost certainly in the first half of 2026, I think we're going to see new, strikes by Israel on. Iran, just since we're throwing out random countries and sort of testing your, tell us about Cuba. What does this mean for Cuba?

Gregory Brew: So I think I think Cuba is very much on the menu. So to speak. I think we're going to hear more about Cuba now that they have done what they want to do in Venezuela. Obviously, Secretary of State Marco Rubio has a long running, interest in, if not toppling the government in Havana, then putting a great deal more pressure on Havana. Venezuela was a partner of Cuba. A Venezuela was the main source of crude oil. So Venezuela being another element of the US posture towards the new government in Caracas, is going to be to pull them away from Cuba, to isolate Cuba even more in the Western Hemisphere. I don't think military action is likely in the near term, because they still have a lot of work to do with Venezuela. And, moving on very quickly, to another large country, it's going to be difficult for them. But I do think it's going to enter into U.S. policy moving forward.

Joe Weisenthal: Joe, I watched The Godfather two over Christmas, and now I consider myself a Cuban history expert.

Tracy Alloway: I need to rewatch Godfather two. Greg Brew thank you so much. You really were the perfect guest. I do feel like we could just throw random questions out about anything, geopolitics or energy for you, and you would have an answer. So we'll have to have you back on again soon. And just, more lightning round stuff. But really appreciate you coming on Odd Lots.

Gregory Brew: Absolutely. Thank you so much for having me.

Joe Weisenthal: Back, Godfather. 1 or 2, Greg two.

Gregory Brew: Oh, interesting. DeNiro.

Joe Weisenthal: Yeah. De Niro. Yeah, I got it. Greg is so good. I love.

Tracy Alloway: So good. Yeah. And he brings that historical perspective. Yeah he's great in which I think you need for something like this, which isn't just a market story. It's very much a geopolitical story. No, it's really you know, there was a quote I might write about it in the newsletter today. There was a quote recently from, President Trump about rare earths. He's like rare earths, really aren't that rare, which is true. And it's one of those things that we talk about, like people like to say. But what's rare is the infrastructure to refine them and actually get anything commercial with it. Right. That actually is scarce. And I feel like this is the thing that always gets missed. And a lot of these oil conversation, like, $300 billion of oil is totally meaningless if you don't have the all the aspects in place to actually produce it at scale, produce it economically. And so I'm not surprised, I guess, that from the perspective of like the oil market that trades day to day, it seems like at minimum it's going to be years before this oil like to the extent that there's some change actually moves the market. Right. And again, I know the oil industry does work on long timeframes, but when you have oil at $60 a barrel on Brant Lower on WTI, I, it seems really hard to make the case that like we should go in and spend billions in Venezuela when they're not even starting rigs in the US. The other thing I saw, you know, the headlines are flying thick and fast on this particular story. And I guess we should just mention that we're we're recording this on January 6th. But, you know, Trump just said that maybe they could use public money to encourage oil companies to invest in Venezuela, US oil companies. And that seems a hard sell to me as well. How do you think the guys in Midland are going to take that? We're going to use public money to expand supply and depress prices further. Yeah. Hard sell, putting it mildly. By the way, have you watched land Man the show?

Joe Weisenthal: No, but I've, I've heard.

Tracy Alloway: No, it's so good. Really.

Joe Weisenthal: Yeah I started well it's so good. You got to I so yeah, it makes me want to do a lot more, episodes about independent oil producers.

Tracy Alloway: I'll watch it. You got to watch it.

Joe Weisenthal: All right. Shall we leave it there?

Tracy Alloway: Let's leave it. There. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me @tracyalloway

Joe Weisenthal: And I'm Joe Weisenthal. You can follow me @thestalwart Follow our guest Gregory Brew. He's at @gbrew24 Follow our producers Carmen Rodriguez @carmenarmen Dashiell Bennet @dashbot and Cale Brooks @calebrooks And if you want more Odd Lots content, you should definitely check out our daily newsletter. You can find that at bloomberg.com/OddLots and you can join fellow listeners in conversation 24 over seven in our discord discord.gg/oddlots And if you enjoyed this conversation, then please like the video or leave a comment. Or better yet, subscribe! Thanks for watching.