It has been yet another bizarre week in the fuel world, although we are relatively numb to the bizarre. Almost two weeks after the removal of the former Venezuelan dictator, markets jumped roughly $.20 as focus shifted to the next crisis, Iran. One would have thought we would see some additional downside or at least a calm period as the US tries to figure out its restructure plan for Venezuela.
Interesting to note, see Updates from 8/14 and 9/4, it is hard not to believe that the ground work for the recent action has not been in place for months. Remove a dictator, force Russia to a bargaining table, open up a countries refining capabilities, and maybe keep a little for yourself. Sounds perfect. One must also note that Venezuelan crude is a heavy, high sulfur, product. Not all that suitable for US needs as it has to be coked or hydrocracked to get acceptable end products and only few refiners in the States have that ability. Additionally, wanting Ven Crude for our SPR might have some storage limits because of the different grades. Think of it like mixing olive oil and vegetable oil.
With most US oil companies balking at the investment opportunity in Venezuela, Chevron remains all in along with other maintenance operators. We are seeing a pull back today as Iran tensions cooled overnight, still not a bad time to look at some fixed price options for the Spring and Summer months. Remember, winter is not over, stay the course with winterization plans.