Seeing a lot of hype around the impact of Venezuelan oil on oil markets and U.S. gulf coast refiners. I think folks need to temper down expectations.
Re-routing Venezuela’s 900k bpd from China to U.S. gulf coast refiners is simply a trade shuffle and won’t result in any supply/demand changes for a long time. China will simply buy barrels elsewhere but without the the steep discount they get from Venezuela.
Even optimistic estimates regarding Venezuela production increases put any additional barrels above 900k bpd 3 to 5 years out (Jeffries put out a note on this today).
Personally I am doubling down on safe haven assets such as gold due to the norm-busting stance of the Trump admin. I am adding exposure to gold via GDX and GDXJ. These always higher beta run GLD (I’ve actually never held GLD).
What do you guys think?