Venezuela: A Trump Oil Shock?

http://www.trendmacro.com/system/files/reports/20170808TrendMacroWarren-80.pdf
Donald L. Luskin
Michael Warren
Tuesday, August 8, 2017
Oil is priced for geopolitical perfection. Venezuela is far from perfect, and getting worse.
Strategic view: 

US sanctions on crude oil and product imports or exports would push Venezuela into collapse, taking up to 2 million barrels a day off-line. Though strategic and LOOP reserves would buffer the impact in the US, Trump would not likely want to be responsible for a global oil shock. Venezuela is already in a deep inflationary depression and near civil war, so may collapse anyway. It’s an embedded call option in oil that is far underpriced.

 

Author Override: 
Michael Warren and Donald Luskin