Rory Johnston: US policies are bullish for oil prices

Key Takeaways

• Presidential actions have been ineffective in reducing oil prices.
• The global oil market is projected to face oversupply in late 2025.
• Sanctions significantly impact oil availability despite production levels.
• US presidential policies have been bullish for oil prices.
• Venezuela’s oil production suffers from lack of investment and mismanagement.
• Brent crude markets are bullish, while WTI lags.
• Venezuelan oil production recovery could take over three years.
• Initial production increases in Venezuela can be quick, but long-term growth needs major investments.
• Chevron sees potential in Venezuela due to its strategic position and sanction waivers.
• Geopolitical factors play a crucial role in shaping oil market dynamics.
• Sanctions create a disconnect between oil production and market supply.
• The oil market’s future is influenced by political leadership and global economic conditions.
• Investment and infrastructure improvements are key to Venezuela’s oil production growth.
• The divergence between Brent and WTI prices highlights market complexities.
• Understanding geopolitical influences is vital for navigating the energy sector.

Guest intro

Rory Johnston is a Toronto-based oil market researcher and founder of Commodity Context, an independent commodity market research platform, where he provides data-driven analysis of global oil markets. He is a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy and a Fellow with the Canadian Global Affairs Institute and the Payne Institute for Public Policy at the Colorado School of Mines. Prior to founding Commodity Context, Johnston led commodity economics research at Scotiabank, where he set the bank’s energy price forecasts and advised executives on commodity-exposed sectors.

Presidential influence on oil prices

• President Trump has been ineffective in using presidential tools to lower oil prices.

  — Rory Johnston

• The oil price might be lower if the president had taken no action.

• I would say that the president’s actually been really really bad at this to date.

  — Rory Johnston

• US presidential policies have been a bullish factor on oil prices.

• If you’re grading him on his ability to keep oil prices low, I would say he has been to date a bullish factor on oil prices.

  — Rory Johnston

• Prices would be lower if Kamala Harris had won the presidency.
• Political leadership significantly influences oil market dynamics.
• Understanding the political context is crucial for analyzing oil price trends.

Global oil market outlook for 2025

• The global oil market is expected to experience significant oversupply in late 2025.

• The global oil market has headed in 2025 particularly the latter half of 2025 into fairly pronounced oversupply.

  — Rory Johnston

• Supply is projected to outpace demand by 3 million barrels a day.
• Geopolitical factors will affect oil prices and market dynamics.
• Understanding supply and demand dynamics is essential for market predictions.
• Sanctions and political developments will impact future oil availability.
• Market conditions are based on current trends and data analysis.
• Investors should prepare for potential market shifts in 2025.

Impact of sanctions on oil availability

• Sanctions significantly impact the availability of oil in the market.

• They’re being produced… but they’re not actually available to supply any piece of the market.

  — Rory Johnston

• Sanctions create a disconnect between production and supply.
• Understanding sanctions’ effects is key to analyzing market dynamics.
• Sanctions influence logistics and market availability of oil.
• Political factors shape the oil market landscape.
• Sanctions can lead to supply shortages despite high production levels.
• Market analysts must consider sanctions in their evaluations.

Challenges in Venezuelan oil production

• Venezuela’s oil production suffers from lack of foreign investment and mismanagement.

• Venezuela’s oil production… is essentially rotted away for lack of foreign capital.

  — Rory Johnston

• Domestic mismanagement exacerbates production issues.
• Sanctions further complicate Venezuela’s oil industry challenges.
• Foreign investment is crucial for revitalizing Venezuela’s oil sector.
• Political factors hinder Venezuela’s oil production recovery.
• Understanding Venezuela’s challenges is key for global oil market analysis.
• Structural issues in Venezuela impact global oil supply dynamics.

Brent vs. WTI crude market trends

• Brent crude markets are rising and showing bullish trends.

• Global Brent crude markets… are rising rallying pretty aggressively.

  — Rory Johnston

• WTI is lagging behind Brent in market performance.

• WTI is lingering kind of on a weaker back foot not quite able to get that same bid.

  — Rory Johnston

• Market dynamics vary significantly between Brent and WTI.
• Investors should monitor both Brent and WTI for market insights.
• Understanding pricing dynamics is crucial for market analysis.
• Divergence in market trends highlights complexities in crude oil pricing.

Timeline for Venezuelan oil production recovery

• Venezuelan oil production recovery could take over three years.

• It would take at least three years to get just 1,000,000 barrels per day of Venezuelan production back online.

  — Rory Johnston

• Achieving a million barrels a day could take three to five years.

• You’re gonna get three five plus years before you can really get a million barrels a day of production again.

  — Rory Johnston

• Political factors influence the timeline for production recovery.
• Infrastructure improvements are necessary for long-term growth.
• Investors should consider the long-term outlook for Venezuelan oil.
• Understanding recovery timelines is critical for market expectations.

Immediate vs. long-term production increases in Venezuela

• Initial production increases can be achieved quickly in Venezuela.

• You can probably get a piece of that say two three hundred thousand barrels a day probably quicker than that.

  — Rory Johnston

• Long-term growth requires significant investment and infrastructure improvements.

• After that immediate low hanging fruit is exhausted… you need to fix like the entire country’s power grid.

  — Rory Johnston

• Investment is crucial for sustaining production growth.
• Infrastructure challenges hinder long-term production increases.
• Understanding immediate vs. long-term challenges is key for market analysis.
• Investors should weigh short-term gains against long-term needs.

Chevron’s strategic position in Venezuela

• Chevron sees potential upside in Venezuela due to its longstanding presence.

• Chevron… has been in Venezuela never left Venezuela.

  — Rory Johnston

• Recent sanction waivers benefit Chevron’s operations.

• They think that… they can get it… it’s all upside for them.

  — Rory Johnston

• Chevron’s strategic position offers advantages in a challenging market.
• Understanding Chevron’s history in Venezuela is key for market insights.
• Sanction waivers provide opportunities for Chevron’s growth.
• Investors should consider Chevron’s potential in the Venezuelan market.