Venezualan developments to have limited impact on global oil - Public Investment Bank
Venezuela’s output is less than one per cent of the global oil supply, unlikely to cause a supply shock.
KUALA LUMPUR - Public Investment Bank Bhd said developments in South America following the US airstrikes in Venezuela and the capture of President Nicolas Maduro are expected to have a limited direct impact on global oil fundamentals.
In a research note today, the investment bank believes the near-term impact on oil markets will be limited given the deep-seated sanctions on Venezuela’s financial and oil sectors that have been in place since 2017, which have already constrained investment and export capacity.
"In the near term, oil prices may temporarily price in heightened geopolitical risk sentiment, particularly around countries perceived to have close ties with Venezuela, such as Russia and China.
"However, we expect this effect to be short-lived, with market focus likely to revert to core supply-demand dynamics, where the impact remains marginal," it said.
Despite Venezuela holding an estimated 303 billion barrels of proven oil reserves, the largest share of global reserves, its crude production - about one million barrels per day (bpd) below Saudi Arabia’s 10 million bpd and the US’s 13.8 million bpd - has been historically weak.
Furthermore, Venezuela’s output is less than one per cent of the global oil supply, unlikely to cause a supply shock.
Hence, for Malaysia, the investment bank sees no change to earnings or capex assumptions across the country’s oil and gas coverage, as domestic activity continues to be driven primarily by Petronas’ upstream spending discipline rather than external geopolitical developments.
"As such, developments in Venezuela are viewed as sentiment noise rather than a fundamental driver for local producers and service providers," it added.
Hence, it has a neutral call for oil and gas sector. - BERNAMA
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