Matt Smith of Kpler highlights the geopolitical stakes behind the Trump administration's pursuit of tankers linked to Venezuela, explaining why Washington may be "purely targeting" these vessels. He also examines how countries like China could respond to the U.S. actions.

Caracas

A market analyst outlined the Trump administration's primary goal of ousting Venezuelan President Nicolás Maduro and explained that US actions against Venezuela-linked oil tankers are designed to limit the country's oil exports without causing a significant spike in global oil prices. Most Venezuelan crude continues to be shipped to China, with a substantial amount held in floating storage, providing a buffer that prevents sharp price increases.

The analyst noted that targeting Venezuela, rather than other sanctioned countries like Iran or Russia, helps keep US fuel prices low and inflation in check. However, continued US actions against Venezuelan tankers could provoke responses from China or Russia, as these countries benefit from discounted oil shipments. Despite US measures, China is expected to continue purchasing discounted crude from Venezuela, Iran, and Russia.

Analyst explains why Trump 'targets' Venezuela-linked tankers

President Trump did say that he would not rule out war with Venezuela. What do you think the Trump administration's end goal is here and how seriously should traders be taking that rhetoric? Yeah, sure. So in terms of his end goal, I think it is to absolutely oust Maduro here. So that is the main goal. In terms of the oil price, you know, we're seeing an increase today which is not surprising given the escalation that we have seen. But in the grand scheme of things here, we are just slightly above $60 on Brent. We still can't push above $60 on WTI. And this is because in terms of those Venezuelan barrels, you know, it's having a limited impact taking them out of the market. All of that goes to China. There will be the lagged impact because it takes about a month and a half for a Venezuelan crude cargo to go from Venezuela all the way to China there. The second thing, Dan, is that we have floating storage or crude building up off of China as well. We've got a lot of Venezuelan barrels there already. We've actually got a huge amount of Venezuelan and Iranian barrels there, sort of 60 million barrels or more. And so point being is that there is this buffer in terms of the supply and the lags involved. And so while we won't see prices skyrocketing by any means, you are ultimately going to be taking barrels out of the market. We are still seeing these export loadings happening in Venezuela. There are about 800,000 barrels per day so far in December. That is typical. It's just they cannot really get past this blockade. Matt J. Piong here. I've spent a couple of days now wrapping my head around this concept of a shadow fleet that Venezuela is part of. But we also know there are shadow fleets in other parts of the world. What if this attack, and I just want to get your thoughts on this, what if this particular action or the set of actions the U.S. has taken against these Venezuelan tankers is more of a message to broader shadow fleets that, hey, if we can do this Venezuela, we can do this to some of the shadow fleet tankers in Iran, in Russia, for instance? And again, could that actually be something that could introduce even more price volatility or uncertainty into the markets? What are your thoughts, sir? Yeah, absolutely could do. So if we just focused on Iran, Iran loads up to about 2 million barrels a day. We've seen in recent months there that is basically all heading into China. So if we were to take those barrels out of the market, that would be 2 million barrels a day less than we'd have. So there would be this supply reduction that would cause prices to rally. The reason that it seems that Trump is purely targeting Venezuela here and not these other sanctioned tankers is simply because he doesn't want the oil price to be ripping away from us here. Prices at the pump in the U.S. are down to $2.85 a gallon, and that's nearly a five-year low here. In certain states in the country, they're down to $2.40 a gallon. So really seeing low prices, that is great for his base because it's essentially acting like he's calling it a tax credit. But it's not just that. It's also a tool for inflation. If he can keep that oil price in check, it helps to keep down inflation on the overall indicator here. And so while targeting other sanctioned shadow fleets, whether it's with Russia, whether it's with Iran there, would really put the screws on those countries and hurt their revenues, it would also skyrocket oil prices higher too. Is there incentive, though, for some countries to respond to some of these increasing actions because it could set a precedent? I mean, as you mentioned a while ago, a lot of these Venezuelan oil tankers, a good number of them at least, do go towards China. Could we see perhaps a reaction or even irked words of his, for lack of a better term, from Beijing, for instance, or from Moscow, again, if these actions persist or escalate and he starts to target even more tankers from Venezuela, for instance? Absolutely, because that Iranian crude, that Russian crude, that Venezuelan crude is all moving at a discount to China and is increasingly seeing those discounts getting wider here just because of the risks involved there. And so that incentive, that economic incentive, is there for China to take these barrels. And so they are going to get frustrated. They're going to go to the market and buy 10 million barrels a day of full-price crude. They are enjoying getting 3 million barrels a day of discounted barrels. And so Beijing is likely to get frustrated if this is going to happen, yeah. So, Matt, how does Beijing respond? That's a great question, right, but immediately by still taking these barrels. And so we're seeing it with Russia, with Iran. The blockade in place is very much a game-changer for the Venezuelan side of things, but in terms of the other countries, they'll just simply be taking that crude.

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Washington

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Islamabad

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Washington County

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Council of the City of Sydney

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Breakdown