"Seizing the Orinoco"
by Joel Bowman
“Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”
~ Edward Norton Lorenz,
an American meteorologist and mathematician (1917-2008)
Buenos Aires, Argentina - "If a US Delta Force operation flaps its wings in the Caribbean, does it set off a tornado in the Pacific? This time last Friday, a special envoy from China was en route to Venezuela, a strategic trading partner in their global Belt and Roads Initiative (BRI)… Meanwhile, oil tankers in Russia’s “shadow fleet” were crossing the Atlantic, preparing to dock in Venezuela’s offshore lightering points (or “informal” terminals)...
And Venezuelan strongman Nicolás Maduro was considered, by “educated” people of the world – from the American elites to bobble heads in the legacy media to bloviating eurocrats over on the continent – to be an “illegitimate dictator” who was causing “the greatest humanitarian crisis ever in this hemisphere.”
Fast-forward a week. Flap… flap… flap…Today, the Chinese envoy is back home… at least one fleet of alleged “shadow tankers” (flying under Russian flags) has been impounded by the US Coast Guard (5,500 kilometers from the US coast, mind you…) and Maduro, whom President Biden once called “a dictator, plain and simple,” is the new cause du jour of the rent-a-crowd mobs in cities around the world.
Strange days, no? And certainly, there’s plenty of questions in the air regarding national sovereignty… empirical overreach… sand the limits of what Professor John Mearsheimer calls “offensive realism.” But today, just for a change, let us not become mired in heavy, sour sludge that so often characterizes normative discourse. “Wrong or right,” writes guest columnist MN Gordon in today’s Note, “What’s done is done. Once a cucumber has become a pickle it can never be a cucumber again. There’s no going back.”
What does all this portend for global oil prices… for the influence of the BRICS nations in general… and the balance of power between Washington, Beijing and Moscow, in particular? Without trying to derive ought from is, Gordon takes a sober look at the new geopolitical reality facing the world. Please read on for his insights, below.
Oh, and if you’d like to see more of his fine work, do be sure to check out Mr. Gordon’s Economic Prism website, right here. We have no financial arrangement with Gordon and do not benefit from featuring his writing... we simply enjoy what he has to say and hope you do, too."
"Seizing the Orinoco"
by MN Gordon, founder of Economic Prism
"Last weekend’s capture and extraction of Venezuelan President Nicolás Maduro was both fun and exciting. Disregarding national sovereignty and international law feels good when the outcome is favorable. Doing something reckless, like train surfing or drunk driving, and getting away with it teaches a dangerous lesson. Namely, that you’re invincible and can take things up another notch – or two. Does might make right? The time to answer this question has come and gone. Wrong or right. What’s done is done. Once a cucumber has become a pickle it can never be a cucumber again. There’s no going back.
Perhaps Maduro, a corrupt and illegitimate dictator with a long list of abuses, had it coming. Handcuffs appear fitting. Certainly, opinions abound. Ours is of little concern. What we’re interested in better understanding is, what’s the meaning of it all? The world appears to be significantly different than when the clock struck midnight on January 1, 2026.
The headlines are moving fast. By physically removing a head of state and assuming control over the world’s largest oil reserves, the U.S. has put its force behind the recently published Trump Corollary to the Monroe Doctrine – now called the Donroe Doctrine. Specifically, it has cut China off from its strategic oil investments in Venezuela.
Michael Burry, the eccentric contrarian who made a fortune shorting subprime mortgages in 2008-09, said on Monday that this is a “paradigm shift despite the market’s yawning.” To Burry’s point, on the surface, the market’s immediate reaction was quiet. Brent crude climbed less than 1 percent. And while stock futures opened higher on Monday, they didn’t exactly skyrocket. But this doesn’t mean there aren’t significant economic and geopolitical ramifications…
Breaking BRICS in the Hot Sun: Burry believes the “game just changed” for global energy and American consumers. If he’s right, this maneuver will rapidly diminish the influence of the BRICS nations while creating a captive energy supply for American industry. The taking of Maduro and the subsequent U.S. promise to “run” the country is a source of short-term uncertainty. But assuming it doesn’t turn into another military quagmire, this could have long-term advantages for the American economy.
For example, tapping into Venezuela’s massive reserves – the largest proven crude reserves in the world – could lead to a sustained drop in gas, diesel, and jet fuel prices. Cheap, plentiful energy is a critical input for a thriving economy. It’s what America needs to suspend its day of reckoning. As production and transport costs decline, lower fuel costs flow through the entire supply chain. For American consumers, this could be the ultimate answer to the inflation that has dogged the 2020s.
According to Bloomberg, Chevron has 11 ships scheduled to arrive in Venezuela this month. Chevron is the only Western oil company allowed to produce and export oil in Venezuela, operating under a license granted by the Treasury. The expectation is that it will increase production and delivery of crude to refineries in the U.S. Gulf Coast and East Coast.
This could also be a boon for the big oil service companies like Halliburton, Schlumberger, and Baker Hughes. These companies will likely be tasked with upgrading Venezuela’s crumbling pipelines and refineries and maximizing production. There’s also the question of how the U.S. takeover of Venezuelan oil assets impacts the global balance of power.
Doctrine of Disruption: If Washington succeeds in redirecting the world’s largest oil reserves to the U.S. Gulf Coast refineries, then Beijing and Moscow are looking at a major readjustment. For years, China has used its Belt and Road Initiative (BRI) to extend influence into South America, lending over $60 billion to Maduro’s government. Those loans were collateralized by future oil output. That output is now controlled by the U.S.
From a practical standpoint, about 4 to 5 percent of China’s oil imports currently come from Venezuela. If the U.S. diverts that oil to its own ports, China loses a key source of low-cost oil supply. Moreover, this has a larger impact on China’s BRI throughout Latin-America. It demonstrates to other regional partners that Chinese financing can be severed overnight by a shift in U.S. policy.
In addition, Russia’s development rights to billions of barrels of Venezuelan oil via Roszarubezhneft, a Russian state-owned oil company, are now in legal limbo. So too, by taking control of Venezuelan crude, the U.S. minimizes the influence of Russian oil on the global market. As Venezuela’s output is restored and modernized by American contractors, Russia will lose the strategic leverage it has over energy markets.
If the U.S. successfully ramps Venezuelan production back to its peak of 3 million barrels per day, the resulting global oversupply will drive prices down. A drop in oil prices below $50 per barrel would be devastating for Moscow’s war-inflated finances. While there are reasons to be bullish on the economic upside for America, there’s also potential fallout. The U.S. captured a dictator. But it also took on a nation in collapse.
Seizing the Orinoco: Ask any poker player. A massive win at the table often comes with a ‘bad beat’ for someone else. In this case, the risks are as deep as the Orinoco Belt itself. While the prospect of several decades of $2.00 per gallon gas is tempting, the reality of running a nation in collapse is a potential nightmare.
What President Trump calls a liberation, leaders in Mexico City, Brasília, and Bogotá are calling aggression and recolonization. By invoking the Trump Corollary, the U.S. has effectively told every sovereign nation in the hemisphere that their borders only matter so long as they don’t interfere with America’s interests.
What sort of blowback could result? Could neighbors like Colombia or Brazil be compelled to pivot even harder toward the BRICS bloc for protection? Instead of isolating China, the U.S. might have just given every Latin American nation a reason to sign a mutual defense pact with Beijing.
Likewise, the influx of Venezuelan heavy crude is not without problems. Most U.S. refineries are optimized for light, sweet crude. To process the sludge coming out of Venezuela, massive, multi-billion-dollar upgrades will be needed to Gulf Coast facilities. Also, by centering the Venezuelan recovery entirely on oil, the U.S. risks creating a concentrated economy on a national scale. If oil prices stay low, Venezuela’s economy will continue in chaos, potentially leading to a permanent U.S. military presence just to keep the lights on.
In short, the Donroe Doctrine represents a high-stakes gamble, trading international law for energy dominance. Seizing Venezuela’s reserves could slow inflation and weaken adversaries like China and Russia. But it comes at the risk of regional blowback and costly military entanglements. In the end, long after Trump has taken his last breath, the United States may find that the true cost of seizing the Orinoco is a hemisphere permanently turned against it."
Joel’s Note: "Where do we go from here, dear reader? Mr. Trump has undoubtedly unsettled the status quo antes with his latest daring maneuver, but will it redound to America’s benefit… or its peril? Will the so-called “Donroe Doctrine” usher in a new era of regional, western security… or push bullied LatAm countries further into the arms of unfriendly state actors? And what might be the blowback… economically, politically… even militarily? Have your say in the comments section, below…"
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