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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

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Michael Tanner: [00:00:10] What’s going on, everybody? Welcome into the Thursday, March 20th, 2025 edition of the Daily Energy Newsbeat. Stand up, here are today’s top headlines. First up, Chevron out, black market in, the fallout of U.S. sanctions on Venezuelan oil, super fascinating deep dive into sort of the art of the black market. Next up, Trump to meet oil CEOs amid market turmoil. I’ve got some very interesting thoughts on that. Next up, price rally sets the stage for US natural gas boom. I will then jump over and quickly cover what happened in the oil and gas market today, cover what did or didn’t happen with the Fed rate decision. And then we will quickly touch on EIA crude oil inventories. And then we will let you get out of here and get back to work. As always, I am Michael Tanner rocking a solo show today. Give Stu a much needed day off. He’s been holding the fort down for a while. So let’s go ahead and jump in and kick us off. [00:01:07][56.6]

Michael Tanner: [00:01:07] Chevron out and black market in the fallout of U.S. sanctions on Venezuela. This one is super interesting. So we’re going to go back all the way to February 26. Current U.S. President Donald Trump announced his intention to end what is known as the General License 41. Now remember, this license was granted in the Biden administration, which allowed Chevron to operate in Venezuela despite the sanctions that were on there. So basically what this did is the U.S. Treasury, this authorized the U.S. Treasury of foreign asset control to create a system to allow Chevron to actually begin producing oil in Iran. There were four corporations that were authorized under this general license 41, one of them being Chevrol, Repsol, Martul Elpram, which is you can assume is a French company, and NI. And that contributed about 320,000 barrels per day in January, which is about 25% or a little bit over say 35% of the country is about 1.06 million barrels per day. That’s according to Pesa, who’s the state owned energy company. There are a bunch of other stuff here. But what’s interesting is Trump has now gone in and removed this license. So why was this license here in the first place? We know that during the first Trump administration, he basically shut down all Venezuelan activity and really, you know, in attempt to economically sanction the Maduro government. I mean, it goes without saying that, you know, most people aren’t a fan of what Maduro is doing down there. I’m no fan of what’s going on. You could really call it a humanitarian crisis. So the idea was let’s basically ramp down their oil production. Well, what happened was a couple of things happened. You saw companies who had interest in Venezuelan oil, you know, really cry foul and say, hey man, we’re losing money over here. You saw a humanitarian crisis as less money started flowing into the country. Now you could argue that even if money was flowing into the country, would it go down and solve the humanitarian crisis? Probably not. I mean, some of the stuff that’s coming out of Venezuela right now is absolutely scary. So the purpose of this license was really to allow Chevron to recoup its debt that it had in the industry while subsequently minimizing cash flows that came to the Venezuelan state. Because what happens was under these sanctions, guess what? You end up in this situation where the black market takes over. So if Chevron’s not allowed to produce those barrels, those barrels are still going to get produced by Pada Vesa, and then they’re going to go ahead and sell them on the black market. And so the idea with this general license 41, as it’s called, was, Okay, let’s take those barrels that are going to get produced. Let’s put them back in the hands of Chevron, who’s obviously not going to be necessarily handing the cash over to the Venezuelan government. So it’s going to minimize the amount of cash flow that flows, you know, all they’re going to get instead of the full barrel value, which is, you know, whatever the net barrel value is, they’re just, you know, pay the base is just going to get whatever royalty that’s agreed to by Chevron. You’re not, they’re not not going to pay the royalty, but they are going to reduce heavily the amount of cash that’s flowing while allowing Chevron to recoup some of its so-called debt. I’m not of the camp that Chevron needs to worry about its Venezuelan debt, in my opinion, but that was the idea. Keep oil flowing. If you go through Chevron, it gets out of the Venezuelan government’s hands. You reduce their net cash flows because, as Stu has talked about tremendously, the dark fleet then takes over and fills the void. Obviously, those barrels are still going to produce. And so what we saw happen really in 2020 through 20, you know, what we really saw was that there was a huge increase in the amount of dark fleet. You know, we saw, you know, Venezuelan oil minister Tarek El-Asami, you know, according to, I’ll read straight from the article, flourished under these strictest of sanctions. And in March, in 2023, it was leaked to Reuters that Patevez had 21.2 billion in unpaid bills from intermediaries. And this guy managed the oil sector from 2020 the 2023, when this scandal was uncovered, basically what he did was he constructed this wildly opaque system to produce and sell Venezuelan oil on the black market. And in doing so, he ramped up output from about 400,000 barrels to about 750,000 barrels when he was forced to resign. All of these transactions were carried out in cash and crypto, and they were able to divert billions of dollars from what was due to the Venezuelan state relative to hopefully eventually get flown down to its citizens. We know that really wasn’t going to happen though, and stayed in this guy’s crony hands. The hard part is, you know, now this with, you know, and so the idea of this, the goal of this general license was to attempt to reduce that. And it eventually did in March of 2023, he got kicked out. But it’s this infamous gray market that happens, you know, we know China has come in and bought a bunch. You know, I’ll read straight from the article, pay to base is still exports part of its crude to Malaysia, where it’s rebranded and then sent on to China. You know, there’s this book written in the book called On Sanctions in Venezuela, Economist Estrubal Ovarious and Juan Palacios showed that in 2023, the US, Spain and India represent 34% of Veil’s win in oil exports while China and Malaysia took 51.6% and in 2024, their shares virtually inverted. So what does that mean? That means that general license 41 is helping because now instead of it all going the gray market, it’s all going to US, Spain and India, which are recoup, which are the cash flow mainly is going to those companies. So it’s going to be interstate. I understand what President Trump is trying to do. I mean, obviously what he’s trying to do is cripple the Iranian regime. Now the question is, is the sanctions actually the best way to do it? Stu has come on this podcast plenty of times and said, sanctions don’t work. And so we will really see how this plays out. I’m interested to see how this plays out. And to be honest, I don’t know. I see both sides of this. If you had to ask me to stick my neck out for an opinion and say, what side do you fall? I actually think that allowing these companies to export their oil, keep it and reduce the amount of cashflow going into Venezuela is good. Now the problem is, is that only going to make the people of Venezuela suffer worse? And really where I come from is what can we do to relieve the suffering going on in Venezuela. So we will be, we will be very interested to see how this plays out and we will be following this tremendously. All right. [00:07:42][394.9]

Michael Tanner: [00:07:42] Let’s move to Trump to meet oil CEOs amid market turnover. This meeting actually happened on Wednesday. We don’t quite know the fallout from this, so I’m sure as you listen to this, you’ll be hearing leaked information, but he basically sat down on Wednesday with the group of oil company executives to basically go over, you know, basically what’s been going on and his idea of drill, baby drill, and to kind of hear the feedback he’s getting. This is, he sat down with members of the executive committee of the API, which is the American Petroleum Institute, which is basically made up of the CEOs of some of the largest oil and gas companies and refiners in the business. And I think this is gonna be a very interesting meeting, okay, because Trump and his team, Doug Burgum, friend of the show, Chris Wright, has said, hey, we want to drill, baby drill. We wanna drive oil prices as low as possible in a way to tackle inflation. And the interesting part is oil and gas companies have turned around and said, well, we’re not gonna drill new wells at these prices because it doesn’t make sense. And it’s really put oil company CEOs and oil companies who are extremely Trump friendly in an awkward position relative to Trump because they don’t necessarily want, they can’t necessarily oblige by that because they know they can’t make any money with the oil. Scott Sheffield last week came out and basically said that after he went scorched earth and said Exxon didn’t buy any inventory with Pioneer, which is kind of unbelievable. I think the interesting part again is friend of the show, Chris Wright. Chris Wright understands to his core the profitability of the business because he was running one of the largest oil and gas service providers before he became the secretary of energy. And when he said he wants oil prices at 50, it can’t be because he wants his former company to thrive, he sold all his stock, he had to. He’s not invested in them anymore, so he doesn’t care because as oil prices fall, so do the price of oil that service company. So I do think it’s going to be interesting having him in the room with these company, with these oil and gas EMP CEOs that he knows. And I, you know, it’s, it’s, and, and then trying to say, dude, like you were six months ago, you were in our position, $190 oil, because that means we’re going to be fracking more. Well, you know, now how, how the turntables as Michael Scott would say. So I think it’s going to be very interesting and, and I’m interesting to read the notes that come out of this because yeah, absolutely. you know, US shale needs, you know, really much higher prices than $50 and higher than 60s. I mean, that’s what Harold Ham told Bloomberg last week. You know, there’s also this concept of the tariffs and how that comes in. I don’t think that affects these oil and gas CEOs as much. I mean, obviously steel prices do, considering that there’s, you know, a complex supply chain that goes into drilling these wells. So from that standpoint, I’m pretty, pretty, you know, think these oil and gas companies are concerned that, hey, if prices drop much farther, you impose all of these steel tariffs, you’ve basically wiped out our entire margin. We’re not going to be drilling. And the counter to that is, okay, well, oil is one of the most pure supply demand commodities, which means, okay, you stopped drilling for six months, oil production drops. What does that mean? Supply out or demand outweighs supply and you see a price increase. I mean, coming from an economist standpoint, that’s exactly how it works. So I think it’s the wall in this to kind of hear the back and forth that’s going on and really get in the mind of Chris Wright, who again, you know, we love him, but I, I, I be, you know, where he’s coming from is obviously somebody who’s not invested in the oil and gas business because he had to sell all his stock. He’s, you know, that’s what happened. And conveniently he got to sell and pay no capital gains tax. So there’s, there’s, you always have to remember that you, you know, I learned that last week. If you are, if I, if I’m, if I own stock in an oil and gas company and then all of a sudden Trump calls him and say, Michael, and this would be a disaster, but he’d say, Michael, you’re the new US energy secretary. Because I’m going into public service, I would have to sell my stock. I can’t have a copy of the integers. But they’ve written laws to say, well, now I don’t have to pay capital gains on that because I’m forced to sell and I don’t have a choice. So he’s done well. He did well in this transition. Let’s not be fair. Let’s be very clear. He did well. Again, I think the dynamics are super interesting with what he’s doing. And I would love to be on the fly on the wall. So we will, we will be following this, but, but guy, $50 oil, no one’s drilling. [00:11:54][252.1]

Michael Tanner: [00:11:55] So let’s, uh, let’s jump to the next one here. Price rally in a natural gas boom. Okay. So basically what this article is talking about, and we’re not going to spend much time on it, but really covering basically how Henry hub has boomed and the fact that the withdrawals from our natural gas stocks are 25% higher than the five year average so far, which in withdrawal season, which as you guys know, in summer we, or in the winter, we withdraw gas to heat our homes and then in summer we fill back up. So we are about to switch from withdrawal to a build season. The problem is we’ve withdrawn heck of a lot more than we’ve needed to, which is interesting. And this article also points out that hedge fund managers have become more increasingly bullish on natural gas as those inventories have dipped. So natural gas is going and we were about to cover it. It’s been consistently above $4 now for the last couple of weeks. And we haven’t seen that in a hot minute, as the kids would say on the block. So super interesting from that standpoint. I think natural gas is set for a boom. [00:13:02][67.4]

Michael Tanner: [00:13:02] All right. Well, let’s jump over and cover finance guys. But before we do that, let’s quickly pay the bills. As always, thank you for checking us out here on the world’s The best place for all your energy and oil and gas news. Stu and the team do a tremendous job. Keep making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below. All the links to the timestamps, links to the articles. I appreciate everybody who has reached out to me over the last couple of weeks to say what we’re saying. We appreciate everybody who’s watching us on YouTube. All the comments we are getting, even the people that say I scream into the mic. I’m working on it, guys. don’t get me wrong. If you are so inclined to support the show, the best way to do it is go subscribe to our sub stack. We both have a free and a paid version. That’s truly the best way to stay up to speed with everything is go subscribe to our sub stack. Stu is dropping a bunch of paid for articles and we appreciate all of our subscribers there. We also just want to give a quick, quick shout out to Energy Newsbeat sponsor, it’s a Reese Energy Consulting. Love those guys over there. If you are an oil and gas company and you’re not using a… If you’re a big company, you have internal marketing teams, and that’s fine. But if you’re a smaller, small to mid-size oil and gas company, and you don’t have an internal marketing team, you need one because you’re getting screwed on your oil prices and your gas prices from your first purchasers. They’re sleeping it a little bit. They’re sleeping it slightly. And so what you need to do, what you need to do is call up Reese Energy Consulting. They’re the best oil and gas marketing team on the planet, and they will be able to get you a better price. They will be able to get you a better price. I promise you, you need to work with them. If you’re in the process of trying to build an LNG facility, call them, guys, Reese Energy Consulting. If you need training, Reese Energy Training, check them out, guys, Reese Energy Consulting. We love them over there, guys. And as always, the last thing, if you need to become Billy Bob Thornton from Landman, if you are interested in getting into the oil and gas business, becoming a working interest owner. We have all the information, invest in oil.energynewsbeat.com, gives you all the info on how to get a little bit of monthly dividend, more save on taxes, never to really start thinking about taxes, and more importantly, become Billy Bob Thornton from Landman. Not Monty, but Billy Bob Thornton, because he’s much cooler than that. [00:15:19][136.6]

Michael Tanner: [00:15:19] But let’s jump over guys quickly, cover markets here. S&P 500 and NASDAQ both up about one percentage points, two and 10 year yields did drop out 1.6 percentage points on the two year yield, 0.8 on the 10 year yields, mainly to do with what We saw with the Fed decision today, which we will cover dollar index, fairly flat Bitcoin at 85,000, which down about a percentage point crude oil is actually up about a half a percentage point on the day up to 6724 Brent oil stayed above 70 at 7093, but basically flat day over day. Natural gas did wipe about 1.25 percentage points off its off its index, but it’s sitting about a dollar, $4 and 19 cents right now. But overall both did see a rise as I record this a little bit later tonight on day. A lot of interesting stuff. Again, the big news is the US Central Bank and the Fed deciding to keep the Fed funds rate at that guidance of 4.25 out of 4.5. So no change. I mean, that was expected on the street. I mean, I think that’s one of the reasons why I think you saw sort of a modest increase in the S&P 500. Nothing too crazy, but I think the markets may have hoped a little bit more on that day. [00:16:29][69.6]

Michael Tanner: [00:16:29] We also did see a modest increase in the EIA dropping its strategic petroleum reserve numbers. It was about a 1.7 million barrel build, which is about a million barrels bigger than what we thought, which I think really halted what was a bullish day for oil, not just because of the fed oil, but also the fact that we did see two things. One, Trump basically said he wants war with Iran. Oh my goodness. I’ve got a lot of thoughts on And then we did see the fact that Israel has launched more ground troops into Gaza after the quote unquote ceasefire. So very interesting, very interesting on, on, on the fascia of, of bullish, you know, very bullish demand signals there. I, then I, again, I think, you know, you know, what happens, we also saw Russian Ukraine both, both accusing each other of violating a new agreement, which refrained from attacks on its energy targets. They did actually do a prisoner swap, but here’s the, here’s the quote here. Even if a deal is struck, it will likely take some time before Russian energy exports increase in a significant way with short-term impact being around the diversion of flows in order to attract a better pricing. That’s according to Panmer, Librium, Anish, Ashley, Kelty. As we know, Russia is one of the largest energy suppliers, but it’s a lot of its black market. So super, super fascinating on the oil side today. That’s really all I see. I think it’s all quiet on the Western front from an M&A standpoint. We’re hearing a little bit of noise in the future. I think the question really is, you know, I think everybody’s kind of waiting and seeing. I think if you were in a M&A process and prices drop below 70, I think you, you, you kind of shuttled a little bit. So it’s, I think it’s going to be very interesting on that standpoint, but we will, we will be following that. [00:18:06][97.2]

Michael Tanner: [00:18:07] So I’m going to go ahead and let you guys get out of here, get back to work on this Thursday. Appreciate you guys checking us out here on the world’s greatest energy podcast for Stuart Turley. I’m Michael Tanner. We will see you on Saturday for the weekly recap. We’ll take Sunday out, and we’ll be back in the chair Monday. Have a great weekend, folks. See ya. [00:18:07][0.0][1074.4]