Venezuela's near-term gas impact will be indirect. Piped gas can backfill underutilized LNG facilities in neighboring Trinidad and Tobago and eliminate Colombia's need for LNG imports. This creates a bearish effect on the global LNG market without Venezuela building a single new LNG plant.
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Even as a massive LNG supply glut promises lower prices, emerging Asian markets lack the physical capacity to absorb it. A severe shortage of regasification terminals, storage, and gas-fired power plants creates a hard ceiling on demand growth, meaning cheap gas alone is not enough to clear the market.
With over half of new global LNG supply coming from the US, an impending oversupply will force US export facilities to operate at significantly lower utilization rates. This transforms the US from a simple high-growth exporter into a flexible, market-balancing swing producer, a role it was not designed for.
Driven by U.S. shale, Brazilian and Guyanese oil, and Canadian pipelines, the Western Hemisphere's importance in global fossil fuel production has surged to levels not seen in nearly a century. This geographic shift fundamentally alters global energy dependencies and geopolitical focus.
While beneficial for U.S. refiners, a resurgence in Venezuelan production could harm U.S. shale producers. They would face not only lower overall oil prices but also a potential shift in marginal supply growth away from shale towards Venezuela over the next decade, diminishing their market position.
The oil market's lack of reaction to the events in Venezuela demonstrates a key principle: short-to-medium term prices are driven by current production and delivery capacity, not the theoretical size of underground reserves that may take years and billions to develop.
Despite major political upheaval in Venezuela, the oil market's reaction is minimal. This is because the short-term supply impact is ambiguous, with an equal probability of production increasing through U.S. re-engagement or decreasing due to intensified blockades, creating a balanced risk profile.
For a country dependent on a powerful neighbor like the U.S., the path to a fairer relationship is creating leverage. This is achieved by developing independent infrastructure, like pipelines and LNG terminals, to sell resources to other world markets. With viable alternatives, the country can negotiate from a position of strength, not desperation.
Market fears of Venezuelan oil flooding the market are misplaced. Experts estimate it will take at least three years and significant investment to bring just one million barrels per day of production back online. The immediate supply Venezuela can offer is minimal, making the news irrelevant to the 2026 price outlook.
The rise of destination-flexible U.S. LNG is fundamentally altering global gas markets. By acting as the marginal supplier and an effective 'global storage hub,' the U.S. reduces Europe's strategic need for high storage levels, leading to structurally lower prices and a new market equilibrium.
By consolidating influence over Venezuelan and Guyanese reserves alongside its own, the U.S. could control nearly a third of global oil reserves. This would fundamentally reshape energy geopolitics, diminishing the influence of powers like Saudi Arabia and potentially keeping oil prices in a lower range.