‘Big Short’ investor Michael Burry says toppling Maduro in Venezuela will weaken Russia’s global position as its oil ‘has become less important’

The big short Investor Michael Burry says the recent US-led regime change in Venezuela could weaken one of America’s biggest adversaries.

Burry, who correctly predicted the subprime mortgage crisis in 2008, said Russia could face consequences after the United States overthrew Venezuelan President Nicolás Maduro on Saturday morning, the investor wrote in a post on his Substack. newsletterCassandra Unchained.

Shortly after Maduro’s capture, President Donald Trump said the United States would become more involved in the country’s abundant oil reserves. He put the onus on U.S. oil companies to improve Venezuela’s oil infrastructure with billions of dollars of investment and said the U.S. would sell the oil to other countries.

Although it could take five to seven years, Burry estimates, the increased flow of Venezuelan oil could reduce Russia’s revenue and influence.

“Russian oil has become less important in the medium to long term,” Burry wrote.

Venezuela contains about 19 percent of the world’s oil, or about 300 billion barrels, dwarfing the United States’ estimated 61 billion barrels. Energy Institute. Yet, partly due to dilapidated infrastructure, poor management and US sanctions, the country only exploits a fraction of what it has the potential to produce.

Because it has the world’s largest reserves, increasing its oil production could affect the price of the product globally, said economist and associate dean of Boston College Aleksandar Tomic.

If oil prices fall due to increased global supply via Venezuela, Russia could be weakened because oil is its “lifeline”, he said. Fortune. Despite US sanctions, Russia exports oil to countries like China and India.

If prices fall due to increased Venezuelan production, Russia could have more to lose than any other country because of its costly war against Ukraine, he added. Its oil and gas industry represents on average about 20% of the country’s GDP, according to the Oxford Institute for Energy Studies.

“[Oil] “This is what funds their war effort, so it’s pretty crucial for Russia,” Tomic said. “It would be a pretty big blow for them if the price of oil collapsed, if, for example, the United States flooded the market with Venezuelan oil.”

Certainly, it is not clear who will lead Venezuela in the future and how its oil reserves will be managed. Despite Trump’s assertion that the United States will “run” Venezuela, the president has given few details on how the United States will be involved in the country’s administration. Venezuelan Vice President Delcy Rodriguez was sworn in as interim president after Maduro’s capture.

It’s also unclear whether U.S. oil companies would rush to restore their operations in Venezuela, Tomic said. Both ConocoPhillips And ExxonMobil left the country in the early 2000s and have since sought to recoup losses related to their expropriated assets through international arbitration.

And increased oil production in Venezuela could lower prices, which would also affect U.S. companies’ profits, Tomic said.

Chevron is the only American oil company operating in the country. CEO Mike Wirth last year reiterated the company’s support for rebuilding Venezuela’s economy.when circumstances change.»

A ConocoPhillips spokesperson said the company was monitoring developments in Venezuela and their potential global energy implications.

“It would be premature to speculate on future business activities or investments,” the spokesperson said in a statement. Fortune.

Exxon Mobil did not immediately respond to Fortunerequest for comment.

Still, the chance for U.S. companies to grab a share of Venezuela’s large oil reserves is tempting, in part because U.S. oil production is expected to peak in 2027, then maintain high levels for a decade before declining rapidly. the United States Energy Information Administration predicted.

“As the United States (sic) brings its major oil companies to Venezuela, with refining assets relatively close by, there will be a global shift in energy geopolitics,” Burry wrote.

This story was originally featured on Fortune.com

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