Is the US targeting Venezuela because of crude oil? What impact does this swift war have on the market?

Web3 people's self-cultivation: whenever big events happen:

First: analyze what impact it might have on the market, quickly adjust positions or place orders.
Second: see if there are any MEMEs to buy, quickly lay in wait.
Third: see if there are any hot topics to ride the traffic.

This article mainly studies the reasons and impacts of the US targeting Venezuela this time.

┈┈➤ First Impact: Bearish

Ignoring right and wrong, reasons, and actual effects, the first impact of war is a black swan, so it is initially bearish.

The airstrike occurred in the afternoon Beijing time, so BTC indeed showed a decline in the afternoon.

┈┈➤ Second Impact: Limited bearishness

As previously introduced, Venezuela has experienced crazy inflation for over 100 years, reflecting the incompetence of the country's monetary authorities and even the government management. Whether in terms of economy or military strength, Venezuela is no match for the US. Soon, Trump announced the capture of Venezuelan President Maduro and his wife.

Therefore, the bearish impact of this conflict is relatively limited. For now, BTC's decline is relatively contained.

┈┈➤ Third Impact: Possible limited subsequent effects

╰┈✦ What is the real reason for the US attacking Venezuela?

The US claims the reason is that Venezuela supplies drugs to the US. According to media reports, the Venezuelan government stated in a declaration that the US's target in attacking Venezuela is oil and minerals.

Because Venezuela is the world's largest oil reserve country, most people's first reaction is also crude oil.

However, although Venezuela has the highest oil reserves, the quality is almost the worst.

▌Global crude oil gradient distribution

The API gravity of crude oil(light)the higher, the lower the sulfur content, the easier it is to extract, and the better the quality of refined products. Globally, crude oil can be divided into several tiers based on quality:

▌Venezuela's high-cost crude oil

The first is high extraction costs.

Venezuela's crude oil quality is really poor. Estimating the extraction cost:

Saudi Arabia's oil layer is shallow, with high pressure and many self-flowing wells, almost like inserting a straw, with extraction costs around $3-6 per barrel.

UAE and Iraq are next, about $3-8 per barrel. Then Iran at $5-12.

US WTI crude oil extraction costs are about $6-12 per barrel. US shale oil extraction requires hydraulic fracturing, with a short well lifespan needing continuous new wells, costing $8-15 per barrel.

Venezuela's heavy crude oil is thick and sticky like asphalt, requiring additional injection of diluents or heating to flow, with extraction costs around $12-25 per barrel.

The second is high refining costs.

Venezuela's crude oil is almost like asphalt, approaching solid. On one hand, because its molecular structure is different, composed of large molecules with over 40 carbon atoms(light oil generally contains 5-10 carbon atoms). Therefore, it needs to be subjected to high-temperature environments or catalysis to crack it into low-carbon light oil. For high sulfur content, coking is also necessary to break it down.

On the other hand, it contains many impurities like sulfur and metals, requiring refining. GDP estimates Venezuela's extra-heavy oil refining costs at $18-30 per barrel.

Although these GDP estimates may not be entirely accurate, the extraction and refining costs of Venezuela's extra-heavy oil are clearly higher than most crude oils.

The third is low efficiency.

Finally, a lot of money is spent, and a significant amount of low-value by-products (such as petroleum coke, sulfur) are produced. The effective yield of Venezuela's heavy oil after refining is relatively low.

Venezuela also has some oil resources outside the Orinoco region, but the quality and extraction environment are similarly poor. Imagine if Venezuela's crude oil quality were ideal and costs lower, the country wouldn't have such severe fiat currency inflation just by exporting oil.

The US has very good relations with Saudi Arabia and the UAE, especially since Saudi Arabia's oil reserves are the second largest globally and costs are particularly low. So the US has no need to target this high-cost, low-efficiency Venezuelan crude oil, and attacking Venezuela might even attract global criticism, which is unnecessary.

▌Other reasons for the US targeting Venezuela

Aside from crude oil costs and quality, if the US wanted Venezuela's oil, they would have acted long ago. After all, the US can capture the Venezuelan president in a few hours, and Venezuela has been exporting drugs to the US not just recently.

Therefore, this move by the US is most likely unrelated to Venezuela's crude oil.

The deeper, more fundamental reason might be geopolitical factors. Venezuela has close ties with China, which the US considers its biggest competitor.

╰┈✦ The subsequent impact may be limited

Because Venezuela's crude oil is high-cost and of poor quality, the US is unlikely to extract Venezuelan oil like in Iraq, so the overall global oil supply probably won't be significantly affected.