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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Short Sighted and Slanderous. The Energy Report 08/31/2026

It’s almost unbelievable the way Democrats attacked President Trump’s history-making achievement of cutting an oil deal with Venezuela that more than doubles our country’s proven oil reserves, enhances our energy security, and puts us on a path toward lower oil prices for our hemisphere for generations to come.

Trump described the pact correctly as “THE BIGGEST OIL DEAL IN WORLD HISTORY.” Trump’s deal, negotiated by Secretary of State Marco Rubio and Defense Secretary Pete Hegseth with Venezuela’s interim President Delcy Rodríguez through a private partnership, gives the United States majority control of more than 65 billion barrels of proven reserves across 17 fields at no cost to the American taxpayer. Consider the fact that U.S. proven crude oil and lease condensate reserves total 46.0 billion barrels as of year-end 2024, according to the U.S. Energy Information Administration this deal to develop these fields will pay dividends for the US and Venezuela for generations to come.

Yet sadly some Democrats do not have the understanding of just how important this is to the country and how this is a major win for our country. In what can only be called a slanders statement from Senator Chris Van Hollen said, “Putting our soldiers’ lives on the line for private profit is a gross dereliction of his constitutional duty.” Which shows that Senator Van Hollen is oblivious to the threat that wads posed by the Maduro regime. Senator Van Hollen said nothing about the danger Maduro and his regime posed to the region and to U.S. national security.

Maduro ran a hybrid criminal state—the Cartel of the Suns—partnering with FARC terrorists and Tren de Aragua to move cocaine north while his government systematically seized private property: more than a thousand companies and millions of acres of farmland, plus the homes of opponents. It wasn’t just oil. Russia, China, Iran, and Cuba used Venezuela as a beachhead in our hemisphere. China took the bulk of the crude at steep discounts to service oil-backed loans; Russia supplied arms and a military foothold.

Maybe Senator Van Hollen doesn’t know Venezuelan oil helped the United States and our allies win World War II. Or that Gulf Coast refineries were purpose-built in the 1990s and 2000s—delayed cokers, vacuum units, upgraded metallurgy—to run Venezuela’s heavy, sour crude. That relationship started long before Maduro. PDVSA locked in the downstream outlet by buying half of Citgo in 1986 and the rest in 1990, then pairing with U.S. partners on the Lyondell-Citgo Houston upgrade, the Phillips Sweeny coker for Merey, and the Chalmette joint venture for Cerro Negro. At the late-1990s peak, we were taking well over a million barrels a day of Venezuelan crude—sometimes closer to 1.5 to 2 million.

Then Hugo Chávez treated PDVSA like a political piggy bank. Oil money funded social missions, dirt-cheap gasoline at home, and PetroCaribe giveaways abroad, while the fields and plants were starved of capital. After the 2002–2003 strike he fired 18,000 to 20,000 people, including most of the experienced engineers, and put loyalists in their place.

Production had peaked near 3.5 million barrels a day just before he took office. It never recovered. The 2007 expropriations of foreign partners finished the job. The heavy-sour barrels those Gulf Coast plants were built to run dried up, and American motorists paid for it at the pump. Yet it seems that Senator Van Hollen’s party still seems to carry a soft spot for the socialism Chávez and Maduro championed, the same socialism that collapsed production from nearly 3 million barrels a day to barely 1 million, wrecked the economy and drove eight million people out of the country. To slander the President without facing those facts on the ground is just a cheap attack. Every real achievement by President Trump only reminds people how badly his own side failed.

Senator Tim Kaine of Virginia said now we see why Trump invaded Venezuela and removed the dictator Maduro but kept his VP in power while blocking opposition leader and Nobel laureate María Corina Machado from returning home and delaying all talk of elections so the US could control Venezuelan oil in violation of its constitution.

What I find telling about Tim Kaine’s statement is that it seems he has a lot more respect for the Venezuelan constitution that was written by a corrupt regime and has less respect for our Constitution and our founding principles, where we believe that people’s rights do not come from the government. This is the same Senator Kaine who, in a Senate Foreign Relations Committee hearing last September, called the American founding idea that rights come from God “extremely troubling.” His words: “The notion that rights don’t come from laws and don’t come from the government but come from the Creator — that’s what the Iranian government believes. It’s a theocratic regime that bases its rule on Sharia law and targets Sunnis, Bahá’ís, Jews, Christians and other religious minorities. And they do it because they believe that they understand what natural rights are from their Creator. So the statement that our rights do not come from our laws or our governments is extremely troubling.”

He added that the idea our rights do not come from our laws or our government “should make people very, very nervous.”

So Kaine treats a constitution written under a socialist dictatorship as something the United States must not violate, while treating the Declaration of Independence — “endowed by their Creator with certain unalienable Rights” — as if that is the real danger. He says that it puts America in the same category as the Iranian theocracy. He will lecture us about Caracas and worries about protecting their constitution—the one Chávez rewrote so he could be dictator for life—but gets nervous when we quote Jefferson.

Still, I’ll admit the worry about doing business with Venezuela’s interim government is a fair one. President Trump has a working relationship with interim President Delcy Rodríguez. He’s called her a “Highly Respected Interim President” and said she’s doing “a fantastic job.” That deserves a hard look. There’s a practical logic too: he doesn’t want a replay of Iraq after Saddam, when the vacuum turned into years of chaos. Get the oil flowing and the cash moving first. Stabilize the industry. Then deal with the politics.

Rodríguez isn’t some accidental dance partner. This is transactional, not a conversion. Her father, Jorge Antonio Rodríguez, was a Marxist guerrilla who co-founded the Socialist League and was tied to the 1976 kidnapping of U.S. businessman William Niehous. He died in police custody that year. She has said that episode is why she went into law. She trained at UCV, did additional work in France, and climbed the Chavista ladder: communications minister in 2013–14, Venezuela’s first female foreign minister from 2014 to 2017, president of the 2017 Constituent Assembly, vice president since 2018, and later oil minister. Loyal to Hugo Chávez. Loyal to Nicolás Maduro.

Can this leopard change her spots? On Saturday she went on state television to sell the new 25-year energy agreement. Here’s what she said: Develop 17 strategic oilfields with a target of more than 1.5 million barrels a day. Venezuela is currently around 1.25 million. Caracas keeps ownership and sovereignty. The U.S. brings capital, technology, and operating capacity. About $19 a barrel goes to the Venezuelan state. At a $65 benchmark, she put the take at roughly $209 billion. “The benefits are endless.” She called it historic and said it would help Venezuela become “an energy powerhouse.” That’s the commercial piece. The political piece is still unfinished. Venezuela still needs a real path to free and fair elections. Rodríguez is a Maduro insider. That history matters.

María Corina Machado should be allowed to come home. She has said she intends to return before the end of 2026, run again, and demand elections that include the millions of Venezuelans living abroad. The Venezuelan people should decide the next chapter. A managed transition that freezes the current power structure is not the same thing. But at the same time, after the devastated Venezuelan earthquake and the progress that has been made stabilizing the country.

Ro Khanna looks off on both the strategy and the morality. Over the weekend he called the policy “morally wrong” and said Trump had “rolled back the clock a hundred years to the era of gunboat diplomacy where might makes right.” He’s been using the same “gunboat diplomacy” and “plunder weaker nations” line since the January operation that removed Maduro. The comparison doesn’t hold. This is a commercial partnership with an existing interim government, not a 19th-century occupation. And Khanna has been a lot quieter about the socialism that wrecked Venezuelan production, produced hyperinflation, and created the humanitarian mess that made a deal like this possible in the first place.

Although this agreement will not lower oil prices overnight, a stable Venezuela could expand production, support long-term price relief, and strengthen economic stability. It could also weaken OPEC’s influence and provide the U.S. military with a reliable long-term supply of diesel fuel. This is a major strategic win, and it is disappointing that Democrats do not recognize it. Yet regardless of the outcome, they seem unlikely to support any policy associated with President Trump.

With oil trading overnight, the market didn’t get a minute to celebrate the Venezuelan news because of another attack in the Strait of Hormuz. The United States responded for the first time since July, attacking Iranian missile launchers.

In other words, drones are down, threats are up, and oil popped. Reports say that U.S. forces hit Iranian rocket launchers on the Strait of Hormuz Sunday — the first American military action in weeks after a lull. CENTCOM said IRGC units were preparing rockets and sea mines for the strait. Iran quickly reported “martyrdom and injury” near Larak Island and vowed to “punish the aggressor.”

That’s the headline that popped oil. WTI was sitting in the low $83s after Friday’s close and saw an after-hours/Asian-session bounce toward the mid-$84s–$85 area on the news. Classic risk-premium spike. Trump: The US will respond to Iran’s attack on US forces. – Fox News Iran has been throwing drones and missiles at Jordan for months — targeting U.S. facilities at bases like Muwaffaq Salti/Al-Azraq. Jordan and U.S. defenses have knocked most of them down. Limited damage, few casualties on the receiving end. The pattern is the same: Tehran launches, the systems get intercepted, and the follow-through never quite matches the rhetoric.

Iran’s own exports have collapsed under the blockade. Yet crude is trading in the low-to-mid $80s WTI / high $80s Brent — well off the panic highs from earlier this year and a long way from the triple-digit doomsday numbers that were supposed to arrive if the strait stayed pinched.

The market has already learned this lesson. Iran can still make noise and launch what it has left. Its ability to close the strait for good or sustain a campaign that changes the physical supply picture looks increasingly questionable after months of U.S. strikes on launchers, boats, radar, and command sites. Tit-for-tat is not the same as control.

Oil likes to spike first and ask questions later. The questions are already there. The gap below this bounce is still waiting to be filled. Same movie, different Sunday.

We’ll keep a close eye on the diesel crack spread because it could become a major market driver, especially if more Venezuelan crude comes online. Remember, Venezuela’s heavy oil is well suited for producing the diesel that powers trucks, construction equipment, and the broader economy, along with the jet fuel our military depends on. This is not just an oil story—it is an economic and national-security story. Yeah, I know there are still some challenges, but any uptick would be amazing. Yes, I do know there are significant challenges with the ports in Venezuela and ships backing up, but this type of deal is not about today; it’s about the future.

Natural gas is down a little bit as we head into the shoulder season, but what could be significant for natural gas, as well as the rest of the energy complex, is renewed tropical activity in the Atlantic. You better download your FOX Weather app, because this is what they are reporting: Invest 97L churns in the Gulf with a 50/50 chance of becoming a tropical depression.

A cluster of thunderstorms that developed over the northern Gulf has evolved into Invest 97L, which is bringing heavy rain to the region. The system has a 50/50 chance of strengthening into a tropical depression as it moves toward the Texas and Louisiana coasts.

The disturbance began as a cluster of thunderstorms over the northern Gulf after a dip in the jet stream over the weekend helped set the stage for its development. The cluster has since evolved into a small tropical disturbance.

The Gulf Coast is bracing for a stormy stretch as Invest 97L churns across the region, bringing thunderstorms and heavy rain through Wednesday. The system is showing signs of organization, and forecasters give it a 50/50 chance of becoming a tropical depression.

The system is currently trapped beneath a heat dome and high-pressure system that is bringing hot weather to the Midwest. That high-pressure system is expected to slowly nudge the disturbance toward the upper Texas coast.

The National Hurricane Center said there is a 50/50 chance the system could develop into a tropical depression, noting that the warm Gulf waters and atmospheric conditions appear reasonably conducive for development.

An “invest” is a designation used by the National Hurricane Center to identify an area that is being investigated for potential development into a tropical depression or tropical storm within the next seven days.

Residents from Galveston, Texas, to southwestern Louisiana should closely monitor the forecast over the next couple of days in case the system develops more quickly than expected an d download the Fox Weather ap.

Regardless of whether it strengthens into a tropical depression, the system is expected to reach the Texas or Louisiana coast late Monday or Tuesday, bringing the potential for heavy rain and thunderstorms.

Hurricane hunters are scheduled to investigate the disturbance early Monday morning, providing forecasters with additional data on the system’s strength and organization. Small systems can sometimes spin up quickly in the northwestern Gulf, where the curvature of the coastline and extremely warm waters can contribute to rapid development, according to the FOX Forecast Center.

Traders are going to have to keep a close eye on these storms. It’s that time of year, and we still don’t know whether they’ll hit supply, demand, or both. That’s why you need to download the FOX Weather app. And while you’re at it, stay tuned to the FOX Business Network — the only network in America that’s truly invested with you.

If you haven’t signed up for the Phil Flynn Daily Trade Levels, The Energy Report, or my special reports on metals and other commodities, do it today. You can also open your trading account with us by calling 888-264-5665. Follow me on X at @EnergyPhilFlynn.



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