You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Everyone Everywhere, Now an Expert on the Venezuelan Oil IndustryDid you know that they produce heavy sour crude in Venezuela... Well, so does everyone else now... Plus, what's really driving oil prices next week...
Dear Fellow Traveler: Well. That was fast. 2026 was supposed to be normal. But then, yesterday, my wife’s phone and mine went off at 11:48 a.m. It was a text to a group chat from my wife’s best friend.
That is how geopolitics enters daily life today. Not through official statements or press conferences, but through push notifications, group texts, and the half-awake reflex to check if the world just shifted before lunch. By mid-morning, headlines said the U.S. had taken custody of Nicolás Maduro, just hours after he had met with Chinese diplomats. What followed over the next 24 hours was exactly what you’d expect. Bold headlines. Shouting. Miscommunication. Conspiracy theories. Countless confident “expert” takes, delivered at full volume. We’re three days into 2026, and everyone everywhere is now an expert on Venezuela. On heavy sour crude. On Congressional war powers. On international law. Celebrities with no map and no memory explaining regime change like it was a product launch. But then the irony settled in for me. Maduro, whose brand of socialism finished off what remained of a post-Chávez Venezuela, is now set to be tried in a New York City court. The same city where its newly elected socialist mayor recently promised residents they would soon experience the “warmth of collectivism.” By the afternoon, the shouting had faded. While I watched Amelia bowl and spill milkshakes across an arcade floor, the inbound text questions shifted to oil. I said I’d answer them tomorrow. As Damon Albarn sings, “Tomorrow comes today.”  OPEC, Not Venezuela, Sets the ToneThe news from Venezuela grabbed headlines. The oil market, however, took its cues from somewhere else. OPEC… For those unfamiliar with the global oil markets, OPEC is a global cartel. I don’t say that as a slur. It’s an economic principle. This group of oil-producing countries coordinate production targets to control prices instead of letting prices float based on changes in demand. By ensuring all their members are aligned in production, they try to maximize oil prices, and everyone makes more money. That said, everyone member technically has an incentive to cheat to produce more and make more money, while others follow the rules. (This is a simplified description of John Nash's game theory/mathematics in the film, A Beautiful Mind) OPEC+ is the expanded version of the cartel, formalized in 2016. This larger version now includes Russia and other non-OPEC producers. Today, OPEC+ controls roughly 50% of the world’s oil production. When they cut output, prices rise. When they increase output, prices fall. When they hold steady, they are signaling that the current balance suits them. This morning (January 4), OPEC+ reaffirmed that it will maintain its current oil output policy through the first quarter of 2026. The decision followed a virtual meeting of the group’s eight core producers and came despite elevated political tensions among members. The eight countries (Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman) are the ones who relaly make the decisions in the OPEC+ alliance. For me… it’s not just what was decided. It’s what wasn’t discussed. Venezuela. No media outlet or press release mentions Venezuela (a founding OPEC member) as a risk, offset, or factor in supply planning. That omission matters… OPEC Is Choosing Stability Over ReactionFrom April through December of last year, the eight core producers raised output targets by roughly 2.9 million barrels per day. That figure represents about 3% of global demand. In November, they agreed to pause further increases for January, February, and March 2025. That pause is set to hold through the first quarter... and maybe longer. The decision to pause comes after oil prices dropped 18% last year. That’s the biggest drop since the pandemic. The feeling is that there’s still too much oil in the system and demand remains uneven. In a conversation with Reuters, Jorge Leon, head of geopolitical analysis at Rystad Energy and a former OPEC official, said:
OPEC+ also said that the 1.65 million barrels per day of “voluntary adjustments” could be returned gradually depending on market conditions. This matters because prior expectations call for testing members' capacity ahead of higher demand forecasts in the years ahead. So… we saw no acceleration, surprise cuts, or emergency response from OPEC+ a day after the U.S. arrested the head of the country with the largest proven oil reserves in the world. If OPEC believed the market was tightening or that geopolitical events were about to overwhelm supply, this would have been the moment to respond. They didn’t. The decision to maintain production while geopolitical noise is running high is not passive. It’s an active signal that OPEC+ believes global markets are well supplied… Political Tension, Market DisciplineOil markets are determined by barrels… not headlines. And what makes this decision more telling is the backdrop. Saudi Arabia and the United Arab Emirates are backing opposing sides in Yemen’s decade-long conflict. That rift overshadows Venezuela right now. Tensions escalated last month when a UAE-aligned group seized territory from the Saudi-backed government. It fueled the largest rift in decades between the former close allies. And despite that headline, it didn’t deter the production discussion at all... This is familiar behavior. OPEC has managed to overcome many internal rifts in the past, including the Iran-Iraq War. They’re professionals. They prioritize and manage the market over political disputes. When it comes to oil, this discipline has historically outweighed diplomacy. It’s is just another reminder. Regardless of headlines, OPEC doens’t feel the need to increase or reduce production. And, it does not (at least yet) consider Venezuela relevant to that decision. Where Venezuela Fits, and Where It Doesn’tVenezuela, despite the scale of the event and noise here in America, probably won’t move prices much. Venezuela holds the world’s largest proven oil reserves, larger even than Saudi Arabia. But its oil production has plummeted due to years of mismanagement and sanctions. It currently produces less than one million barrels per day, under 1% of global supply. Roughly half of that is exported. These flows weren’t moving anyway. They faced sanctions, infrastructure decay, and logistics failures by the Maduro government. Analysts broadly agree that any serious increase in Venezuelan production would take years… and tens and tens of billions of dollars to bring back online… Even under an optimistic scenario involving sanctions relief and foreign investment… Time is a real commodity here. And Venezuela’s political story needs to adjust first. For January, Venezuela is the noisy story layered onto a market that’s already well supplied. So… let’s turn to what will move oil prices this week… What Moves WTI Prices This Week? U.S. Supply FiguresOPEC’s decision sets the tone. But traders will be watching U.S. supply data this week. The U.S. ended last year producing just over 13.8 million barrels per day (bpd), a record level. Inventories remain elevated, and first quarters are typically periods where there is an absundance of oil supply because of softened demand... So, we’ll watch inventory data, refinery utilization, and product demand. That will matter far more this week than press conferences or speculation about Venezuela. As long as U.S. stockpiles continue to build and OPEC holds the line, geopolitical events would need to disrupt physical flows to materially change prices. That’s not what OPEC is seeing right now. When markets reopen, a brief spike in the risk premium is possible. But most analysts expect any move to be limited to roughly $1 to $2 and vulnerable to fading if inventories and supply data continue to confirm oversupply. I will note that our energy signal did turn positive on Friday… But that could quickly shift. The larger signal is that the group that controls half the world’s oil is behaving as if supply is ample, not scarce. Prices should remain contained. Again, the oil market is governed by barrels, not headlines. What This Means for YouSupply is ample and prices are capped. Geopolitical noise will create short-term spikes… but as you have to look out on a longer time period. The floor is soft, and ceiling is lower than the headlines suggest. If you own energy, it’s not the best environment for upstream exploration and production companies tied to price, though people will speculate on Chevron (CVX) over Venezuela. Interestingly, this event is more bearish for oil prices over the long term if the U.S. does maintain control and influence of that massive energy supply… But I remind you that there is always money in the midstream. What’s that? Here’s what I wrote in May 2024.
My favorites remain the same ones I outlined in our report, “There’s Always Money in the Midstream.” Energy Transfer (ET) and Enterprise Product Partners (EPD) remain the backbone of any midstream allocation. Both generate massive cash flows, pay dividends north of 7%, and benefit directly from record U.S. production that needs to move through their pipes. For those who want diversified exposure without the K-1 headache, the Clearbridge Energy Midstream Opportunity Fund (EMO) offers a clean way to own the sector. Yes… the Venezuela story will generate volume. OPEC’s silence tells you it won’t generate returns. Now, if you’ll excuse me… I have to go prepare for questins about the Cuban Remix… Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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