Venezuela's 65 billion barrels... It may not help the U.S. anytime soon... Dan's great call on refiners... The 'hawks' are circling... Bessent's response to Druckenmiller...
We have a deal (with Venezuela)...
In a series of posts on Truth Social over the weekend, President Donald Trump announced that the U.S. had reached an oil-supply agreement with Venezuela. In his post, Trump said that the deal secures "majority U.S. control" of more than 65 billion barrels of oil.
Last night, the White House released a fact sheet with more details...
Under the agreement, North American Blue Energy Partners will receive concessions for 17 oilfields in Venezuela. That's where the "65 billion barrels" will come from.
The U.S. government has the right to purchase 20% of all oil produced from those fields. America will also have a "right of first refusal" on the remaining 80%, meaning the federal government can match any offer for any further Venezuelan crude.
Trump wrote that the Venezuelan crude will go toward refilling America's Strategic Petroleum Reserve ("SPR"). Last week, we wrote that two of the SPR's sites are almost empty – with one down to 13% of total capacity.
And the drawdowns continued last week, with the SPR falling below 290 million barrels for the first time since 1982 in the week ending August 21.
On the surface, the agreement would quickly reverse that trend. But oil markets don't believe it just yet. Crude oil rose yesterday, and it's up another 3% today after the U.S. announced more military strikes on Iran.
It's not quite as easy as it seems...
Venezuela has the most oil reserves of any country in the world. But it only produces about 1.25 million barrels per day. Based on 2025 numbers, that would rank Venezuela as the 19th-largest producer... covering only about 5% of daily U.S. consumption.
And it's not going to make an impact anytime soon...
The oil and gas analysts at HFI Research estimate that it will take three years just to boost Venezuela's oil production to 1.75 million barrels per day. It won't be cheap, either. Consultancy firm Rystad Energy estimates that it will cost $110 billion just to get Venezuela to 2 million barrels per day.
Then, once we do get Venezuelan crude out of the ground, it won't be the quality we need for the SPR. According to the U.S. Energy Information Administration, Venezuelan crude is "extra-heavy." That means it has to go through an extensive refining process to be stored or used.
In a 2016 report to Congress, the Department of Energy said that the costs of storing heavy crude outweigh the benefits, adding that it would create "considerable operational difficulties."
Even so, according to Trump, we're going to be accepting Venezuelan crude. And that means refineries are going to be busy getting those imports ready to be stored in the SPR.
Tipping our cap to Dan's great call on refiners...
Over the past few months in his Friday Digests, our colleague Dan Ferris has written repeatedly about refiners – including in the August 21 Digest. Dan has been bullish on the refiners since before the Venezuelan news... This week's headlines are just an added tailwind for the industry.
As he wrote in the July 17 Digest...
They benefited as the war in Iran pushed up fuel prices. (I won't pretend I predicted that in December.) Even with oil and gas prices retreating from their April war highs, the crack spread – the price of gasoline and diesel fuel minus the cost of the crude oil required to make them – has soared to all-time highs and now sits around $65 a barrel.
As he wrote in the August 21 Digest, the "crack spread" is now at around $70 a barrel. According to Dan, "It looks like a long-term bull market in refinery profitability." And now, they're going to be a lot busier with more Venezuelan oil imports.
That's good for the two refiners that Dan recommended in The Ferris Report. As of yesterday's close, both stocks are up more than 120%. Congrats to Dan on a great call!
Paid-up Ferris Report subscribers and Alliance members can read Dan's full report on the refiners here. If you're not a subscriber but would like to learn more, you can sign up for a 30-day free trial here.
Hawks are circling at the Fed...
At its last meeting in July, the Federal Reserve left rates steady, but three voters "dissented" in favor of a rate hike.
In the next couple weeks, the central bank could face more pressure to raise rates...
On September 16, the Fed's next policy decision is due. And between new Chair Kevin Warsh's comments in Jackson Hole, Wyoming and remarks from other Fed members... a rate hike is likely.
In a speech today, Fed Governor Michael Barr said that he wants to "act decisively" to raise interest rates if inflation doesn't continue to show progress heading back toward the Fed's goal of 2%.
The personal consumption expenditures ("PCE") index – the Fed's preferred inflation metric – has been above that 2% level every month since April 2021. And it has been at or above 3.5% for each of the past four months, not showing a meaningful drop even after oil prices retreated from their summer highs.
As a Fed governor, Barr is a permanent voter on Fed policy. In July, he voted with the majority to keep rates steady. But based on his comments today, he's the latest member to lean toward hiking rates.
Before that policy meeting, we get one more inflation report – the consumer price index ("CPI") – on September 11. If the CPI doesn't show continued "cooling" inflation, the market will continue to price in a hike this month.
That means a headwind for rate-sensitive investments, such as heavily indebted businesses and dividend stocks.
Bessent responds to Druckenmiller's op-ed...
Last week, in a Wall Street Journal op-ed, billionaire investor Stanley Druckenmiller criticized the Treasury Department's decision to boost bond prices by buying back more longer-dated Treasurys.
In the August 25 Digest, we described Druckenmiller's tone as "fighting words" for his former employee (and now Treasury Secretary) Scott Bessent.
Now, it's Bessent's turn to take a jab at his mentor...
The secretary discussed the issue in a CNBC interview in North Carolina, where he's attending a G20 finance summit.
Bessent told CNBC that he's "not sure where the weakness" is in the bond market, adding that the 10-year yield is about flat since President Trump took office in January 2025.
That's technically true... But the 10-year yield fell to as low as 3.96% earlier this year before rising back to its January 2025 level.
Bessent also responded to Druckenmiller directly...
Stan's a great investor. He changes his mind a lot, and he doesn't like losing money... I think he lost money the day he sent in the editorial.
In other words, Bessent believes Druckenmiller was short bonds, and Bessent's maneuvers drove up bond prices.
But the secretary's push hasn't stuck.
August 25, the first trading day after Druckenmiller's article, marked the recent low in the 30-year yield. Because lower yields mean higher bond prices, this means Treasurys have since fallen again. So if Druckenmiller is indeed short government bonds, his trade has worked out one week later.
Today, yields moved higher again – with the 10-year matching its January 2025 high at 4.79%. And the yield on the 30-year Treasury rose for the fifth straight day, though it remains below the level where the Treasury intervened.
The market agrees with Druckenmiller, for now. And so do we...
Inflation is still an issue for the economy, the conflict with Iran is ratcheting back up, and government spending is out of control. So it'll take a lot more than $4 billion in bond buybacks to convince investors that yields should come down.
New 52-week highs (as of 8/31/26): Alpha Architect 1-3 Month Box Fund (BOXX), Cambria Emerging Shareholder Yield Fund (EYLD), Marathon Petroleum (MPC), Okta (OKTA), Plains All American Pipeline (PAA), USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI), Valero Energy (VLO), and State Street Energy Select Sector SPDR Fund (XLE).
In today's mailbag, we have feedback on yesterday's edition... which covered the Fed and Kevin Warsh's message in Jackson Hole, along with Secretary Bessent's solution for the $40 trillion U.S. debt... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Why do you pay attention to what the Fed says? We're adding a trillion dollars every 100 days to the national debt, we're primarying any congressman who dares to vote against a bill that adds more debt, our treasury department miraculously finds a trillion dollars in a special account to buy the treasuries no one else wants to buy, we've stolen Venezuela's oil, trying to steal Iran's oil, we want NATO on Russia's border and wonder why Russia invades Ukraine, we illegally appropriate territory belonging to others, we're pissing off the entire world, and still think the Fed wants to bring down inflation?
"Our government is in panic mode! It is obvious inflation will keep going up and up and up! How else can they pay off the debt? There are only three choices: inflation, default, or war and hope we win. They have to tax us and inflation is the easiest way to do it and fool us into thinking they want to reduce it. Don't be surprised if the Fed redefines how they measure inflation to bring the numbers down, but even then, inflation will keep going up above the 2%. We'll continue to feel it!" – Subscriber Luis A.
Corey McLaughlin comment: Well, we write about the Fed because whatever the central bank does – or doesn't do – matters in the market. It's important whether we like it or not. But we also write about the Fed for subscribers like you... folks who can see through the madness and think for themselves.
On that point, I think you covered it all – and then some!
Inflation will always be "there." And it hits everyday Americans' budgets more than the "official" numbers of 3%-plus even indicate. Alternative measures show much higher inflation. These include the Chapwood Index, which we've written about in the past... It found more than 10% annualized price increases over the past several years for common goods in major U.S. cities.
Also, as I've mentioned in the past, Warsh could redefine the Fed's preferred inflation measure anyway. We've pointed out that it would let him dodge tough decisions (and lead to more inflation). Warsh has already alluded to making such a change.
"Corey, On Scott Bessent saying we will grow our way out of debt. Yeah, right... 10,000 comedians out of work and he's trying to be one." – Subscriber Gary A.
All the best,
Nick Koziol
Baltimore, Maryland
September 1, 2026
