Title: Doomberg Sees Hundreds of Billions Flowing Into Venezuela's Oil Sector Show: In it to Win it — host Steve Barton Guest: Doomberg — the anonymous energy/finance Substack collective (green-chicken avatar), doomberg.com Date: 2026-SEP-02 URL: https://youtu.be/xdAxAnx92Z0 Length: 29:27 Note: Free (public) portion of the episode; a premium segment on the Canada tariffs, rates, gold, graphene and Rick Rule's oil thesis follows behind the host's paywall and is NOT in this transcript. '>>' marks a speaker change (the guest speaks as a collective — "we"). Fillers (um/uh/"you know"/"I mean" when contentless/"like" as a tic) removed and stutters and false starts collapsed; wording otherwise verbatim. Unambiguous ASR mis-spellings of proper nouns are corrected to the intended entity: "Duneberg"/"duneberg.com" = Doomberg / doomberg.com, "Bessant" = Scott Bessent, "Bergam" = Doug Burgum, "Malay" = Javier Milei, "Hugo Shabba"/"Cheva" = Hugo Chávez, "Perian" = Permian, "Monteray" = Monterey, "Gavin Newsome" = Gavin Newsom, "Rick Roll" = Rick Rule, "graphine" = graphene, "straight of formoose"/"street of Hermuz"/"straight of four moves" = Strait of Hormuz, "the straight up moves was closed" = the Strait of Hormuz was closed, "SenCom" = CENTCOM, "IC brand" = ICE Brent, "seabor" = seaborne, "deluent" = diluent, "IUS" = IOUs, "pre-ell" = pre-sell, "girations" = gyrations, "civ" = sieve, "Bacan type resource" = Bakken-type resource, "the R market" = the oil market, "front routing" = front running, "unsaavory" = unsavory. Three further readings are judgement calls and flagged here: at 12:38 "you're talking trading houses" and at 21:37 "longtime readers of Bloomberg will recognize our subtleties" is read as *Doomberg* (the speaker is describing his own readership and his own house style); the Venezuelan businessman at the centre of the Doomberg piece is rendered by the auto-transcript as "Benton Court" [sic] — the surname is not clearly audible and is deliberately left as-spoken rather than guessed. One garble is left as-spoken because the intended words are genuinely ambiguous: at 21:37 "Trump, he bought, that's the old meme, right? you dump it." Topic: crack spreads and why the oil market carries better information than the stock market, the oil business "run on credit," Greenland vs Venezuela vs Vaca Muerta vs the Monterey Shale, Venezuela's path back to 4 million barrels a day, the Pentagon's 35% stake in a Venezuelan vehicle company, and the SPR.
00:02 Welcome to In It to Win It. This is Steve Barton and thank you for tuning in. We are back with our resident energy expert Doomberg. Doomberg, thank you for coming back on the show. >> Steve, great to be with you, my friend. Sharp as always. Nice tie. >> Looking dapper as always. Yes. Okay, let's start out with diesel.
00:22 I think that affects everyone here and with everything that's going on in the Middle East and with the recent tariffs being thrown across the border north and south, can you give us a kindergarten definition of what are crack spreads? >> Yeah, sure. Crack spreads are the difference in the price of the stuff that comes out of refineries compared to the price of the stuff that goes into refineries.
00:46 In other words, it's a proxy for the profit on offer for refineries in their capacity to transform crude oil into useful fuels. There are different measures, but yeah, go ahead. >> Is basically they're putting a raw barrel of oil in and then when they get the stuff out, as it— >> what do you 3:1 crack spread, right? I think it's some combination of gasoline, diesel, and jet fuel roughly in proportion to how much of each you get, right? So you take basically you take the revenue you get
01:22 out of a barrel of oil and compare it to the price of a barrel of oil. So when crack spreads are high, it tells you that there's no shortage of crude, there's a shortage of refining capacity. This is a really important concept actually and it's something we've written several times and it's a great phrase that we've leveraged from our friend JJ.
01:44 Oil is worthless until it gets to a refinery. There are no customers for oil other than refineries, at least no sustainable ones. Yes, a hedge fund or two might rent a tanker to capture some arbitrage, either calendar or geographic arbitrage. But take away the refineries and there's no demand for crude. Crude becomes valuable when a refinery buys it.
02:14 Until then, it's toxic goo. It's difficult to store. Nobody needs it. Nobody wants it. And in fact, one of— we wrote a whole piece on this because a friend of ours, another podcast host had criticized our view that the oil markets were efficient and his evidence against our view that the oil markets were not efficient was that the Korean stock market had wild gyrations.
02:42 And I was like, no, but they're wildly different markets. The stock market is not the oil market. The oil market has a different purpose. It has a different structure that's fit for that purpose and it has different participants than the equities market. So let's take a moment and define those three things.
03:02 I know this is well beyond kindergarten, maybe the gifted kindergarten that you send your kids to. The purpose of the oil market is to ensure a steady supply of crude oil to refineries at a price that they can earn a spread on. Crack spread. That's it. That's the reason oil markets exist. That's why they spontaneously arose.
03:24 That's their function. You take away the refineries, you have no oil market. You have no need for oil. So there go the drillers, there go the midstreamers, there go the tanker owners. All these people exist to serve refineries. Okay. Given that purpose to ensure a steady supply of oil at a price that refineries can earn a spread, what is the structure? The structure is defined by a series of futures contracts largely settled by delivery with grade specification and location specifications embodied in the
03:58 contracts. And there are two huge driving forcing functions in the oil market that don't exist in the stock market which are delivery and expiration. So when people talk about what is the price of crude in America, they're talking about West Texas Intermediate front month for delivery at Cushing. When people talk about global oil prices, they're almost always talking about ICE Brent front month futures which price most of the seaborne crude around the world.
04:30 At the end of all of those contracts eventually is a refiner. Even the ones that are kind of settled by financial differences, there's enough delivery and the steady cadence of expiration that the oil markets are just wildly different and more efficient, I would argue. And then the last is the participants. There's hundreds of futures contracts that trade with pennies worth of variance on all these nuances and the participants in the oil market are refinery operators, sophisticated hedge funds, there's not much in the way
05:12 of retail punters worried about the spread between November and December of 2028 that you could bet that it exists. It has volume. You could pull it up on your Bloomberg terminal and watch some trades in real time. These are people in the market typically who have a cargo of oil coming here and they want to hedge it there and they work with their banks and they have their margin and they understand and they could settle it by delivery or they're playing some sophisticated game of arbitrage.
05:45 It's well beyond the reach of you and me and most of the people listening to us. Whereas the stock market is just a wildly different purpose, structure and participant. So the purpose of the stock market is to assemble risk capital for enterprises. And the structure of the stock market is quite simple.
06:06 You have an initial public offering, at the market offerings, private placements, stock buybacks. But there's no expiration generally then there's no need for delivery. In fact, if a company never goes bankrupt, never does a buyback or never issues another share, the IPO stocks are basically immortal. They can trade forever.
06:29 Who participates in the stock market? Everybody participates in the stock market. So you can have wild swings, crowd effects, psychology of crowds, all of those things. The market can stay wildly inefficient for a very long period of time. There's no forcing function. So if you're an oil speculator and you're convinced oil is going to go to 150 and there's a bunch of refineries that are more than happy to lock in a price of 100, you're dealing with the majority of the market that has a different view than you do
07:02 and has the financial means to impose that view. And so what is a crack spread? The spread, generally speaking, has to be positive and positive enough that not only can these refineries continue to exist, but they can earn their cost of capital. And that's it. It's a spread business. So if you're an oil driller, the long-term real price of all commodities is lower, but that doesn't mean the spread goes away.
07:32 As long as you can earn your spread, you don't care what the price is. Everybody in the business is getting a spread. And people get more efficient over time in the business. And so even after presenting this thesis to my friend Nate, the host of Canadian Prepper, he still didn't quite believe that the oil markets provide information of a different quality compared to the stock markets. They just do.
08:03 And so when the war in Iran breaks out and we like everybody else were dead wrong thinking oil would go to 150 or 200 and it didn't, you saw this bifurcation in analysis between people who respect the oil markets as a reasonably good source of information and people who immediately assume that they weren't wrong.
08:22 It must be that the markets were being manipulated. Bessent, Trump, and this was aided, or from our perspective made worse by the fact that there's clear insider trading going on, front running and all that stuff. But yes, there's shady stuff going on, but that doesn't mean the price itself on the screen is bad information.
08:45 It means that people are aware of small swings before the forcing function of delivery and expiration take over and they're profiting from it at your expense. For sure, you should be mad at that. It's probably illegal. Although, who knows what's legal now, but that doesn't mean that the price on the screen is not useful information.
09:03 So I'm sure that was not the kindergarten answer you were anticipating, but something we've given a lot of thought to. >> Okay. So basically the crack spread is the cost of a barrel going into the refinery, the product coming out, the difference between that— the refiner of course wants it positive so that they can make money.
09:25 Some of the big points on this: you want to ensure that there's a steady oil supply going in so that they can have a profit. Most of the cost goes into calculating through futures contracts. Basically how much can we produce today, what are we going to get paid for it 1, 2, 3, 4 months from now.
09:45 And the participants are refinery operators, big money hedge funds and retail is essentially not even a second thought >> and the banks of course that make markets in these hedging products for the refiners. So just give you a real example of how this works. We like to say the oil business is run on credit.
10:09 What do we mean by that? Imagine you're the UAE or you're Saudi Arabia, you're Saudi Aramco or whatever, and you have an oil well that's been drilling oil for decades. It produces a million barrels of oil per day like clockwork, day in and day out and day in and day out.
10:29 And you know that you have a steady customer on the other end of this that is going to accept delivery. Well, you might pre-sell that. The price goes up, you might lock that in by selling short oil, knowing that you're going to make good on that short sale by selling with physical delivery. So, you've locked in a price.
10:51 Let's say it cost you $40 a barrel to bring it to surface and get it to the delivery point, and you could lock in $80. Well, you've locked in quote unquote $40 of profit, but you really haven't yet. What you've done is you've accepted $80 in cash from a bank that you owe and you're going to deliver the barrel of oil to make good on that IOU and then you pocket the $80 you got from the bank and you closed your short position.
11:24 When the Strait of Hormuz was closed, suddenly drillers who had been doing this for decades and assumed this was how we do it, this is how we finance our business, suddenly they have IOUs with the bank, they don't have the physical to close that short and the price spiked so their margin calls are getting pretty significant, right? And so when you look at the price of oil you might say wow, the price of oil went up.
11:54 That must be good for these drillers. Well, not if they've pre-sold at a lower price and they can't deliver to close that financial exposure. And I only give you that example to try and describe the sophistication of these markets in a way that it's not just see price, get price.
12:15 It's just not how the market works. And so when I see people who should know better on Twitter talking about how Donald Trump of all people with his magic wand is keeping a lid on the price of oil when there are hundreds of oil contracts all over the world, the world's most sophisticated arbitrage with decades of experience.
12:38 You're talking trading houses, the shady characters, money launderers. We wrote a piece this morning about this Venezuela deal and somebody commented to us about how, well, you didn't go into the shady background of this Venezuelan businessman. He's been accused of money laundering.
12:51 And we're like, if you take those people out of the oil business, there would be no oil business. Yes. And I was like, does that background make it less likely or more likely that this deal is going to work? I would argue it makes it more likely. You need such people to keep the oil markets lubricated, shall we say.
13:10 Lots of dirty business happens under the radar. This is just the nature of the commodities world. So anyway, bit of a soapbox moment, but figured I would share it. >> Yeah. So basically, one guy can't influence hundreds of markets like that. And to think so is— >> that if people have been doing it for decades and are more than willing to capture inefficiencies, right? I mean,
13:39 again, the purpose of the oil market is not to allow speculators to make bank. The purpose of the oil market is to ensure a steady supply of crude oil to refineries. By the way, the purpose of the stock market is to allow people to occasionally make bank. That's the whole point. Suck people in. This IPO could be the one, yolo, your lottery ticket. Well, that's just not what the oil market is.
13:58 It's not what it does. It's not its purpose. It's not a structure. It's designed for— the analogy I would say is it's designed for the high frequency traders who are making pennies on every transaction with a thousand times leverage. They're more than happy to lock in the nickels during times of crisis.
14:14 Whereas you're thinking it's going to go to 150 or 180 or 200 when it didn't. Again, there's nothing wrong with being wrong. We were wrong. Quickly adapting to why you're wrong and trying to understand it, we think, is what's paramount. So anyway, here we are. People still on Twitter talking about tank bottoms and how the SPR is going to run dry and then you'll get your $200 oil.
14:37 We're not getting $200 oil unless Iran blows up all the oil and gas facilities in Saudi Arabia. >> Okay. Let's see. AB wants to know any thoughts on extracting oil from Greenland and how is this all connected geopolitically? I don't think there's— Well, so it's interesting question. Is there potentially a significant amount of oil and gas and other hydrocarbon resources under the ground in Greenland? Sure.
15:10 Are there far better places to go look for it that we already know exist? Yes. If the US were truly interested in extracting resources, I don't know, they'd topple the president of Venezuela and cut a deal with a puppet government. They might prop up Milei and get a leg into the most prolific shale outside of the Permian that the world knows.
15:38 Yes, there's oil off the north shore of Cuba, but on the waterfall chart of ripeness of opportunity, is that really going to drive geopolitical activity? No. Greenland is some weird fascination with Trump that has something to do with early missile notification, access to the Arctic, gumming up the Russia, China northern sea route, imposing sovereignty over Canada with probably an eye in Alberta, cajoling the Europeans to spend more money on American weapons.
16:15 All of the above much more so than there's a Bakken-type resource that is waiting to be developed. Heck, we got one of those in California. It's called the Monterey Shale. We don't need to go to Greenland. We just need to get rid of Gavin Newsom. >> Okay.
16:36 There's much lower hanging fruit available like Venezuela, >> right? >> Okay. Okay. So getting into Venezuela again, I remember reading that they have the potential to produce like four million barrels a day but because of all the corruption and everything we're down to like half a million barrels per day. How quickly do you think they could jumpstart Venezuela to get it up to some kind of meaningful production? >> Let me correct a few things that you said.
17:07 >> Okay. They don't have the potential to produce 4 million barrels a day. They used to produce 4 million barrels a day and could easily do that again. >> Okay, >> so this is not a dream. The only difference between Venezuela and Alberta is governance and a decision by certain Venezuelan leaders in the past to play hardball with US super majors.
17:32 We would contrast the difference between how the government of Guyana has decided to embrace Exxon with how Hugo Chávez has decided to deal with the super majors once they've invested all this capital to get the oil flowing. That's not to say that super major is good, Chávez bad. That's just an agnostic observation of the difference in approach to the superpower in your backyard.
18:00 Not a half a million barrels a day. That was the low they reached before Maduro was snatched. And in July, they're already back up to 1.1 million barrels per day. So, what is Venezuela? Venezuela is a huge relatively low quality hydrocarbon endowment. It's heavy, it's gooey, it's solid, it's tainted with sulfur, almost coal on that— on the chart from natural gas to coal is Venezuela very similar in some ways, although different in others, to what,
18:43 the oil sands of Alberta present as a challenge. And so at the highest level, you've got ultra light hydrocarbons pouring out of the gusher that is the Permian. You could slipstream a lot of these lights as a diluent to make the processing, extraction, processing and shipping of Venezuelan heavy crude all that easier.
19:12 That's exactly what's happening. Every super major on earth knows exactly where they would go first. Because the country is extraordinarily well understood. They all used to be there. So are they going to get to 4 million barrels next year? No. Are they likely to overshoot in the short, medium, and long term what critics are saying is possible? Probably.
19:38 Is it going to cost a lot of money? Absolutely. And the piece we published this morning, I don't know if you had a chance to read it, on this subject is that there's a really important thing that most people are missing. One of the things about Trump is he's very polarizing and we try to take an objective view on a case-by-case basis of what he's doing.
20:04 And he's so polarizing that on the occasions when you agree with what he's doing, you're immediately labeled a Trump apologist. And on the occasions where you disagree with what Trump is doing, you're labeled a woke leftist, whatever. We're neither of those things. We recognize Trump is extraordinarily complex, we would say, tragic figure.
20:32 But he's not wrong all the time either. And he has some good people around him, especially in the energy space. Chris Wright, Doug Burgum, these are high quality people that know what they're doing. Scott Bessent in the finance world, although I do think his style and mannerisms could be improved and are a bit unbecoming of the position, but nobody would argue he's dumb.
20:56 And so there's a hidden thing going on here in Venezuela that nobody wants to acknowledge, which is just a tsunami of outside money beyond the reach and oversight of Congress that Trump has lined up to do these types of things and hundreds of billions of dollars and I think that the cash will be there.
21:17 So they've kind of threaded the needle and they have this Venezuelan citizen, checkered past that he might have. We smirked. Again, if you longtime readers of Doomberg will recognize our subtleties, I suppose, but if you pull up the piece, I don't know if you can share it. >> The, your recent article.
21:37 >> Yeah. From this morning, "with American characteristics" is the— >> I can do that, Johnny on the spot. And >> so this guy. Yeah. So go down, scroll down there. Yeah. Trump, he bought, that's the old meme, right? you dump it. So go down to after cut the paid there and the picture of this Benton Court [sic] guy who to be fully honest with you, we hadn't heard of before this, but there he is, right? And so if Mr.
22:06 Rogers were a billionaire, this guy had allegedly had an arrest warrant out for him in Switzerland that the US State Department helped him squash. Okay, well this is a connected person, right? If you and I have an arrest warrant in Switzerland for us, we're unlikely to get Rubio to make a phone call on our behalf. I thought I maybe— you— >> not that special. No.
22:26 >> Right. And so this is our way of signaling to our readers like yeah we know who this guy is. Sure. And so the Pentagon basically is taking a 35% passive stake in his company. Scroll down. And that's going to be the vehicle through which hundreds of billions of dollars flow into Venezuela.
22:49 So the US taxpayer is putting no money into this. The US government gets privileged access to something like 20% of the barrels and they own 35% equity stake in this guy's company. What sovereign wealth fund in Singapore or Qatar or Saudi Arabia doesn't want to get behind this? Hey, you want to diversify beyond the Strait of Hormuz? Here's a play for you.
23:17 >> Yeah. >> Right. And so I'm sure there's going to be some unsavory stuff and people in the cap table that are connected to pick your favorite politician. Our job is not to moralize. Our job is to predict. And so our prediction is people are radically underestimating the cleverness of this deal.
23:40 And as we said in the article, if you think Chevron is just going to sit there and watch Venezuela get turned into a Guyana and not do something about it, of course they're going to jump on the bandwagon because once the billions start flowing, it's in everybody's interest to keep this going. And this is the gambit that Trump has made with Venezuela.
24:00 By the way, all of this only shines a light on what a terrible decision it was to go to war in Iran. >> Yeah. >> Like this could have stopped this— a western hemisphere play. It's okay to do a strategic retreat and regroup, get your cheap energy, get your manufacturing base, keep your base in Bahrain, don't have it get destroyed in a missile war with Iran. But here we are. >> Okay, piggybacking on Venezuela now moving to the Middle East. Where are we at with strategic petroleum reserves? I recently watched a report on we're taking
24:43 about 20 million barrels a day through the Strait of Hormuz. It looks like we've been able to bypass or so maybe 5 million barrels. Is that about the numbers you've got? When do we hit a critical point here? Just kind of pontificate on that for a minute. >> Yeah.
25:00 Well, first of all, this whole canard about the US strategic petroleum reserve is— look, it's an input, but it is not the trip wire that the same people who have been arguing that the price of oil is being manipulated single-handedly by Trump. It's not that kind of a trip wire. Okay, let's go back to kindergarten.
25:24 What is the SPR? The SPR was set up in the aftermath of the 1970s oil embargo to help ensure that the US is never victim of an import ban like the one it suffered back then. Back then the US was a net importer of massive amounts of crude. Today before the trade war with Canada at least, between the captive barrels that have nowhere else to go from Canada, US domestic production and excess refining capacity,
25:55 America is an energy superpower. It's a net exporter. It doesn't need an SPR. What Trump is doing with the SPR and also by allowing refiners to export diesel at record rates is to help the rest of the world keep a lid on their fuel prices and letting America's price at the pump toggle up enough to keep some balance, but not so much that it hurts him too much politically.
26:18 Now, I'll note that he has the refiners in the White House today as we're recording this, as your calendar behind you helpfully says, September 1st. There's a world where he begins to limit exports to keep a lid on prices here. That is an option for Trump to do anytime he wants. So whether the US SPR reaches tank bottoms is not going to impact the average American consumer.
26:42 It's going to impact Trump's ability to help the rest of the world paper over the mistakes he made by going to war in Iran. So that's why they're important, but they're not critical. Who knows how much oil is coming out of the Strait of Hormuz. All I know is it's not enough of it to move the price of oil.
27:02 In other words, it's not a big enough shortage to cause oil to spike and stay over $100 a barrel. So whenever anybody tells you commercial satellites say this, CENTCOM says that, oil is leaking out of that place like a sieve, because Brent is in the 80s, everything else is noise. Back to the quality of information that price gives you for the reasons I described in my first answer.
27:29 So that's our answer on how much is coming through. It doesn't matter. The price tells you that enough of it is. >> Okay. Yeah, I've been looking at the futures contracts too and well, I didn't look at them this morning, but yesterday anyways futures contracts were coming down. So if the smartest traders in the world think that the price is going to be cheaper in the future, then it probably will be.
27:50 >> Well, no, but those prices also have to reflect the time value of money and the cost of storage. That's why they're also lower. It costs money to keep oil in storage and it costs money to borrow, right? And so yeah, that's the normal way the curve looks. >> Yeah. Yeah. Okay.
28:12 Okay. We're going to go a little bit deeper with premium subscribers, especially on the tariffs with Canada. Any final thoughts, Doomberg? >> I say we save them for the people that are paying you, Steve. >> Okay, fair enough. If people here want to follow you and your work, how can they do so? >> Once they're done subscribing to you, they can come over to doomberg.
28:32 com where we have everything. One-stop shop. >> Awesome. Thank you very much. We'll put your link down below. Doomberg, always a pleasure. >> You bet. In the premium episode, we go deeper into what may really be happening behind the US Canada tariff headlines and why energy could be the real story underneath it all.
28:49 Could political conflict actually unlock a major new pipeline boom? What would that mean for oil flows, diesel prices, and North American energy security? We also get into interest rates, gold, graphene, a discussion of Rick Rule's oil thesis. Could oil companies do well even if the commodity itself keeps losing value in real terms? If you want the full breakdown, join us on the premium side.
29:11 Link is down below. Thank you so much for your support. Have a wonderful rest of your day and happy trading. For more content like this, check out these videos right here.