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- Venezuelan Strikes and Oil Restoration
Last week, the US struck Venezuelan military and government infrastructure with missiles, then going on to depose Nicolas Maduro - the authoritarian president of the nation. Following this, the Venezuelan government has been using armed forces to suppress civilian support of Maduro’s removal.
At the same time, Donald Trump states that US oil companies will be able to enter Venezuela and rejuvenate the nation’s poor oil facilities. Share prices in oil companies like Chevron surged on the Monday following the strikes as these companies plan for their entry and investment into Venezuela.
These strikes run further than just some favourable oil agreements, as Trump’s demands for the temporary acting president - Delcy Rodriguez - extend to cutting ties with allies like Russia and China.
How do companies fare in this period of turmoil?
- Oil companies are gaining quick and easy access to large oil reserves that will undoubtedly fuel revenue and profit in the long term
- Hedge fund managers profit from a bond surge as prospects of repayment have improved under the US intervention
- The regime change has unlocked previously frozen claims, which means lenders have prospects of recovering what they are owed on Venezuelan assets
- Shrinking U.S Trade Deficit
Economists predicted a US trade deficit of around $60 billion - trade deficit referring to the amount by which a country’s imports exceeds its exports. Instead, the US trade deficit narrowed to around $30 billion, massively beating out economist predictions.
A lot of this is down to a drop in pharmaceutical imports for the US, since Trump was able to secure exemptions from tariffs for drugmakers back in September.
One of Trump’s economic objectives was to rebalance global trade, which is an objective that this smaller trade deficit seems to support. Certain economists have since revised their GDP growth estimates for the US upwards.
What are the implications of a smaller trade deficit for the US?
- Trump’s aggressive tariff regime is yielding positive results for the nation, fundamentally altering supply chain decisions
- Sector-specific exemptions from tariffs are becoming a substantial component of companies’ economic successes
- This information does not inform us of whether domestic demand for goods and services is increasing, or whether consumer demand is falling altogether
Knowing the story isn’t enough. In applications and interviews, firms expect you to explain why this matters commercially and how it affects clients. The Commercial Awareness Starter Pack shows you exactly how to do this using a simple, repeatable framework.
How to use this in applications
- The unfrozen claims, new sanctions regime, and future oil company investments all require legal advice across Disputes, Trade, and Project Finance. These strikes have both economic impact through oil activity and geopolitical impact through shifting political allegiance in favour of the US. As such, this is definitely something to look out for in law firm interviews as you may be questioned on the potential impacts of these strikes, and also questioned on the potential challenges/opportunities for firm clients.
- Trade policy decisions have multi-billion dollar implications, especially when involving sectors like pharmaceuticals. It is worth considering corporate lobbying strategies that look to drive favourable trade policies, and also how supply chains are quickly restructured to adapt to changing trade patterns. Law firms at the top level mostly advise multinational companies so must be able to effectively navigate a changing trade policy environment.
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