Charles Schwab pointed out that the production cut decision by OPEC may have limited the downside for oil prices in the short term. Due to expectations that increased supply will lead to lower prices, the prices of medium-to-long-term oil futures contracts (specifically those for late 2026 to 2027) could decline significantly. Near-term or shorter-dated futures contracts are likely to be less affected, as it will take time—potentially several years—for Venezuela's heavy crude oil to enter the market. Charles Schwab also noted that, although the situation in Venezuela remains unstable and subject to change, the global market's reaction has been relatively calm so far. The market outlook will largely depend on the extent of U.S. involvement in Venezuela, how major oil-producing nations outside these two countries respond, and whether significant volatility emerges in the energy markets. Uncertainty could influence the direction of long-term Treasury yields, potentially triggering stock market fluctuations; however, historical trends show that geopolitical events rarely exert a lasting impact on markets. Charles Schwab believes that, although Venezuela is not a major oil exporter, concerns over potential commodity impacts could lead to sustained volatility in oil prices. Venezuela's daily oil production once exceeded 3 million barrels but has now fallen below 1 million barrels. In contrast, the United States produces 13 million barrels per day. Venezuela's largest oil customer is China, but only about 5% of China's oil imports originate from the country. Furthermore, given the fluid nature of the situation, the Federal Reserve's near-term policy decisions are expected to be minimally affected. However, if oil prices trend lower and subsequently pull down gasoline prices, it could help alleviate current inflationary pressures and potentially create conditions for more accommodative monetary policy. All else being equal, this would be a positive signal for the stock market.
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