Merryn Talks Money: "Venezuela’s Oil Reserves Versus Reality: Why Output Can’t Jump Overnight"
Podcast: Merryn Talks Money
Host: Merryn Somerset Webb (Bloomberg)
Guest: Michael Haigh, Managing Director & Global Head of Fixed Income and Commodities Research, Societe Generale
Date: January 12, 2026
Episode Overview
This episode explores the global ripple effects of dramatic political change in Venezuela, a country claiming the world's largest proven oil reserves, following the U.S. seizure of President Nicolás Maduro. Merryn and guest Michael Haigh delve deep into whether Venezuela could actually increase oil output, what its reserves really mean for the markets, and why the answer isn’t as straightforward as headlines suggest. The conversation then broadens into related topics: oil market mechanics, energy transitions, China's strategic oil policy, and trends in metals like copper, silver, and gold—with actionable insights for investors.
Main Discussion Points & Insights
Venezuela: Oil Reserves Versus Reality
Venezuelan Oil: Why Big Numbers Don’t Equal Big Barrels
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Venezuela claims the largest proven oil reserves globally (303 billion barrels), but these numbers are highly sensitive to oil prices and technical definitions.
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Michael clarifies “proven reserves”:
“When we talk about reserves, we talk about proven reserves. That has to do with the geology, how likely it is that we can extract this easily, and the economics behind it. If it’s not economic to extract at current oil prices, it isn’t counted as a proven reserve.” – Michael Haigh [05:02]
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At current prices ($60/bbl), real accessible reserves are much lower.
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Venezuela currently produces under 1 million barrels/day—far from historic peaks (~3.4M/day).
Oil Quality Challenge
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Venezuelan oil is "extra heavy", almost like “goo”, requiring imported diluents such as naphtha to be processed and shipped.
“Its oil isn’t just heavy, it’s what we call extra heavy… you need to add dilutant or condensate… even to refine it.” – Michael Haigh [05:18]
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Venezuela depends on imports of naphtha from Russia, Singapore, or the US.
Can Venezuela Realistically Boost Output?
- Even with major political change and heavy investment:
“To get to between 2 and 3 million barrels a day, most industry experts say it would take five to ten years. Trump says 18 months; I think 10 years to get back to peak.” – Michael Haigh [08:53]
Impact on the Oil Market
- In barrel terms, Venezuela’s near-term influence is negligible. Real impact is geopolitical: China and Russia are heavily vested in Venezuela’s oil ecosystem, and changes could trigger ripple effects.
“Does the political change in Venezuela mean anything for the oil market? The answer is kind of no… but it definitely means something geopolitically.” – Michael Haigh [09:33]
The Macro Oil Picture: OPEC, Demand, and China
OPEC Supply Management
- OPEC is currently limiting production to stabilize prices amid global surpluses and lagging demand.
- Michael predicts OPEC must revisit this strategy in April 2026 as oversupply persists.
China’s Strategic Petroleum Reserve (SPR)
- China’s oil buying for its SPR is a major force propping up oil prices.
“China imports roughly 12 million barrels a day… We guess they have roughly 1.4 billion barrels in SPR, compared to the US’s 400 million.” – Michael Haigh [11:45]
- Some speculate SPR builds are strategic preparation for contingencies like a Taiwan conflict, but at its core, it’s about energy security.
Oil Transition Outlook: Demand Peak and Evolution
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Shifting energy infrastructure takes decades. Reference to whale oil’s gradual eclipse by crude, illustrating slow transitions.
“If an energy infrastructure is set up for one energy, it takes a very, very long time to shift.” – Merryn Somerset Webb [14:51]
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Most models show uncertainty in mid- to long-term demand for oil. Michael expects a gradual demand peak around 2035–2040, declining due to developed world shifts to natural gas and renewables.
On “Peak Oil”
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Fears about physically running out of oil have receded. New technologies (shale, etc.) and higher prices drive new discoveries and extraction.
“When prices are getting too high, technology has a way of fixing the problem… high prices incentivize oil companies to invest more—places you weren’t extracting oil before.” – Michael Haigh [19:26]
Copper and the Electrification Theme
Why Copper Is Different
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Copper’s original demand came from urbanization and population growth (mainly China), now plateauing.
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The electrification megatrend—especially grid upgrades and renewables—apps a new dimension. Recent drivers include:
- AI/data centers (very copper-intensive)
- Defense rearmament globally (weapons and rebuilding)
- Potential mega-rebuilding projects (e.g. post-war Ukraine)
“The demand for copper from AI and data centers wasn’t even talked about two, three years (ago)—now, it’s substantial.” – Michael Haigh [22:45]
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The “cure for high prices is high prices” may not apply in copper: New mines take years to develop, environmental permitting is harder, and existing inventories only buffer shocks briefly.
“It actually can’t. There is no way to… open new mines anywhere, because of environmental regulation, etc. If one big mine goes offline, there’s no way to compensate.” – Merryn Somerset Webb [26:10]
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Michael expresses difficulty in finding short-term bearish factors, except a global recession; even then, defense and reconstruction demand could hold up copper.
Broader Industrial Metals & Strategic Stockpiling
Other Metals: Bull Market?
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Reindustrialization in the West, defense spending, and possible stockpiling of critical materials all boost demand for base metals.
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Stockpiling on the scale of oil reserves would massively impact prices across the industrial metals basket.
“If countries decided to stockpile 90 days’ worth of imports [like oil], you’d be talking about a tremendous amount of material that would put these markets in big deficits…” – Michael Haigh [29:53]
Gold, Silver, and Investment Themes
Silver: Bubble or Foundation?
- Silver is 50% industrial, 50% precious: more volatile than gold, prone to sharper swings.
“Silver… is just like gold but on steroids.” – Michael Haigh [32:11]
- Three years of physical market deficits, investment flows, and possible industrial shortages are supporting prices.
- Bubbles? Maybe, but fundamentals make the bull case rational and possibly sustainable, especially with ongoing deficits.
Gold: Central Bank Buying and De-dollarization
- Central banks are the key driver, especially as some countries rebalance reserves toward gold.
“[If large central banks] moved 1% of their reserves into gold, you’d be talking close to a thousand tons of gold demanded. That would lift prices $1,000 an ounce.” – Michael Haigh [35:04]
- Central banks aren’t sensitive to gold price when buying (no sign higher prices slow purchases, except in jewelry segment).
- Risk points: possible reversal in central bank buying (currently not seen), or a dramatic drop in global uncertainty (which would reduce ETF demand). Michael tracks UK gold exports to China as a leading proxy for this.
Gold and Silver Miners
- Both gold and silver miners are now highly profitable and may continue to perform well as metals appreciate.
Bitcoin as a Reserve Asset?
- So far, only fringe central banks have even considered holding bitcoin (Czech Republic, Kazakhstan), and then as a very limited proportion. Not a near-term risk for the gold bull case.
Oil Bear Market Outlook & Investment Advice
Why Michael Is Bearish on Oil:
- Surpluses are building as OPEC brings supply back and non-OPEC (US, Brazil, Guyana, Canada) steps up output.
- China’s SPR buying has disguised the oversupply; when they stop, prices may fall sharply.
“When you subtract incremental demand from this new supply, you end up with a surplus of about 3 million barrels a day—a gigantic percentage. That means inventories build and prices collapse.” – Michael Haigh [43:07]
- House forecast: Brent could fall to $50/bbl by year-end (from $60 at time of recording).
- Cheaper oil is good for global growth/inflation dynamics, as recessions often follow high oil prices.
Investing in Energy—For Ordinary People
- Avoid direct futures/options; use energy company equities or ETFs for simple exposure.
- Michael remains bearish on oil prices for now and cautious even on oil services companies.
“I’d stay away from the flat price of energy through futures and options… The most sensible way is through energy companies, or an ETF linked to those companies.” – Michael Haigh [41:05]
Notable Quotes & Timestamps
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On Venezuelan Proven Reserves
“If it’s not economic to remove it… at the current oil price, it doesn’t count as a proven reserve.”
— Michael Haigh [05:02] -
On extra-heavy Venezuelan oil:
“Its oil… is almost like goo coming out of the ground.”
— Michael Haigh [05:18] -
On Venezuela’s chances of boosting output:
“To get back to peak, I’m going to guess 10 years.”
— Michael Haigh [08:53] -
On China’s SPR buying:
“We guess they have roughly 1.4 billion barrels in [SPR]... compared to the US’s 400 million. Gigantic.”
— Michael Haigh [11:54] -
On copper’s macro signals:
“Copper is literally everywhere… it’s my favorite commodity because we call it Dr. Copper—it can forecast the macroeconomic outlook.”
— Michael Haigh [27:35] -
On silver’s volatility and role:
“It’s just like gold but on steroids.”
— Michael Haigh [32:11] -
On central banks driving the gold price:
“Gold isn’t about jewelry or ETFs anymore; this is now a central bank story.”
— Michael Haigh [34:07] -
On the bearish oil call:
“We end up with a surplus… 3 million barrels a day. That means inventories build—and prices collapse.”
— Michael Haigh [43:07] -
On the best way to invest in energy:
“Stay away from the flat price of energy through futures and options. The most sensible way is through energy companies, or an ETF linked to those companies.”
— Michael Haigh [41:05]
Key Timestamps
- 02:22 – Merryn sets the agenda: Venezuela, oil, gold, silver
- 04:05–09:25 – Venezuela’s reserves, extraction challenges, and output timelines
- 10:17–13:54 – OPEC strategy, Chinese SPR, and oil market mechanics
- 14:07–19:36 – Long-term oil demand, energy transitions, and “peak oil”
- 21:53–28:53 – Copper, electrification & industrial metals, supply bottlenecks
- 30:59–36:35 – Silver and gold: market drivers, central bank actions, bubble diagnostics
- 36:35–40:00 – Gold vs Bitcoin as reserves, risks to the gold bull thesis
- 40:02–44:39 – Energy investing advice for ordinary investors & 2026 oil outlook
- 44:39–45:08 – Closing thoughts: why lower oil benefits the global economy
Tone and Takeaways
The conversation is insightful, candid, and occasionally irreverent—Merryn’s droll skepticism draws clear, jargon-free explanations from Michael. Technical detail is balanced by actionable, concrete takeaways for regular investors:
- Venezuela’s oil cannot change the global market overnight.
- Demand for oil is plateauing, but supply and geopolitics matter far more to near-term prices.
- Copper’s bull story is tangled up with global megatrends—its price is robust.
- Silver and gold remain attractive, with central bank flows and real-world deficits supporting the thesis.
- For energy investing: pick the right vehicles and stay wary of trying to time oil’s price.