Big Short's Michael Burry Says Venezuela Raid Marks a Paradigm Shift as US Oil Stocks Poised to Soar

The founder of Scion Asset Management, Michael Burry, is known for making contrarian bets. His most popular trade was against the housing market during the 2008 financial crisis, which netted him $700 million (£517.1 million). The trade was chronicled in the award-winning film The Big Short.

Burry recently shuttered his hedge fund amid AI bubble fears, and even placed massive bets against AI leader Nvidia and Palantir. He now writes on Substack, offering valuable insights into market dynamics for investors.

In an early Monday Substack post, Burry said the US raid on Venezuela is a way bigger deal than the markets' dull reaction suggests. He wrote that the 'game just changed' in the mid to long term, and 'markets are not pricing in all that may come of this weekend's events.'

'This is a paradigm shift despite the markets yawning,' Burry later wrote in a post on X.

Benchmark oil prices rose less than 1% yesterday, and US stock futures opened higher, after the US captured Venezuelan President Nicolás Maduro, and President Donald Trump said America would 'run' the country with massive oil reserves for the time being.

US Raid Offers China Blueprint for Taiwan Takeover

The military operation was a 'shot across China's bow,' Burry wrote, highlighting the billions of dollars in loans that China issued to Venezuela under its Belt and Road Initiative. More interestingly, the debts were collateralised using future oil output that is 'now in US hands,' he added.

The investor explained that China may now have a 'blueprint' for how to take over Taiwan, but 'must be in awe of Trumpian America's infuriating gall and decisive power.'

Burry said that Chinese stocks strike him as 'somewhat riskier' at present in terms of running into conflict with sanctions. He wrote that major companies like Alibaba, Baidu, and other potential sanction targets 'could be in for some volatility' if China ramps up its aggression in the South China Sea or takes aim at Taiwan.

Russian Oil Just Became Less Important

Burry noted that 'Putin's jaw has to be on the floor' after the US did in 'practically seconds' what Russia has been attempting to do in Ukraine for years.

At the same time, Russian oil 'just became less important' in the mid to long term, as Venezuelan oil reserves could bolster the US and 'reduce Russia's income and power,' he said, adding that Canada and Mexico could also 'lose a good amount of leverage' in trade with the US if American refineries replace Canadian crude with Venezuelan oil.

US oil-services companies like Halliburton (NYSE:HAL) and Baker Hughes (Nasdaq:BKR) 'should benefit significantly' as American contractors will be roped in to modernise Venezuela's pipelines and refineries, according to the investor.

Burry also predicted a 'long term tailwind' for the US as inflows of Venezuelan oil will mean gas, diesel, and jet fuel prices will drop. He said that this dynamic could push down prices and benefit US households, especially lower-income ones. Furthermore, these oil inflows are also likely to trim supply chain overheads and ease some uncertainty about the future for business owners.

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