Deutsche Bank In-depth: The U.S. Targets Venezuela Not Just for Oil, But Also to "Save the Dollar"

Deutsche Bank points out that the U.S. competition for Venezuelan oil appears to be about energy on the surface, but is in fact a hidden war for dollar hegemony.

According to news from Chase Wind Trading Desk, on January 8, Deutsche Bank strategist Mallika Sachdeva published a report stating that U.S. involvement in Venezuela is far more than a simple energy consideration. While controlling the world's largest oil reserves would enhance the U.S.'s influence on global oil prices, the deeper strategic aim is to safeguard the dollar's status as the world's reserve currency.

Sachdeva believes that the irreplaceability of oil for military power directly affects a country's chances of success in conflict, which is the core reason why central banks hold reserve currencies. Secondly, controlling oil pricing rights is crucial for maintaining the petrodollar system.

As the U.S. is no longer the world's largest oil importer, it may lose its ability to control pricing through demand, and instead seeks dominance on the supply side to ensure oil continues to be priced in dollars.

If the U.S. successfully controls the entire Western Hemisphere's oil supply, its share of reserves will surpass OPEC, thereby consolidating the dollar's special status in the global financial system.

Energy Hegemony: The Inevitable Logic of History

The report reviews history, noting that a country that controls the world's core energy source not only gains economic and industrial advantages, but also transforms them into unchallengeable military dominance and global financial hegemony, thus establishing and maintaining its world-leading position.

Britain ignited the Industrial Revolution and became the 19th-century world factory and hegemon by relying on the largest coal reserves in Europe. The United States, after discovering large-scale oil, leveraged its high energy density and convenience to drive revolutions in automobiles, aviation, and chemicals, and after World War II became the center of the global economy and industry.

Therefore, the report stresses that the cheapest and most abundant energy is the cornerstone of industrial production and economic growth; whoever controls it, controls the engine driving the global economy.

Deutsche Bank analysts point out that now over 70% of U.S. energy consumption depends on oil and gas. If the U.S. bets on fossil fuels as the future energy choice, it must ensure ample and low-priced supply to maintain global competitiveness.

Venezuela's oil reserves are six times those of the U.S. Although Venezuela's production is low, its huge underground reserves and America's excess capacity form a "perfect complement."

The report cites recent statements by U.S. President Trump, noting that controlling Venezuelan oil is not just about preventing competitors from acquiring resources, but also about reviving Monroe Doctrine-style dominance in the Western Hemisphere.

Military Hegemony is the "Hard Currency" of Dollar Credibility

Deutsche Bank analyzes why global central banks hold the dollar as a reserve currency. Besides economic factors, military success rate is a key implicit variable.

Deutsche Bank emphasizes that the truly irreplaceable field for oil is military use. Although passenger cars can be electrified and AI can be powered by nuclear energy, U.S. military tanks, ships, and aircraft will rely on oil for a long time.

The U.S. Department of Defense is the world's largest institutional oil user. 75% of the federal government's energy consumption comes from the Defense Department, the majority being jet fuel.

(75% of U.S. government energy consumption is for defense purposes)

The report cites academic research showing that the countries with higher probabilities of success in conflict have currencies that are less likely to collapse or depreciate, thus being preferred by central banks. Historical experience from WWII shows that cutting off oil supply was the key factor leading to German and Japanese defeat.

Therefore, U.S. military hegemony has always been the key factor for the dominance of the dollar in the global reserve composition. If military success probability depends on access to oil, then by ensuring control over the world's largest oil reserves and preventing major opponents from acquiring them, the U.S. can boost its relative probability of victory, thereby supporting the dollar's reserve status.

But Deutsche Bank also cautions that if U.S. tough actions prompt Europe, Japan, or other regions to accelerate military reform and pursue strategic autonomy (such as increasing defense spending), global foreign exchange reserves could shift from the dollar to the euro or yen, weakening dollar dominance.

From Controlling "Oil Prices" to Controlling "Pricing Power"

Market attention often focuses on how the speed of Venezuelan oil reserve development will affect long-term oil prices. But Deutsche Bank believes that the U.S. intends to control the oil pricing system.

The report notes that the foundation of the petrodollar is shaking. The 1974 petrodollar agreement was based on the U.S. being the world's largest oil buyer. As the largest buyer, it could demand transactions in dollars. However, after the shale oil revolution, the U.S. attained energy self-sufficiency and is no longer the top oil importer.

This means America's traditional leverage in maintaining dollar pricing power through "demand-side" is greatly weakened. Since it can no longer "demand" dollars as the largest buyer, the U.S. must find a new way to "ensure" continued dollar use.

The report proposes a new path: by becoming one of the world's largest oil suppliers, the U.S. can force dollar settlement from the "supply-side." Through controlling massive western hemisphere (especially Venezuelan) oil reserves, the U.S. could surpass OPEC in reserve share.

(Proportion of global oil reserves)

The report adds that Europe and BRICS countries are now pushing for non-dollar settlements, and South American crude oil exports have traditionally been relatively balanced among the world's top three economies.

If the U.S. controls Venezuelan oil sales channels, even if the oil doesn't ultimately flow to the U.S., as long as settlement is through the U.S. banking system, this massive trade flow can remain locked within the dollar system, maintaining global demand for dollar reserves and allowing continued enjoyment of the "arrogant privilege" of low financing costs.

~~~~~~~~~~~~~~~~~~~~~~~~

The above highlights are from Chase Wind Trading Desk.

For more in-depth interpretation, including real-time analysis and frontline research, please join [Chase Wind Trading Desk ▪ Annual Membership]

Risk Disclosure and DisclaimerThe market has risks and investment needs caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are applicable to their particular situation. Investments made on this basis are at your own risk.