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For those who want to use the Iraq model as an overlay, this might be correct.
As the gray box shows, it took five years to ramp up production after the second Gulf War.
Consultants Wood Mackenzie estimate that every additional half a million barrels of extra output will require $15bn-$20bn of investment.
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This sounds correct.
But if we assume that Trump announces $30 to $40 billion of oil infrastructure investment tomorrow (an additional 1M barrels/day). How long will it take to actually spend this much money and get the oil out of the ground (profitably at $50/barrel)?
Answer ... about 5 years, see the chart below.
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1/5 Thoughts on market reaction to the Venezuela news. tl:dr The spigot in Venezuela waiting to be opened to flood the world with crude oil and lower its price has been broken for a while. It will take several years to fix it.
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