• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 3 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 14 hours Will Uncle Sam Step Up and Cut Production
  • 2 days Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 20 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 16 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 3 hours Continental Resource's Hamm (Trump Buddy) wants shale to cut production.Can't compete with peers. Stock will drop in half again.
  • 3 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 1 day Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 12 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 2 days I think I might be wrong about a 2020 shakeout
  • 2 days Kremlin Says WTO's Existence Would Be In Doubt If the U.S., Others Left
  • 52 days To be(lieve) or Not To be(lieve): U.S. Treasury Secretary Says U.S.-China Trade Deal Is 90% Done
  • 2 days Why Oil is Falling (including conspiracy theories and other fun stuff)

VENEZUELA-US: Tell-Tale Signs of Hostile Environment for Investors

Bottom Line: As Maduro expels two US government officials from Venezuela, cutting off informal channels of communication, and the US reciprocates by expelling 2 Venezuelan diplomats, optimism surrounding a post-Chavez regime wanes. 

Analysis: Despite some optimistic reports that Chavez’s passing could start a new chapter in the relationship between the US and Venezuela, tell-tale signs in the last few weeks debunk this. Maduro expelled 2 US government officials on 5 March, and a week later the US reciprocated by expelling 2 Venezuelan diplomats. This latest diplomatic tit-for-tat came after public statements of support by a US State Department official for Maduro’s challenger, Henrique Capriles.

Though Maduro will almost certainly win the election, he will need to contend with weak infrastructure, rampant inflation, long-term contracts that provide below-market-price crude oil to China and other partners, and social problems including high crime rates. Pdvsa, the state oil company, is under extraordinary pressure to increase production and bring in more money to help solve those problems. Accidents like a refinery fire, pipeline explosion or oil spill could trigger a political breakdown or irreparably damage Pdvsa’s production capacity. It is entirely conceivable that President Maduro will be forced to reckon with major protests and strikes, possibly including violence or sabotage of infrastructure.

Venezuela Maduro

Bottom line: The Venezuela-U.S. relationship is not on the verge of a friendly transformation. However, political rhetoric is one thing, the business of oil and gas is another. Investors may get better terms than under Chávez in the near-term (this year), but they should be prepared for political and economic problems in the medium term (1-5 years). Foreign investors should also proceed with extreme caution, with a back-up plan in place in the event of widespread political and social disruption.




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play