Oil &
Energy
Venezuelan oil price
down to USD 42.44 a barrel
The Ministry of Petroleum and Mining reported
via its Twitter account that the Venezuelan oil price tumbled this week to US$
42.44 per barrel –a drop of US$ 4.61 versus the first week of the year, when
the price averaged US$ 47.05 per barrel. This is the lowest price for the
Venezuelan oil in the last five and a half years. Oil prices worldwide started
to decline since September 2014. (El Universal, http://www.eluniversal.com/economia/150109/venezuelan-oil-price-down-to-usd-4244-a-barrel)
Venezuela, Iran plea
for oil cut hits Gulf OPEC brick wall
A diplomatic push by Venezuela and Iran for an
OPEC oil output cut has failed to soften the refusal of the group's Gulf
members to do so for now, according to delegates. An oil price sinking to
almost U$ 48 a barrel on Monday is twisting the knife in Venezuela's steadily
shrinking economy and in sanctions-bound Iran. President Nicolas Maduro on
Sunday met Saudi Arabia's Crown Prince Salman in Riyadh before heading to Qatar
and Algeria on a tour to discuss the oil price crisis. Iran's supreme leader
Ayatollah Ali Khamenei also weighed in and told Maduro he backed coordinated
action between Tehran and Caracas to reverse the more than 50% drop in crude
since June 2014. But the Gulf members of the Organization of the Petroleum
Exporting Countries, who account for more than half of the 12-member group's
output, are holding to their stance from OPEC's November meeting in Vienna. "There's a push from Venezuela for a cut, this
is what they argued in Vienna and this is what they are lobbying for now. But
from what I see there is no sign of cutting production from the Gulf states,"
a Gulf OPEC delegate said. "The only
solution is to have the market absorb this surplus and the extent of that will
be assessed by OPEC by ministers during their meeting in June." Another
delegate said: "You need to give it
some time to see the effect on prices. I think the Saudi oil minister was very
clear on that." During Maduro's visit to Saudi Arabia, it was agreed
that a high-level commission between the two countries would meet every four
months to review the market, a diplomatic source said. The source added that
during Maduro's meeting in Qatar, concern was expressed about prices but Qatar
made no promises or commitments as to what action should be taken. Maduro said
from Qatar he would travel to more oil-producing nations in a bid to rally
support. (Reuters: http://www.reuters.com/article/2015/01/12/us-opec-venezula-saudi-idUSKBN0KL18D20150112;
El Universal, http://www.eluniversal.com/economia/150112/maduro-capitalism-bets-on-destruction-of-fair-oil-prices;
http://www.eluniversal.com/economia/150112/venezuela-iran-seek-to-stop-oil-price-fall;
http://www.eluniversal.com/economia/150112/venezuela-saudi-arabia-vow-to-work-for-recovery-of-oil-prices;
http://www.eluniversal.com/economia/150111/venezuela-saudi-arabia-agree-on-joint-strategy-to-stabilize-oil-prices)
Commodities
Venezuela announced partnership with Qatar for
agricultural development
President Nicolas Maduro has announced the creation of
an alliance with Qatar to boost a special project for agricultural production
development of both nations. After meeting with the emir of Qatar, Tamim bin
Hamad Al Thani, Maduro explained: "We
have strengthened ties of cooperation which will open up the way for economic,
investment, tourism and cultural exchange. Qatar has a special fund to invest
in food production. So we will jointly develop the productive forces and the
transfer of technology to produce food for the Venezuelan market." (AVN,
http://www.avn.info.ve/contenido/venezuela-announced-partnership-qatar-agricultural-development)
Economy
& Finance
The ghost of a default
haunts Venezuela
Will Venezuela default in 2015? Will the
drastic drop in oil prices force the chavista regime to suspend payments? This
is one of the key questions in the new year, as many analysts believe there are
real possibilities that Venezuela will default. Mistrust of Venezuela is
spreading. In 2014 FITCH severely dropped Venezuela's credit rating from “B” to
“CCC”, a category used to identify nations where a default is a "real possibility". Foreign debt was
more than US$ 116 billion at the close of 2014, five times international
reserves that are down to little more than US$ 21 billion, according to
Venezuela's Central Bank. Luis Vicente León of DATANÁLISIS says: "It is obvious that the risk of a default
exists. And an oil crisis would increase it, but the cost is so high that it
will be the last option.” Asdrubal Oliveros, of ECONANALÍTICA, says that in
the case of a default GDP would drop by at least 1%, there could be banking
crisis, external financing and credit would shut down, and the nation would
become an international pariah. Everything indicates Venezuela could escape
default in 2015 but the longer term situation is much less clear. A Bank of
America reports says Venezuelan debt is "high risk" and warns that "its economic position could be worse than official data shows".
Oliveros says: "The nation will
continue to face a serious crisis due to economic contraction and high
inflation and scarcity, resulting from an economic system that has destroyed
the price system...the scenario will continue to worsen if necessary
corrections are not made, and they are absent to date." More in
Spanish: (Infolatam, http://www.infolatam.com/2015/01/11/el-fantasma-de-la-suspension-de-pagos-ronda-venezuela/)
Venezuela faces key
deadlines for billions of dollars in foreign debt this year and is considered among one of the
most vulnerable oil producers in the 12-member cartel. Most analysts estimate a
fiscal break-even price of some US$ 110 a barrel. However, both WTI and Brent
futures were trading below US$ 50 Monday morning. "The figures that we expect for (Venezuela in) 2014-16 would be
devastating: a contraction of the economy of 11.7%, accumulated inflation of
600%, a currency that will lose 89% of its value (an increase in the price of
the dollar of 900%) and real wages that will lose an accumulated 47%,"
Barclays wrote in a research note in December. (CNBC, http://www.cnbc.com/id/102328516#.)
Maduro claims he is securing
financing from Qatari banks
According to President Nicolás Maduro Venezuela is securing financing from Qatari banks. "We're firming up a financial alliance with
important banks in Qatar, that are giving us sufficient oxygen to cover the
fall in oil revenue," Maduro said without providing details. "We're raising financing for several billion
dollars, not only for 2015, but also for 2016," he added in comments
to journalists. Venezuela's tightening financial situation has fanned market
anxiety about a default, especially as oil slumps to near six-year lows. Maduro
has vowed to pay bondholders and most economists doubt a default is coming in
the near-term, but investors are getting skittish as the economic crisis
worsens. (Reuters, http://www.reuters.com/article/2015/01/12/venezuela-qatar-idUSL1N0UR1PU20150112;
Bloomberg, http://www.bloomberg.com/news/2015-01-12/venezuela-woos-qatar-as-oil-rout-exacerbates-cash-crunch.html;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42323&idc=1)
Politics and
International Affairs
Venezuelan shortages,
long lines spark violence, arrests
At least a dozen protesters arrested here
remained in jail on Monday and masked assailants burned a bus overnight amid
scattered unrest over swelling lines for basic goods, activists said. Police
rounded up 16 people for protesting in front of stores over the weekend,
according to the opposition MUD coalition, which said four of them were
released shortly after. Rights group Penal Forum said 18 protesters were still
behind bars on Monday. The government did not confirm that. (Reuters, http://www.reuters.com/article/2015/01/12/us-venezuela-shortages-idUSKBN0KL1QE20150112;
Bloomberg, http://www.bloomberg.com/news/2015-01-12/venezuela-lines-shorten-as-police-reduce-shoppers-not-shortages.html;
El Universal, http://www.eluniversal.com/economia/150112/long-lines-at-venezuelan-outdoor-market;
http://www.eluniversal.com/economia/150112/venezuelans-stay-the-night-outside-stores-for-food;
http://www.eluniversal.com/economia/150112/citizens-stand-in-lines-across-caracas-to-buy-food-stuffs)
Arreaza threatens:
there are cells available in Ramo Verde prison
Vice-President Jorge Arreaza accused the
opposition of trying to incite violence in the country. "The right wing is trying to set the country
on fire." Arreaza also stressed that "in Ramo Verde (military prison) there are still many cells available
for those who dare to try to harm the peace of the Republic with political
violence....If you want to join that
guy (detained dissenter Leopoldo López) in Ramo Verde, there is enough room
there," Arreaza said on Sunday during a government event. (El Universal, http://www.eluniversal.com/nacional-y-politica/150112/venezuelan-vp-there-are-cells-available-in-ramo-verde-prison)
Capriles warns that
the Venezuelan people "are running
out of patience"
Opposition leader Henrique Capriles has warned
that the people "are starting to
become desperate and are running out of patience" with the multipling
long lines at markets as they try to obtain basic staples. "We hope that is not what the government is
playing at in order to create (violent) situations that would only benefit them",
he said. Capriles rejected government repression and added: "Our people have all the right to mobilize
and demand anwers to chaos, the government is seriously mistaken if they
believe the people have to stand for this. This is the time to mobilize. How
can the government stop our people from mobilizing and demand respect for their
right to eat? Arrest them all?".
More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/capriles-advierte-que-al-pueblo-venezolano--se-le-.aspx#ixzz3ObaUhgG8; El Nacional; http://www.el-nacional.com/)
Yaracuy Governor Julio León Heredia decreed a
ban for customers to sleep over in front of grocery
stores and other
commercial establishments to prevent disturbances. He informed of the decree
himself via Twitter. Zulia state Governor Francisco Arias Cárdenas would be
considering a similar measure. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42322&idc=3)
Catholic bishops
strongly condemn attempts to establish communism in Venezuela
In a Pastoral Letter, all of Venezuela's Roman
Catholic bishops have issued a strong condemnation of regime attempts to
establish a communist system here: "The
key problem and cause for this general crisis...is the decision by the
executive and other government powers to impose a Marxist or communist style
political and economic system. That system is totalitarian and centralist,
establishes State control over all aspects of the lives of people and public
and private institutions. In addition, it undermines freedom and the rights of
people and groups, and had led to oppression and ruin in all nations where it
has been applied...It is also manifest in recent appointments to National
Elections Board Directors, some magistrates in the Supreme Tribunal and other
officials...according to partisan interest...We say it again: Marxist socialism
is the wrong path and thus should not be established in Venezuela".
They went on to ask the government to stop insistent on an "inefficient" system and "promote reforms that do away with barriers
to production, stop inflation, and solve the problems of scarcity and rising
cost of basic staples by promoting private economic activity as established in
the Constitution". Cardinal Jorge Urosa called upon the people to
"Remain calm. We share your concerns
and anguish over scarcities, but it is important to avoid all violence".
In a speech to diplomats, Pope Francis has optimistically pointed to
initiatives leading to restoring political and social harmony in Venezuela.
More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150113/obispos-venezuela-necesita-un-espiritu-emprendedor;
El Nacional; http://www.el-nacional.com/)
...and Cabello
disqualifies Roman Catholic hierarchy
Captain Diosdado Cabello, President of the
National Assembly and Vice President of the ruling United Socialist Party
(PSUV) has turned down calls for dialogue by the Episcopal Conference, saying:
"They cannot call for a dialogue and stay out because they are part of the
problem...True Christians have no other choice but to be 'chavistas'...We
salute the party of the eclesiastic hierarchy. Sign up with the National
Elections Council and run for office. (El Nacional; http://www.el-nacional.com/)
María Teresa Romero: The failure of Nicolás Maduro's tour
Nicolás Maduro's New Year tour of the Middle
East and Asia has been specially criticized by Venezuelans, and rightly so.
They key purposes were to get new funding to relieve the tremendous economic
crisis the nation is undergoing and to try to boost oil prices with friendly
nations, such as Iran. But none of those goals were met, despite the tour
having been advertised as a total success by the President and key government
officials. The truth is that no specific agreements were reached and they only
received promises and diplomatic smiles Was Maduro's diplomatic effort
necessary after former Oil Minister Rafael had failed and Saudi Arabia insisted
on maintaining the downward trend in oil prices? In China he received no
financing that would provide immediate liquidity, after a prior visit by
Finance Minister Marco Torres had failed. Generally speaking, the political
impact of the tour was counterproductive the President himself and his
government. Not only because he did not reach the goals set, but because his
image was weakened. An enormous and costly retinue made the tour with him at a
time the entire nation expects policy announcements amid the general perception
of a total disaster. According to opposition legislator Carlos Berrizbeitia,
the entourage of more than 70 people cost the nation over US$ 1.3 million.
Venezuelans, not even the chavistas, no longer tolerate or justify such an
expensive trip on a Cuban Air Force airplane, with his entire family, with
photographs of them having fun at costly Chinese hotels. More in Spanish: (Infolatam,
http://www.infolatam.com/2015/01/13/el-fracaso-de-la-gira-de-nicolas-maduro;
El Universal: http://www.eluniversal.com/nacional-y-politica/150106/berrizbeitia-viaje-de-maduro-a-china-cuesta-1-millon-300-mil-dolares)
STRATFOR Analytic
Guidance: Considering a coup in Venezuela
President Nicolas Maduro is in an increasingly
tenuous position. During his nearly two-year time in office, Maduro has
contended with an increasingly weak national economy, eroding his ability to
manage the various factions within the ruling United Socialist Party of
Venezuela (PSUV). In this context, widespread unconfirmed reports have emerged,
none clearly reliable, that a coup is being planned against the president. According
to information from STRATFOR sources, military commanders and auxiliary
security forces known as colectivos will coordinate with the majority of PSUV
congress members to prevent Maduro from returning to power once he returns to
the country. Maduro is abroad on a state visit that took him to China and
Russia as well as Iran, and he has so far not provided a return date. Defense Minister
Gen. Vladimir Padrino Lopez, is also part of the delegation accompanying
Maduro. Without any meaningful economic lifelines, Maduro will have few options
to counter Venezuela's economic decline. (STRATFOR, http://www.stratfor.com/analysis/analytic-guidance-considering-coup-venezuela#axzz3OhzQ9E2s)
Roger Noriega:
Rebuilding Venezuela
Venezuela is collapsing. President Nicolas
Maduro’s dash-for-cash to Beijing last week was a humiliating failure. Sources
here say that Cuban military officers have abandoned their posts in Venezuelan
military installations and returned home in recent days, leaving Maduro at the
mercy of military professionals who are unwilling to use force to save his
collapsing regime. To avoid a dangerous power vacuum, Venezuela’s democrats
already are counseling a peaceful transition and the reconstruction of the
country. Maintaining public order, disarming militants, and confronting
criminal gangs also will require the cooperation of responsible military
leaders and of moderate chavistas. Of course, the opposition will continue to
insist on elections as soon as stability and a level playing field are
established. Restoring the Venezuelan economy will take time. However,
competent management of the oil industry and common-sense economic reforms
should produce the revenue and private investment required to rebuild
Venezuela. (Inter American Security Watch, http://interamericansecuritywatch.com/rebuilding-venezuela/)
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