Monday, March 5, 2018

Biggest risk to #Oil market lies most likely in #Venezuela @NickBb2211 #Guyana #OPEC #OOTT @FT

There are many-mostly political-risks out there, from Saudi pushback on #MBS' "reforms" to instability/conflict on the Korean Peninsula, but the biggest all round risk to the Oil market lies in #Venezuela, writes Nick Butler @NickBb2211. 

"What surprise event of 2018 will shift the energy market out of a complacency that is the result of steady demand matched by plentiful supplies, with the equation balanced not just by the Opec quota but also by the continuing decline in Venezuelan production.

It is hard to identify any factor within the industry that could reshape the market…Any real change will come from events in the external political environment. "
"to me the most likely — risk lies in Venezuela, the most unstable state within Opec. The country's inflation is beyond counting. The economy, civil society and government have broken down. The army is a caricature of corruption. President Nicol├ís Maduro remains in power but his position is weak. The danger is that in extremis he seeks a convenient enemy against which to unite the nation and embarrass the Venezuelan opposition. 

"The most likely target is Guyana — the subject of a long-running territorial dispute. Recently, I wrote about the new offshore oil discoveries. The beginning now of the process of development of those fields, which are due on stream by 2020, could provide an excuse for Venezuelan intervention in the disputed area east of the Essequibo river."

Read the whole piece by Nick Butler @NickBb2211 online @FT:

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