There has been an outbreak of unity within Opec, just when it needed it the most.
One wonders if Venezuela’s energy minister Nelson Martinez has packed extra underwear on his new tour of Opec and non-Opec oil producers. The streets of Caracas are ablaze with protests, and Opec’s traditional price hawk has become a crippled bird.
It is a rich irony that the accelerating downfall of Venezuela´s once-thriving oil industry isn´t enough to realize the country´s ambitious oil price aspirations. The Orinoco oil belt is still mostly an undeveloped wasteland, and grand schemes for offshore gas have given way to gruesome images of spiraling canisters of tear gas.
The success of the Opec and non-Opec production cut deal ultimately depends on the extent to which it erodes bloated inventories. That depends on compliance and the proof of that pudding will be in the eating.
We’re learning day by day that the wrecking ball of corruption piloted by Odebrecht and other Brazilian contractors swung far and wide across Latin America in the 2000s. Projects to build pipelines, highways and other strategic infrastructure are stalled, and senior politicians are quivering.
Latin American prosecutors gathered in Brasilia yesterday to coordinate their investigative efforts. Spurred by Brazil’s Car Wash probe of state-controlled Petrobras and Odebrecht’s December 2016 international plea deal, the prosecutors want to find out who took bribes, and how much of the loot from overpriced projects their governments might recover.
The rot may have gone straight to the top. Peru is after former president Alejandro Toledo. Colombia, Panama and Chile are scrutinizing how their sitting presidents financed their electoral campaigns. Continue reading
The oil market has been fixated on Opec of late, with newly-loquacious oil ministers’ every utterance pored over.
But the exporter body isn’t the only organisation with a key role to play in balancing the market. The People’s Bank of China is Opec’s mirror on the demand side, and the producer countries will be hoping it is up to the task.
BP, in its Energy Outlook published this week, said that all of the demand growth for oil in next 20 years comes from emerging markets, with China accounting for half.
The Middle Kingdom is already a black hole for crude, with storage being built and filled while global prices are low. Aggregate crude imports, apparent demand and refinery runs all hit record levels in December.