Upcoming presidential elections in Latin America could be decisive in advancing policies to maintain oil revenues. However, in the current climate of growing polarization and deeply unpopular incumbents, the elections are generating tremendous political uncertainty.
Canada's oil market is dealing with transportation constraints while heavy crude producers such as Colombia and Venezuela are seeing output declines and OPEC producers are cutting production.
The volatile nature of oil prices, widespread opposition to new projects, and the uncertainty of local and national politics make it crucial for Colombia to diversify its economy.
Stacking PDVSA with military officials may help President Maduro avert unrest in the short run, but it will likely accelerate the deterioration of the state oil company.
OPEC will attempt to manage perceptions in both the physical and financial markets—but given its track record, it will not likely produce stability and certainty, but instead ambiguity and volatility.
The risks of more oil production losses have intensified as the financial screws on Caracas continue to tighten. Deteriorating conditions in Venezuela are occurring at the same time OPEC is looking to extend its production cut and tensions throughout the Middle East are rising.
There’s little question the global market will lose more production from Venezuela in the coming months and years. The country's crude output is at risk of falling to as low as 1.2 million barrels per day.
The recent tension in Iraq highlights the ongoing reality of the global oil market: Many key oil-producing countries are politically unstable.
The U.S. government stopped short of a ban on oil imports from Venezuela, hoping to insulate U.S. refiners. But in the short run, Venezuela will have difficulty moving volumes to the Gulf Coast since the region has been swamped by Hurricane Harvey.
Venezuela has fallen apart as a result of corruption and ineptitude, but even more so because of its over-reliance on oil as a revenue source. Some 95 percent of the country’s export revenue comes from oil.