oil prices

Vladimir Putin seemed pretty emphatic on Monday that Russia would stop construction of the South Stream gas pipeline, shelving a strategically important project that Moscow was counting on to cement its influence in south-eastern Europe.

Speaking after talks with President Recep Tayyip Erdogan, his Turkish counterpart, in Ankara, Putin said Russia would abandon the project to bring Russian gas to Bulgaria under the Black Sea, bypassing Ukraine, unless the EU dropped its opposition.

But does this really mark the full stop that it appears to be? It is true that Alexei Miller, CEO of Gazprom, the company charged with building the pipeline, told reporters: “that’s it, the project is closed”. But analysts see a more subtle game in play. Read more

Bahrain, Angola, Ecuador and Venezuela rank as the emerging markets (EM) most vulnerable to a downgrade in their sovereign credit ratings if oil prices do not recover in 2015, Fitch Ratings said in a report published on Tuesday.

With benchmark Brent crude prices close to $80 a barrel, down from $115 a barrel in mid-June, the revenues of all oil producers are under pressure. But due to differing levels of fiscal reliance on oil income, the speed of deterioration in domestic budgetary conditions varies sharply among EM producers. Read more

One could talk about Venezuela’s economic policy in Shakespearean terms. To devalue or not to devalue; to converge foreign exchange rates or not to converge; to raise the price of the world’s cheapest gasoline or not to raise; to sell Citgo or not to sell; to default or not to do so – these are the questions.

The distortions created by the government’s foreign exchange and price controls – covering even Barbie dolls – keep playing a treacherous role in Venezuela’s unfolding tragedy. Why is this happening instead of not happening? To some analysts, that is the question. Read more

Venezuelans do not really dance the tango. But in the mooted sale of Citgo, the country’s US refining operation, that is what the socialist government has been doing – taking one step forward, two steps back.

In an interview published on Sunday by leading daily El Universal, Rodolfo Marco Torres, Venezuela’s finance minister, said the socialist government had scrapped any plans for a sale. “The sale of Citgo is discarded,” he told the paper. “Venezuela continues with Citgo and will continue making the investments in the refineries.” Read more

Blame the Empire.

Venezuela’s socialist President Nicolás Maduro on Wednesday accused the United States of oversupplying the market -in his words, “inundating the market”- to rattle oil prices. His government is maybe having a tough time coping with a sliding crude price as oil accounts for some 95 per cent of export revenues of the energy rich country.

The toxic combination of dropping oil prices, an economy in shambles and lower levels of foreign reserves, has been reinvigorating fears of a debt default. Alejandro Grisanti, head of Latin America economics research at Barclays, said on Wednesday in report titled “Venezuela: The perfect storm”: Read more

The Nigerian oil industry faces a difficult 2013 as shale oil in the US takes an increasing share of the north American market. Togo-based Ecobank has said that Nigerian crude oil exports to the US could fall by over a quarter this year, from 800,000bpd in 2012 to as low as 580,000bpd in 2013. Read more

Russia’s consumer spending spree could be ending in tears. A credit-fuelled surge has led households to rack up unprecedented levels of consumer debt – so much so that in 2012 some 80 per cent of new consumer loans (excluding mortgages) are going towards interest on existing debt. This cannot go on.

“In Russia, the macro-economic risks are small,” says Natalia Orlova, chief economist at Alfabank, “But the risks in the banking sector are accumulating. Retail lending is becoming a high-risk segment.” Read more

It’s been a week to forget for Ecuador. On Monday, the Andean country startled investors by posting its weakest quarterly growth in two years. Concerns that falling oil prices could cause the country’s current account deficit to widen to unsustainable levels have prompted at least one analyst to speculate that President Rafael Correa might need to turn to China for help in avoiding a liquidity crisis.

On Thursday, Ecuador went cap in hand – not to China – but to the Latin American Reserve Fund, the Bogotá-based regional lender for a $514.6m loan. Read more

As Hugo Chávez leads yet another lavish parade celebrating Venezuela’s freedom from the Spanish empire – Thursday is the 201st anniversary since independence was declared – it’s as well to remember that the OPEC country remains heavily dependent on something else: oil.

That wouldn’t be such a problem if crude prices hadn’t plummeted lately. But with the value of Venezuelan oil falling by about 20 per cent in the last ten weeks, some are worried about how this will affect an economy that relies on oil for more than 90 per cent of its exports.  Read more