oil prices

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”: 

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. 

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.” 

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. 

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.