Thursday , June 24 2021

Trump's support for Guaido places OPEC under control

The group fears that the United States will impose sanctions on Venezuelan oil, which will complicate its task of balancing global supplies of crude oil.

It seems as if the task of the Organization of Petroleum Exporting Countries (OPEC) to maintain the balance of world oil supplies is not complex enough, The cartel is now facing a political crisis in one of its founders, who can make the market in any direction.

Recognition of Juan Guaido as President of Venezuela by US President Donald Trump together with threat of sanctions on oil exports and even military interventionhave struck a heavy blow against the regime of Nicholas Maduro.

For OPEC partners, this is a crisis that will be difficult to predict and even more difficult to manage.

Made by Saudi Arabia, OPEC and its allies reduce production to curb global oil surplus and raise oil pricesThe last time the group tried it, much of its success was due to Venezuela, where volumes fell when the country plunged into an economic crisis.

A full-fledged crisis can once again help to achieve the OPEC goals or cause chaos in world markets, ending with harassment of the organization.

More sanctions?

The most pressing issue for the oil market is whether the US will seek to increase the pressure on Maduro by imposing sanctions. It is not clear at the moment. The Trump administration has drawn up a list of possible export restrictions for Venezuelan crude oil but has not decided to apply themaccording to people close to the topic.

If Washington decides to ban its own imports, it could mean that Venezuela's exports have been shifted to China and India. Wider sanctions, such as those aimed at buyers of Iranian oil, can lead to a market failure and become unbalanced in other important ways,

Venezuela's production, like most of the oil produced by OPEC, is heavier and contains more sulfur than volumes elsewhere. This variety has already been affected by OPEC cuts, and additional restrictions will worsen the shortage, increasing the surplus of lighter and lower sulfur content that has already been created by a US boom in the shale.

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