The endgame in Venezuela is accelerating and it is now only a matter of time before the Maduro regime exits, stage left, the only question is whether he does so peacefully or with the sound of gunfire in the background. And, as we also noted last week, the collapse of the Maduro regime, will "one way or another, send oil prices up".
But while a regime change will certainly lead to violent swings in oil prices (mostly higher), even less volatile events could have a significant impact on the price of crude. According to an overnight report by Barclays' Warren Russell, "even limited new US-imposed sanctions or discussion of broader sanctions could be a catalyst for Venezuela defaulting on its upcoming debt payments, which would put upward pressure on oil prices and help tighten light-heavy spreads."
As it turns out, the timing of the note was apt because this morning, the Trump administration announced it was imposing sanctions on 13 senior officials of Venezuela's government, as well as military and state oil company PDVSA, "seeking to ratchet up pressure on President Nicolas Maduro to scrap plans for a controversial new congress." As Reuters reported , the United States decided to target individuals for alleged human rights abuses and corruption, while sparing the country for now from broader financial or “sectoral” sanctions against its vital oil industry "though such actions are still under consideration."
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