Americas News
"Venezuela will not default" Says Del Pino as OPEC's Fragile Five Sweat Over $50 Oil
Despite Venezuela being one of the Organization of the Petroleum Exporting Countries (OPEC) members whose economy many analysts believe is on the brink of collapse, the nation's oil minister said his country will not default on its debt payments.
However, in stating that "Venezuela will not default," Eulogio Antonio Del Pino conceded, "all the countries are finding financing more difficult and have to find ways in a very difficult market."
Del Pino make the comment upon arrival in Vienna prior to Thursday's OPEC summit, whose outcome is widely expected to consist of an agreement to continue the Saudi Arabia-led market share first strategy: meaning, continued unrestricted output and even more economic pain for the cartel's fiscally weaker and more politically unstable members, including Libya, Nigeria, Iraq, and Algeria.
The Financial Times points out that oil currently at $50 per barrel is actually exacerbating the situation for the so-called "Fragile Five" nations: "It is neither high enough to save their faltering economies nor low enough to instigate any collaborative action among the world's biggest oil producers."
Indeed, Falah Alamri, Iraq's governor for OPEC, stated in a conference last week that although the oil market is slowly rebalancing, the process of recovery has "nearly destroyed many countries."
Presumably nobody appreciates that more than Emmanuel Ibe Kachikwu, oil minister for Nigeria, who recently told media that while the market is moving in the right direction, "we need an acceleration in the pace", adding, "Nigeria does need every dollar it can get."
Helima Croft, global head of commodity strategy for RBC Capital Markets, thinks the time of reckoning for OPEC's weakest members is rapidly approaching: "These states, which were not structurally sound even when oil was above $100 a barrel, were collateral damage of the policy to force the burden of adjustment on to high-cost producers."
With less than a day left before the Vienna summit, Del Pino is calling for the cartel to once again act in the interests of all members: "We need to re-vindicate the role of OPEC; we all want to defend a fair price for our product."
But rethinking output strategy is not on the radar of Suhail al-Mazrouei, oil minister for the United Arab Emirates, who said upon his arrival in Vienna on Tuesday that "The rules of the market, which are supply and demand, are working; the market will fix itself."
Croft recently stated that the social, political, and terrorism-related problems plaguing the "fragile five" countries "could either lead to a regime change or create great instability that could knock out their oil production, leading to an oil-supply shock."
