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Page added on January 12, 2015
Venezuela’s Maduro seeks support from Saudi Arabia on oil prices
Venezuelan President Nicolas Maduro met Saudi Arabia’s Crown Prince Salman in Riyadh on Sunday as part of a diplomatic tour of OPEC members to discuss falling oil prices, which have hit its economy hard.
The Saudi side in the meeting included Oil Minister Ali al-Naimi and several princes including Deputy Crown Prince Muqrin, intelligence chief Prince Khaled bin Bandar and three sons of King Abdullah, who is in hospital, state media reported.
No details of the meeting were given by the official Saudi Press Agency and there was no indication that the world’s biggest oil exporter was any closer to taking action to stem the over 50 percent rout in oil prices.
The Venezuelan government said in a statement that “we agreed to work to recover the market and oil prices with state policies between the two energy powerhouses.” It provided no details.
Despite growing concern from Venezuela and other OPEC members such as Iran, OPEC delegates have said as recently as last week that the group’s core Gulf members remain committed to their decision not to curb output for now, choosing instead to defend market share and allow lower prices to slow output from growing rivals such as Canada’s oil sands and U.S. shale.
On Saturday fellow OPEC price hawk Iran said it would help cash-strapped Venezuela stem the price fall.
Maduro’ next stop will be in Qatar, followed by a visit to Algeria.
Venezuela’s economy contracted in the first three quarters of 2014 and its international reserves have deteriorated sharply because of the slump in oil prices, which hit new lows last week at below $50 per barrel, around half their value in June 2014.
The decline has spurred concerns that Venezuela may default on its foreign bonds, which in turn has pushed its bond yields to the highest of any emerging market nation. Maduro has promised to pay bondholders.
At the last OPEC meeting on Nov. 27, Saudi Arabia blocked calls from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices.
Venezuela said last month it was considering backing a call for an emergency OPEC meeting depending upon how oil prices perform in the first quarter of 2015.
25 Comments on "Venezuela’s Maduro seeks support from Saudi Arabia on oil prices"
Davy on Mon, 12th Jan 2015 7:17 am
Oil is not going to save Venezuela. You can’t throw good money after bad. Oil driven socialism is just plain bad policy as practiced in Venezuela. The curse of oil riches seem to always cause ills for a country. This is as true on a macro scale as it is for a country like Venezuela. I need only point to what oil and the car culture has done to the US as an example.
The biggest problem with Venezuela is the tension of socialism in a capitalistic world. The two don’t mix well. I am not going to say Bolivarian revolution was wrong. From the beginning I respected the philosophy of mitigating wealth inequality. Yet, this revolution was corrupted just as communistic idealism was corrupted in the past. The corruption occurred with Chavez and his cronies. Globalism and capitalism are powerful forces that will exploit a country like Venezuela that seek to break out of the capitalistic system while living in it.
Chavez wanted his cake and eat it too. He devoured the oil sector as a cash cow while neglecting the necessary investment in the sector to ensure vitality. His gorging on the oil wealth also left his economy dangerously exposed to price fluctuations. This is where we are now a ruined economy with low oil prices. That is the worst possible place to be.
Apneaman on Mon, 12th Jan 2015 1:39 pm
In the final result, what is the difference between Venezuela and America?
2 years? 5 years? a decade?
Davy on Mon, 12th Jan 2015 1:51 pm
True AP, that drain sucking noise is something some are hearing now but we are all in the same bathtub. It awaits all economies large and small.
bobinget on Mon, 12th Jan 2015 2:30 pm
Venezuela, Nigeria, Ecuador, have in effect been colonized by China.
http://www.ibtimes.com/why-china-just-made-20b-investment-venezuela-1778134
Ecuador joins the Chinese Federation:
http://www.reuters.com/article/2015/01/12/idUSFit89442020150112
Nigeria: http://businessdayonline.com/2014/05/china-promises-africa-robust-infrastructure-transformation/#.VLQr4ca5I20
“Fuck it, Let’s Take Over Russia Also”
http://qz.com/323046/china-is-bailing-out-the-worlds-teetering-oil-producers/
Do you still believe we (US) will be able to import even six million barrels p/d after Canada begins resupplying Eastern Canada? WE are exactly 11 months from a shortage caused meltdown.
Show us how we are not?
Now, tell me who is winning oil wars?
The US with over a T in military expense or China with a few hundred Billion Wal Mart Dollars for “loans”?
Apneaman on Mon, 12th Jan 2015 3:23 pm
What’s the “prize” for winning the oil wars at this late hour?
2 years? 5 years? a decade?
Every 19/20th century ideology: economic, political, cultural, religious is on it’s last legs.
Davy on Mon, 12th Jan 2015 3:49 pm
Bobby, your above comment appears like you are converted to a doom. If you remember I told you back a few weeks ago that would happen. Welcome aboard the doomship.
GregT on Mon, 12th Jan 2015 4:27 pm
Capitalism has almost run it’s course. No country, people or life form anywhere on the planet will be left unscathed.
Apneaman on Mon, 12th Jan 2015 4:32 pm
Davy, I see it more as an awaking than a conversion. A sad awakening indeed. Most conversions are usually the happy kind. Someone finds greater meaning. My observation is that most doomers have adopted a whole systems view of the world and it is not a nice view. Lately, I have gone to great effort to hold my tongue around people in the real world. I sometimes feel guilty for blurting things out around my Mom. I go over to her place to do repairs, maintenance and heavier cleaning and she always has the news on the TV. I will hear it and yell the truth back; just like the old man did growing up. Growing up I must have told myself a million times “I will never be anything like you” regarding the old man. Lol somethings in life are inescapable. I know when I go to far because my Mom says, “your using your outside voice again”. Somethings in life are inescapable.
GregT on Mon, 12th Jan 2015 5:04 pm
“…….the news on the TV. I will hear it and yell the truth back”
Hmmm, sounds familiar Apnea. I try my best to not watch the news anymore. It mostly just pisses me off. The only thing that I dislike more than liers, is stupid people spreading lies as if they are the truth.
Davy on Mon, 12th Jan 2015 5:12 pm
AP, I cringe when I am with mom and dad and have to endure Fox news and CNN. It kills me. I can relate to your outburst.
I am amazed how the corns don’t last long here on PO. Notice how Noony went awol and the Marm. I take that as a sign of a message that is sinking in.
Apneaman on Mon, 12th Jan 2015 6:45 pm
I did so notice their absence, Davy. Maybe they are exercising their conformation bias over on Anthony Watts site or whatever the peak oil denier equivalent is.
Greg, I do not watch TV if I can help it for the same reasons as you and the commercials make me feel like an alien being. I get wifi and cable as part of my rental deal. In 9 months here the only time the TV was on was when the guy from Shaw was hooking up the box. My 50″ flat screen was a gift from my parents a few years back. They knew I had the means to get one if I wanted to. Weird. I gave up the cell phone 4 months ago. There’s some strange reactions I’ll tell ya. I was considering gong bank less, but it’s too much. I saw a notice on the Revenue Canada site that starting in 2016 they will no longer send out income tax refund cheques or GST/climate rebates or any other payment by cheque. Direct deposit or nothing at all. That should save some money given many people on the margins have no bank account. The True North Strong and Free……
Makati1 on Mon, 12th Jan 2015 7:56 pm
bobinget noticed China’s moves to support the countries that they want for friends and partners. China gets over $300+ billion dollars net in trade balance income EVERY YEAR from the US alone, or ~$1,000 for every American man, woman and child. (Did you know you were giving China that much every year?) More than twice their announced military budget per year.
Add in the interest from the USTs in USDs and you get a lot of “good will” money to spread around the world in resource rich countries. Then there are the trillions in reserves to burn while they still have some value. China knows they are shrinking everyday and they are unloading them in projects that favor China, and gold by the tons.
http://www.census.gov/foreign-trade/balance/c5700.html
Worry about China or Russia. Nope!
GregT on Mon, 12th Jan 2015 7:58 pm
“Notice how Noony went awol and the Marm.”
Mark my words, the first sign of an uptick, and they’ll be back louder than ever.
marmico on Tue, 13th Jan 2015 5:27 am
Word salad nutters chanting mantra in their circle jerk is both boring and tiresome.
U.S. households are now saving $200 billion annualized relative to June 2014 at the gasoline pump. The average hourly production and supervisory worker @ $20.68 per hour now works less minutes to drive a new model year vehicle 100 miles than at any time in the history of the oil age.
Davy on Tue, 13th Jan 2015 6:57 am
Marmie, welcome back friend. I missed you honestly. My doom does gets so boring without some hard hitting corns giving me a right jab to the jaw. Yet, stick around but at your own risk of converting to doom. Lots of doomish news now friend.
Davy on Tue, 13th Jan 2015 7:14 am
Marm, is this word salad?
http://www.zerohedge.com/news/2015-01-12/confessions-begin-goldman-bofa-warn-crude-crash-will-have-negative-impact-gdp-earnin
Davy on Tue, 13th Jan 2015 7:30 am
One more Marm and those of you looking for conspiracies in the oil price fall:
http://www.zerohedge.com/news/2015-01-12/did-fed-ignite-irresponsibility-us-oil-over-supply
marmico on Tue, 13th Jan 2015 8:18 am
Of course there are winners and losers between producers, consumers and importers in the price changes. Tyler Durden (all of the Zero Hedge fight club monikers) is a doofus.
On a GDP basis, upstream petroleum capex declines 50 basis points assuming a 50% decline from the $160 billion annual spending on the oil leases and for equipment and machinery, import prices decline which raises GDP 25 basis points and domestic spending rises 75 basis points for a net benefit of 50 basis points.
Good grief. Enough of the one hand clapping. Westexas is an expert at that crap. The net is $600 per capita at the household level and another $300 at the firm and government level. You know, the cost of the gasoline to take your kids to school and bomb ISIL in Syria and deliver your cattle to the rancher gate declines.
Davy on Tue, 13th Jan 2015 8:38 am
Marm, while this appears to be benign in reality it has the potential to be a Butterfly effect now more than ever considering our global state of stable disequilibrium. Your comment on ZH shows a lack of balance and fairness. I read the Fox news site and RT site both at opposite spectrums. Maybe you could use some balance in your economic readership. I welcome your comment though. Like I say I hope you corns are right. Yet, I hope I am wrong but is you, who hope and hold on to you are right what a responsibility to hold up..
Butterfly effect
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Butterfly_effect
A plot of Lorenz’s strange attractor for values ρ=28, σ = 10, β = 8/3. The butterfly effect or sensitive dependence on initial conditions is the property of a dynamical system that, starting from any of various arbitrarily close alternative initial conditions on the attractor, the iterated points will become arbitrarily spread out from each other.
In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state. The name of the effect, coined by Edward Lorenz, is derived from the metaphorical example of the details of a hurricane (exact time of formation, exact path taken) being influenced by minor perturbations such as the flapping of the wings of a distant butterfly several weeks earlier. Lorenz discovered the effect when he observed that runs of his weather model with initial condition data that was rounded in a seemingly inconsequential manner would fail to reproduce the results of runs with the unrounded initial condition data. A very small change in initial conditions had created a significantly different outcome.
The butterfly effect is exhibited by very simple systems. For example, the randomness of the outcomes of throwing dice depends on this characteristic to amplify small differences in initial conditions—the precise direction, thrust, and orientation of the throw—into significantly different dice paths and outcomes, which makes it virtually impossible to throw dice exactly the same way twice.
GregT on Tue, 13th Jan 2015 8:47 am
“The net is $600 per capita at the household level and another $300 at the firm and government level.”
Not when investments and retirement funds are taken in to account. A little bit of short term gain, for a lot of long term pain.
GregT on Tue, 13th Jan 2015 9:12 am
This would be like bankrupting Peter, to pay Paul and his buddies enough to buy a couple of six-packs a week each, when Peter is their only employer.
Apneaman on Tue, 13th Jan 2015 9:39 am
Once Boomer pensions get bailed in, lower fuel costs will be appreciated. Food banks and soup kitchens are well spread out in suburban America.
The pavement is lovely, dark and deep.
But I have calories to reap,
And miles to drive before I eat,
And miles to drive before I eat.
Davy on Tue, 13th Jan 2015 10:06 am
Marm, here you go again more oil price collateral damage for you to digest:
http://www.zerohedge.com/news/2015-01-13/first-many-standard-chartered-hit-billions-losses-commodity-crash
bobinget on Tue, 13th Jan 2015 4:59 pm
If it comes anywhere near a ‘crash’ Obama begins buying ti replenish SPR. From Wikipedia;
The Strategic Petroleum Reserve (SPR) is an emergency fuel storage of oil maintained by the United States Department of Energy. It is the largest emergency supply in the world with the capacity to hold up to 727 million barrels (115,600,000 m3).
The current inventory is displayed on the SPR’s website.[1] As of 23 December 2014, the inventory was 691.0 million barrels (109,860,000 m3). This equates to about 37 days of oil at 2013 daily US consumption levels of 18.49 million barrels per day (2,940,000 m3/d)[2] or 70 days at 2013 daily US import levels of 9.859 million barrels per day (1,567,500 m3/d).[3] At recent market prices ($69 a barrel as of December 2014[4]) the SPR holds over $18.0 billion in sweet crude and approximately $25.5 billion in sour crude (assuming a $15/barrel discount for sulfur content). The total value of the crude in the SPR is approximately $43.5 billion. The price paid for the oil is $20.1 billion (an average of $28.42 per barrel).[5]
Purchases of crude oil resumed in January 2009 using revenues available from the 2005 Hurricane Katrina emergency sale. The DOE purchased 10,700,000 barrels (1,700,000 m3) at a cost of $553 million.[6]
The United States started the petroleum reserve in 1975 after oil supplies were cut off during the 1973-74 oil embargo, to mitigate future temporary supply disruptions. According to the World Factbook,[7] the United States imports a net 12 million barrels (1,900,000 m3) of oil a day (MMbd), so the SPR holds about a 58-day supply (when accounting for domestic production). However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, so it would take over 160 days to use the entire inventory.
bobinget on Tue, 13th Jan 2015 5:10 pm
I should note. Supply, demand and imports numbers are a bit dated. SPR deficit is not, however.
If you want more up-to-date numbers go to
http://www.eia.gov/petroleum/supply/weekly/
AFTER 10.30 Eastern time, Wednesdays for the latest real dope.
One thing we know for certain. USA burned up more then 20.2 million barrels every stinkin day last week.
I’m guessing 20.7 M B p/d with a six million barrel
deficit for the entire week.
(so much for a glut)