Monday, January 20, 2020

Libya will face 'catastrophe' if oil blockade continues: Tripoli premier

BERLIN (Reuters) - Libya will face a “catastrophic situation” unless foreign powers put pressure on eastern-based commander Khalifa Haftar to lift a blockade of oilfields that has cut output to almost zero, the country’s internationally recognized premier said on Monday.

Since Friday, Haftar’s forces have closed Libya’s major oil ports in a power play as European and Arab powers and the United States were meeting with his supporters in Berlin to push him to halt a campaign to capture the capital Tripoli. 

Tripoli-based Prime Minister Fayez al-Serraj told Reuters he rejects eastern demands to link a reopening of oil ports to a new distribution of oil revenues among Libyans, saying such income wasin any case meant to benefit the entire country. 

“The situation will be catastrophic should it stay like this,” Serraj said in an interview in Berlin. 

“I hope foreign countries will follow the issue,” he said when asked whether he wanted them to lean on Haftar to lift the blockade of Libya’s Mediterranean oil export terminals. 

Much of Libya’s oil wealth is located in the east of the sprawling North African state but revenues are channeled through Tripoli-based state oil firm NOC, which says it serves the whole country and stays out of its factional conflicts. 

Haftar’s parallel administration has repeatedly sought to export oil while bypassing the NOC but has been thwarted by a United Nations ban, diplomats say. 

The NOC sends oil and gas revenues, Libya’s economic lifeline, to the Tripoli-based central bank, which mainly works with Serraj’s government tough it also funds some public salaries, fuel and other services in the Haftar-controled east. 

A document sent to oil traders and seen by Reuters on Monday said that the NOC had declared force majeure - a waiver on contractual obligations - on crude loadings from the Sharara and El Feel oilfields in Libya’s southwest. 

At least nine oil tankers had been due to load in the coming days from the ports now under force majeure, according to a local shipping source. The NOC had previously declared force majeure for oil ports on Libya’s northeast coast. 

Libya has lacked a stable central authority since strongman Muammar Gaddafi was overthrown by NATO-backed rebels in 2011. For more than five years, it has had two rival governments, in the east and the west, with streets controlled by armed groups.


In the interview, Serraj also said his government would respect the summit’s decision to turn a tentative truce into a permanent ceasefire in Tripoli and open intra-Libyan talks to end conflict as part of a U.N.-led plan. 

But he ruled out meeting Haftar again. In Berlin Serraj and Haftar conferred with world leaders but not meet each other.

“For me it’s clear....We will not sit down again with the other side,” Serraj said, adding that the question of peacemaking should not be limited to a meeting of two leaders. 

Serraj and Haftar, once a senior army general under Gaddafi, last met in Abu Dhabi in February 2019 where they failed to reach a power-sharing agreement, after which Haftar launched his offensive on Tripoli. 

Sunday’s Berlin summit convened the main foreign supporters of Libya’s warring sides. Haftar enjoys the support of the United Arab Emirates, Egypt, Russian mercenaries and some African troops, while Serraj is backed by Turkey. 

The summit yielded a commitment to shore up Libya’s ramshackle truce arrangement but the gathering was overshadowed by Haftar’s oil blockades. 

The European Union’s top diplomat, Josep Borrell, said on Monday the EU would discuss all ways to uphold a formal ceasefire in Libya but any peace settlement will need real support from the bloc to make it stick. 

Under the Berlin deal, a joint committee will be formed, made up of five military men from each side, and convene in Geneva in about a week to discuss the mechanics of a viable ceasefire to pave the way for a resumption of peace diplomacy. 

“Unfortunately the (Haftar-led) attackers have continued to violate a truce and haven’t signed it anyway,” said Serraj, referring to a meeting in Moscow last week where Haftar refused to endorse a ceasefire scheme. Serraj put his signature on it. 

“We look forward to the committee meeting,” Serraj said. 

Fayez Mustafa al-Sarraj, Libya's internationally recognised Prime Minister, is pictured during an interview, in Berlin, Germany January 20, 2020. REUTERS/Michele Tantussi
Many are skeptical about any ceasefire’s prospects due to a lack of mutual trust and a massive deployment of Haftar’s forces into the northwest in their bid to take Tripoli. 

Turkish support for Tripoli’s effort to repel Haftar has seen the fighting, which has displaced more than 150,000 civilians, take on the trappings of a proxy war.

Friday, January 17, 2020

China's U.S. crude buying binge to set off global sweet oil shake-up

File photo of a worker walking past a pump jack on an oil field owned by Bashneft, Bashkortostan

By Shu Zhang and Florence Tan

SINGAPORE (Reuters) - Sharply higher Chinese purchases of U.S. energy products as part of the China-U.S. trade deal will shake up global crude oil trade flows if American supplies squeeze rival crudes out of the top oil import market, trade sources said.

China's pledge to buy at least $52.4 billion worth of U.S. energy products over the next two years can only be met through substantial increases in crude imports from the United States, the top global oil producer, according to traders and analysts.

But to make way for any surge in American shipments Chinese importers are expected to dial back orders of similar or pricier grades from places such as Brazil, Norway and West Africa - potentially triggering a shake-up of the light sweet crude oil market that could span the globe.

"U.S. crude is always a good choice to diversify supplies and press down West African crude prices," said a source with a Chinese state-owned oil company, while adding that freight rates were now very high.

Traders said some African crude grades had characteristics similar to U.S. oil that made them replaceable in refiner mixes.

Most African grades also trade mainly on the spot market, making it easier for importers to switch them out than supplies tied to long-term contracts.

U.S. crude has not been offered to Chinese independent refiners yet, but the value of West Texas Intermediate (WTI) Midland delivered to China was estimated to be 50 cents to $1 a barrel cheaper than Brazil's Lula crude and some West African crudes, making it attractive, several trade sources told Reuters.

China's return as a major U.S. oil buyer could help soak up excess supplies as production in the United States is expected to hit records in the next two years, although a recent surge in freight rates for U.S. oil shipments to Asia has slowed exports.

Big Chinese orders of U.S. oil could put some pressure on other Asian buyers, such as India, South Korea and Taiwan, which all boosted U.S. oil imports in 2019 while China was sidelined, the sources said.

"If China has to fulfill buying huge volumes of U.S. crude, the arbitrage can be closed for most other people because freight could be really high," said a Singapore-based oil trader.

Goldman Sachs analysts estimated in a Jan. 10 report that China may increase its crude imports to 500,000 barrels per day in 2020 and 800,000 bpd in 2021.

China's U.S. crude imports dropped 43% to 138,790 barrels per day (bpd) in the first 11 months of 2019 from a peak of 245,600 bpd in 2018 after Beijing imposed a 5% import tariff on U.S. oil amid as trade tension rose between the world's biggest economies.

"The energy part of the deal is likely to be an easy win," said Lachlan Shaw, head of commodity research at the National Australia Bank, adding that China's crude demand will increase as new refining capacities are added in the next two years.

(Reporting by Florence Tan and Zhang Shu in Singapore; Additional reporting by Xu Muyu in Beijing; Editing by Clarence Fernandez)

Thursday, January 16, 2020

Gibson tanker report "talk about closing Strait of Hormuz"

Strait of Hormuz

One of the most talked about scenarios remains the possibility that the Strait of Hormuz could be closed, says broker Gibsons in its weekly tanker market report

"Any closure no matter how temporary would impact approximately 17.2million b/d of crude oil and 2.4million b/d of refined product flows," Gibsons says.

"If this was to materialise, the impact on the oil price would be extreme, with major economic ramifications. 

Gibsons weekly tanker Report

Wednesday, January 15, 2020

U.S. Gas Giant Downgraded To Junk Status

Operational Footprint Section Photo
EQT Operational Footprint

The largest natural gas driller in the United States just announced a massive write-down for its assets, offering more evidence that the shale sector faces fundamental problems with profitability. 

In a regulatory filing on Monday, Pittsburgh-based EQT took a $1.8 billion impairment for the fourth quarter, as the natural gas market continues to sour. EQT said that the write down comes as a result of the “changes to our development strategy and renewed focus on a refined core operating footprint,” which is a jargon-y way of saying that some of its assets are now worth much less.
EQT also slashed spending for 2020 to between $1.25 and $1.35 billion, down by another $50 million compared to the guidance the company provided in the third quarter of last year.
Although not a household name, EQT is the largest gas producer in the country, and is a giant in the Marcellus shale. EQT purchased Rice Energy in 2017, growing into a huge gas producer and pipeline company, but it has posted disappointing results in the last few years. The poor performance led to an internal battle for control of the company. Toby Rice, who co-founded Rice Energy and maintained small ownership stakes in EQT after the tie up, wrestled control from management, convincing the company’s board that he could right the ship. He became CEO last year.

So far, the company’s problems continue. Natural gas prices slid sharply in 2019, and are at rock-bottom levels, particularly for the time of year. According to the FT, while Henry Hub natural gas prices for February delivery trade at $2.24/MMBtu, they are only trading at around $1.83/MMBtu at the Dominion South hub in Pennsylvania. Related: Canada Faces A New Oil Price ‘’Blowout’’

EQT itself admits that it can’t succeed in this environment. “Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” Toby Rice said in December “A lot of this development doesn’t work as well at $2.50 gas.”

EQT hopes to cut $1.5 billion in debt by selling assets and boosting cash flow. However, the cash flow part will be hard to pull off with prices stuck in the doldrums.

Moody’s cut EQT’s credit rating on Monday to Ba1 with a negative outlook, moving it into junk territory after the gas giant said it would issue new bonds to refinance debt. “EQT's significantly weakening cash flow metrics in light of the persistent weak natural gas price environment and the company's intent to refinance its 2020 maturities in lieu of debt reduction through repayment drives the ratings downgrade,” Moody’s senior analyst Sreedhar Kona said.

The agency also noted the “volatility associated with the cash flow of pure-play natural gas producers necessitate a higher retained cash flow to debt ratio threshold than EQT can deliver over the medium term even with significant debt reduction.”

“Additionally, EQT's cash flow metrics compare poorly to other Baa3 rated oil producing companies, despite EQT's size and scale,” Moody’s concluded. Related: This Was The Most Successful Energy Niche Last Year

EQT’s share price is down by more than half since last spring, and it is also down by more than 75 percent since 2017.

These problems are obviously much larger than EQT. Range Resources recently slashed its dividend in order to pay off debt, while also taking out another $550 million in new debt in order to pay off maturing debt this year. Meanwhile, Chesapeake Energy, the second largest gas producer, is now trading at pennies on the dollar and faces the prospect of being delisted from the New York Stock Exchange.

EQT’s predicament reflects the broader financial questions that have long plagued the shale industry. Fracking can produce lots of oil and gas, but steep decline rates make profits elusive. If the largest gas producer in the country is struggling, and has a credit rating in junk territory, then something is wrong with the business model.

The problems endemic to the shale gas industry are starting to affect production. The decade-long boom in gas production from Appalachia may have finally come to a halt.

By Nick Cunningham of

Kinder Morgan sells Pembina Pipeline interest for $764 million

Click on Image to See Larger View
Kinder Morgan Asset Map

North American energy infrastructure provider Kinder Morgan has sold all of its approximately 25 million shares in Pembina Pipeline Corporation.

The stock was initially received in connection with Pembina’s acquisition of the outstanding common equity of Kinder Morgan Canada. The sale of the shares is consistent with the company’s intention to convert shares into cash in an ‘opportunistic and non-disruptive manner’.

The shares were sold for after-tax proceeds of $764 million (€687.1 million), consistent with Kinder Morgan’s 2020 budget.

The company previously announced that it intends to use the proceeds to pay down debt, creating balance sheet flexibility in 2020.

Tuesday, January 14, 2020

The World’s Most Precious Metal Leaves Everything Else in the Dust

Periodic table symbol for Rhodium

  • Rhodium extends multiyear surge, jumping 31% so far this month
  • Stricter emissions rules have boosted demand from auto sector
Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

Rhodium -- mainly used in autocatalysts and five times more costly than gold -- surged 31% already this month, touching the highest since 2008. Stricter emissions rules have fueled a multiyear rally and there’s speculation that investors are also jumping in, betting that prices will climb toward a record.

Rhodium rallied 12-fold in the past four years, far outperforming all major commodities, on rising demand from the auto sector. Like palladium, the metal is mined as a byproduct of platinum and nickel, but it is a much smaller market and so is liable to big price moves when supply or demand changes.

“Rhodium is subject to crazy volatility,” said Anton Berlin, head of analysis and market development at Russia’s MMC Norilsk Nickel PJSC, which mines about 10% of all rhodium. Supplies are tight and speculators stepped up buying metal after large industrial users secured volumes late last year, he said.

Price Surge

Rhodium was at $7,925 an ounce by Monday, according to Johnson Matthey Plc. This month’s gain also came after investors turned to precious metals, seeking a haven from Middle East tensions and pushing palladium up about 9%.

“The main driver by the beginning of January was physical demand from Asia, which might be also automotive related,” said Andreas Daniel, a trader at refiner Heraeus Holding GmbH. “Buying triggered more buying and in an unregulated market the effect was massive, with a price move which is only seen maybe every 10 years.”

Demand cooled late last week, according to Daniel. Prices hit $8,200 on Wednesday, before retreating a bit in the following days.

Although pullbacks are possible this year, rhodium could top the record $10,100 set in 2008, according to Afshin Nabavi, head of trading at refiner MKS PAMP Group in Switzerland. Still, those lofty prices a decade ago prompted autocatalyst makers to switch to platinum and palladium, which are also used for cleaning emissions.

It’s much harder to invest in rhodium than in other precious metals. It isn’t traded on exchanges, the market for bars or coins is tiny compared with gold or silver and most deals are between suppliers and industrial users. Global production is equal to little more than a 10th of platinum or palladium output.

Higher rhodium prices are good news for South African producers, which account for more than 80% of global output. Gains in platinum-group metals and a weak rand helped a stock index for the nation’s miners to triple in the past year, reaching the highest since 2011.

But South Africa’s dominance also means production risks hang over the market. Power shortages last year temporarily interrupted some mining operations and there have been long mine strikes in previous years by workers wanting higher pay.

(Updates prices in fifth paragraph)

Monday, January 13, 2020

PDVSA's partners act as traders of Venezuelan oil amid sanctions - documents

PDVSA is the single largest source of income for the Venezuelan government, and oil sales accounting for well over 90 percent of the country’s export revenue. (AVN)

CARACAS/PUNTO FIJO, Venezuela (Reuters) - Venezuela, its oil exports decimated by U.S. sanctions, is testing a new method of getting its crude to market: allocating cargoes to joint-venture partners including Chevron Corp (CVX.N), which in turn market the oil to customers in Asia and Africa.

This would not violate sanctions as long as sale proceeds are used for paying off a venture’s debts, according to three sources from joint ventures. They said this approach could help Venezuela overcome obstacles to producing and exporting oil. 

Venezuela’s oil exports fell 32% last year as the U.S. government blocked imports by American companies and transactions made in U.S. dollars. PDVSA was forced to use intermediaries for crude sales as Washington pressured Venezuela’s Indian and Chinese customers to halt direct purchases. 

The sanctions were designed to oust Venezuelan President Nicolas Maduro after most Western nations branded his 2018 re-election a sham. 

By acting as an intermediary for PDVSA’s oil sales, Russia’s Rosneft (ROSN.MM) in 2019 became the largest receiver of Venezuelan crude, using the sales to amortize billions of dollars in loans granted to Venezuela in the last decade. 

Washington has mostly allowed mechanisms to pay off debt with oil or to swap Venezuelan crude for imported fuel, but Venezuela’s opposition is lobbying the U.S. administration to punish intermediaries. 

PDVSA, the U.S. Treasury Department and the State Department did not answer Reuters’ requests for comment. 

The latest tests of the policy come this month. A 1 million-barrel cargo of Venezuelan upgraded crude consigned to Chevron is scheduled to load at PDVSA’s Jose port, according to internal documents from the state-run firm seen by Reuters. 

Chevron has a stake in the Petropiar joint venture with PDVSA to upgrade oil in the OPEC nation’s Orinoco belt, one of the world’s largest oil reserves. Chevron’s license to operate in Venezuela despite sanctions expires on Jan. 22 unless the U.S. Treasury renews it. 

“Proceeds from these marketing activities are paid to our joint venture accounts to cover the cost of maintenance operations, in full compliance with all applicable laws and regulations,” said Chevron spokesperson Ray Fohr. 

In the past, Chevron itself used to refine Venezuelan crude at its U.S facilities, often bought from PDVSA’s joint ventures. 

Another cargo of 670,000 barrels of Tia Juana and Boscan crudes, chartered by Venezuelan oil firm Suelopetrol, set sail at the beginning of January, the documents showed. 

Suelopetrol, a minority stakeholder in joint ventures with PDVSA, said it was recently allocated a Venezuelan crude cargo under contracts signed prior to U.S. sanctions with PDVSA and joint venture Petrocabimas to support investment and development of oilfields. 

“Those contracts include the designation of Suelopetrol as offtaker of crude produced for compensating accounts receivable, due since 2015, for capital contributions, technical assistance, provision of services and accumulated dividends,” it said in response to questions from Reuters. 

By Venezuelan law, state-run PDVSA is required to market all Venezuela’s crude exports, except for upgraded oil, whose output was suspended in 2019 due to accumulation of stocks. Only Petropiar, one of four upgrading projects in the Orinoco, has recently resumed operations. 

To avoid violating Venezuelan law, the joint ventures that are not allowed to market their output for exports first sell the oil to PDVSA, which then allocates the cargoes to its joint venture partners, according to two of sources and documents. 

The private partners take possession of the cargoes at Venezuelan ports and transport them in chartered vessels to refineries around the world, according to the documents and tanker tracking data from Refinitiv Eikon. 

Proceeds from these sales to ultimate buyers are being transferred to the joint venture’s trustees to fund operational expenses as well as paying debt and dividends owed to partners. 

“It is a matter of life or death for joint ventures to achieve this so operations can restart,” said a top executive from one of the joint ventures that accepted the mechanism. 

According to the PDVSA documents and sources, Chevron took two cargoes of Venezuelan Boscan and Merey crudes in the last quarter of 2019, before lifting a cargo of Hamaca crude in January. Suelopetrol’s cargo, on tanker Ace, set sail on Jan. 5.


Several of PDVSA’s more than 40 oil producing joint ventures owe hundreds of millions of dollars to minority partners as PDVSA demanded from 2013 to 2017 they extend funding to the projects. 

Minority stakeholders put the money through credit lines and loans backed by supply contracts so sale proceeds would go to trustees for paying the projects’ costs while amortizing the loans. 

But U.S. sanctions deprived PDVSA and some joint ventures of the supply contracts used to guarantee the loans, leaving the projects without sources of cash and freezing the credit lines. 

The new mechanism is intended to unfreeze cash flow to continue production, the sources said. It could also make it easier to trade Venezuelan oil by using joint-venture partners as buyers or traders while sanctions are in place. 

Very high freight tariffs for transporting Venezuelan oil, the difficulty in finding willing buyers, and problems at oilfields and shipping terminals remain obstacles to implementing the mechanism, the sources added. 

Lawyers consulted by some PDVSA partners interested in lifting Venezuelan crude told them the sales are allowed under sanctions as long as proceeds paying off debts remain out of Maduro’s reach, which is the main intention of the measures, one of the sources said. 

Reporting by Marianna Parraga in Mexico City, Mircely Guanipa in Punto Fijo, Venezuela, and Deisy Buitrago and Luc Cohen in Caracas. Additional reporting by Timothy Gardner in Washington; Editing by Daniel Flynn, Gary McWilliams and David Gregorio

Friday, January 10, 2020

Venezuelan oil exports fell by a third in 2019 as U.S. sanctions bit: data

(Reuters) - Venezuela’s oil exports plummeted 32% last year to 1.001 million barrels per day, according to Refinitiv Eikon data and state-run PDVSA’s reports, as a lack of staff and capital drove output to its lowest level in almost 75 years and U.S. sanctions shrank exports markets.

The drop would have been steeper if some of PDVSA’s largest customers had not bought Venezuelan oil through intermediaries or trans-shipped cargoes off several ports around the world so the country of origin was blurred, according to industry sources, vessel trackers and Eikon data. 

In terms of customers, Russia’s Rosneft was the largest receiver and intermediary of Venezuelan oil with 33.5% of total exports, followed by state-run China National Petroleum Corp (CNPC) and its units with 11%, and Cuba’s state-run Cubametales with 7%, the data showed.

PDVSA did not reply to a request for comment. 

China emerged as the first destination for Venezuelan oil in 2019 as sanctions deprived PDVSA of its primary market, the United States. That was despite CNPC and its units halting the loading of crude at Venezuelan ports in the second half. 

Venezuela sent an average of 319,507 bpd to China in cargoes covering direct routes as well as in vessels chartered by intermediaries that ended up reaching Chinese refiners after trans-shipping the oil off countries like Malaysia, the Eikon vessel tracking data showed. 

U.S. sanctions on Venezuelan and Iranian oil, which along with lower output affected global supply of heavy crude, contributed to driving oil prices up more than 20% last year. But prices are expected to remain rangebound this year as U.S. supplies have swelled. 

OPEC-member Venezuela produced 1.01 million bpd of crude from January through November, according to official numbers. The collapse in output under President Nicolas Maduro has dragged what was once Latin America’s wealthiest nation into an economic tailspin. 

Analysts monitoring Venezuela forecast a further decline in crude production this year due to the combination of sanctions and lack of investment and staff. Market intelligence firm Kpler expects Venezuela’s production to average 600,000-800,000 bpd in 2020, said its global energy economist, Reid I’Anson. 

Analysts said it was hard to predict how sharply exports would fall this year. 

“Washington wants more sanctions but PDVSA’s customers are looking for formulas to continue buying,” said Francisco Monaldi, of Rice University’s Baker Institute, who forecasts output will fall this year at least at the same rate as the years preceding sanctions. 

“The main questions are how much the United States will enforce sanctions on Venezuela? Is Washington ready to act against PDVSA’s partners and customers?,” Monaldi added.


A frozen trade relationship with the United States allowed Asia in 2019 to strengthen its position as the main destination for PDVSA’s oil with China, India, Malaysia, Japan and Singapore receiving cargoes, sometimes only for blending and transferring. 

Venezuela’s oil shipments to Asia averaged 647,000 bpd, or 65% of total exports in 2019. 

India was the second-largest receiver of Venezuela oil last year with 217,739 bpd. Refining firm Reliance Industries suspended direct purchases from PDVSA in the second quarter, but resumed them later in 2019 after reaching a new swap deal allowing PDVSA to receive fuel cargoes in exchange. 

Europe was the third-largest destination for Venezuelan oil, also through swaps allowed under U.S. sanctions. European refiners, mainly Spain’s Repsol, received an average of 118,980 bpd last year, according to the data. 

Cuba was fourth with 70,359 bpd, a number below the average of recent years, but high considering that other Caribbean nations stopped receiving Venezuelan oil even before sanctions hit, due to PDVSA’s declining output. 

Former PDVSA executives and union leaders attribute the slump in oil production to a lack of capital and a recent exodus of about 30,000 workers, around a quarter of total staff reported in 2016, the last year the firm published its annual report. 

PDVSA and its joint ventures also struggled to export oil that had accumulated in storage tanks amid a shrinking portfolio of customers due to the sanctions announced by Washington a year ago to oust Maduro. 

The mounting stocks forced the firm to cut output while converting oil upgraders into blending stations designed for producing the crude grades demanded by Asian clients. 

Venezuela, which has the world’s largest crude reserves, imported an average of 155,674 bpd of fuel and diluent naphtha in 2019, in line with recent years but too little to cover the gap left by PDVSA’s very low domestic refining, resulting in intermittent shortages of motor fuel during the year. 

Reporting by Marianna Parraga in Mexico City, with additional reporting my Mircely Guanipa in Punto Fijo, Venezuela; Editing by Daniel Flynn, David Gregorio and Dan Grebler

Thursday, January 9, 2020

Saudi state oil tanker company suspending shipments through Hormuz - FT

What is the Strait of Hormuz?

The Financial Times reports that Saudi state oil tanker company is suspending shipments through Hormuz following Iranian missile strikes on US military bases in Iraq.
“I think a lot of people are waiting to see if there is any attacks or direct involvement of tankers,” said Richard Matthews, head of research at Gibson shipbrokers was reported as saying. “Beyond the obvious heightened risk, most people are in wait-and-see mode. We haven’t seen a significant shift in tanker rates or insurance rates yet, but it is still very much early days.”

Wednesday, January 8, 2020

Exclusive: U.S. mulls sanctions against Venezuelan lawmakers over bid to seize congress - sources

Juan Guaidó

WASHINGTON (Reuters) - The Trump administration is considering sanctions against some of the Venezuelan lawmakers who took part in a bid supported by President Nicolas Maduro to wrest control of the country’s congress from U.S.-backed opposition leader Juan Guaido, according to two people familiar with the matter. 

Deliberations over the possible sanctions targets, including Maduro-backed lawmaker Luis Parra and more than a dozen others, are in the early stages, and a final decision is not imminent, the sources told Reuters on Tuesday. 

Venezuelan troops blocked Guaido from entering parliament on Sunday for what was expected to be his re-election as head of congress, allowing Maduro’s socialist party to hand the post to Parra. Later in the day, opposition legislators quickly re-elected Guaido - recognized by dozens of nations as Venezuela’s rightful interim leader - at the offices of a pro-opposition newspaper. 

“We go after those who undermine the constitution,” said one of the sources, a high-ranking U.S. government official who declined to be named because details of the deliberations have not been made public. “This is no different.” 

The White House declined comment. The State Department did not immediately respond to a request for comment. 

The measures against the lawmakers could start with bans on their travel to the United States, a restriction that Washington has already slapped on dozens of Maduro allies, and might later involve financial sanctions against them, according to a person familiar with the matter.

Special envoy Elliott Abrams said the United States was looking at additional sanctions to step up pressure on the Venezuelan government on Monday, but did not specify potential targets. 

Last January, Washington recognized Guaido as the OPEC nation’s legitimate interim president and began ratcheting up sanctions and diplomatic pressure in an effort to oust Maduro. 

A year later, Maduro remains in power, backed by the military as well as Russia, China and Cuba. A senior administration official told Reuters in October that Trump’s frustration over the lack of results had spurred aides to ready further actions. 

Reporting by Matt Spetalnick and Alexandra Alper; Editing by Peter Cooney, Leslie Adler and Lisa Shumaker

Tuesday, January 7, 2020

Juan Guaido Reclaims Venezuela National Assembly After Parra’s Exit

Guaido Bursts In to Reclaim Venezuela's National Assembly

Juan Pablo Guanipa, vice president of the National Assembly, left, swears in Juan Guaido in Caracas on Jan. 7.
Photographer: Carlos Becerra/Bloomberg

Venezuelan opposition leader Juan Guaido on Tuesday reclaimed the National Assembly that he heads, pushing past armed guards two days after President Nicolas Maduro’s loyalists blocked him from attending his own re-election.

 Juan Guaido speaks with a megaphone to the crowd as he attempts to enter the National Assembly in Caracas on Jan. 7, 2020.
 Juan Guaido speaks with a megaphone to the crowd as he attempts to enter the National Assembly in Caracas on Jan. 7, 2020. Photographer: Carolina Cabral/Getty Images
  • After struggle with police, opposition made it into building
  • Pro-government faction tried to hold session without quorum 
Guaido and his allies burst through the legislative palace’s doors minutes after a pro-government group led by lawmaker Luis Parra, who had claimed the presidency of the body, scurried to a next-door building for refuge.

Guaido climbed to the dais and took the microphone as opposition lawmakers sang the national anthem, which include the words “Death to oppression.” Lawmakers then voted to recognize Guaido’s re-election as head of the National Assembly for 2020. They rejected Parra’s attempt to claim the role thanks to a Sunday vote taken amid chaos in the chamber as Guaido’s supporters were barred, preventing a quorum.

“It’s a great feat for us to be here today,” Guaido said Tuesday after reclaiming his place. “This is proof of what’s possible if we’re firmly united and organized.”

Electricity was cut off at one point, prompting lawmakers to read the attendance list with the help of mobile phone lights and without microphones. Outside, armed civilian groups known as colectivos cornered and forcibly removed a group of journalists and lawmakers, beating and stealing from some of those gathered.

“The president of the National Assembly is Luis Parra; whoever is with Guaido must leave now,” they shouted.
The attempted takeover of what was Venezuela’s last democratic institution has deepened the standoff between Maduro and Guaido, who last year was recognized as the nation’s legitimate leader by more than 50 countries. The government had yet to comment on Guaido’s return to the assembly Tuesday.

“The opposition comes out well, in the sense that it managed to enter its natural space and hold a session,” said Ricardo Sucre, a political analyst and professor at Venezuela’s Central University. “It sends an image of a cohesive, organized opposition, that could achieve a concrete effect.”

Venezuela, a formerly prosperous petrostate, has spiraled into misery after decades of misrule under Maduro and his predecessor, Hugo Chavez. The failure of their socialist program has been exacerbated by a plunge in oil prices and U.S. sanctions. Crucial oil infrastructure is defunct, hyperinflation has ravaged the economy and food and medicine are scarce.


Venezuelan opposition lawmakers force their way into the National Assembly in Caracas.
Photographer: Federico Parra/AFP via Getty Images
During Tuesday’s session, Guaido pledged to find a solution to Venezuela’s crisis “so we can live with dignity and prosperity” and said the next session would take place Jan. 14. On the way out of the legislative palace, Guaido and his deputies covered their eyes and mouths as they were met with tear gas.

At a news conference later in the day, he demanded that the regime explain why it deployed military personnel to blockade the assembly building and called for protests and rallies. He said the opposition would appoint ambassadors to Bolivia, El Salvador and Uruguay.

Parra, whom the assembly is investigating in connection with a graft case, claims to have been voted in legitimately as the new national assembly head on Sunday. The U.S. is considering sanctioning lawmakers who supported his claim, according to a person familiar with the deliberations.

Guaido for his part, was confirmed Sunday by 100 lawmakers in an off-site vote after he was barred from entering the chamber.

Guaido Bursts In to Reclaim Venezuela's National Assembly
Supporters of Guaido confront members of the Bolivarian National Guard outside the National Assembly building in Caracas.
Photographer: Carlos Becerra/Bloomberg
“The opposition lawmakers are putting on a little show,” socialist lawmaker and former labor minister Francisco Torrealba said Tuesday. “This confrontation within the right is embarrassing, they’re hitting each other instead of solving the crisis fueled by U.S. politics.”

— With assistance by Nicolle Yapur, and Nick Wadhams

Monday, January 6, 2020

Venezuela’s last democratic institution falls as Maduro attempts de facto takeover of National Assembly

Venezuela's National Assembly president Juan Guaido gestures before a crowd of opposition supporters Vargas, Venezuela, on January 13, 2019; Nicolas Maduro speaks from the balcony of Miraflores presidential palace in Caracas, Venezuela, Wednesday, Jan. 23, 2019.Venezuela's National Assembly president Juan Guaido gestures before a crowd of opposition supporters during an open meeting in Vargas, Venezuela, on January 13, 2019; Ariana Cubillos/AP

CARACAS, Venezuela — The government of President Nicolás Maduro attempted a de facto takeover of Venezuela's legislature on Sunday, swearing in its own candidate as head of the National Assembly in a move apparently orchestrated to rob international credibility from Juan Guaidó, who had led the body and has staked a rival claim as head of state.

The dramatic events marked a sharp escalation in Maduro’s gambit to end Guaidó’s quest to unseat him and sparked immediate condemnation by Washington, which has strongly backed the 36-year-old opposition leader. Opposition officials declared the move an effective “parliamentary coup” meant to consolidate Maduro’s near-dictatorial powers.

“Today, they dismantled the rule of law, assassinating the republic, with the complicity of a group of traitor lawmakers,” Guaidó told reporters outside the parliamentary building.

Later Sunday, Guaidó sought to counter the move by gathering opposition lawmakers at the headquarters of El Nacional, a local newspaper, to cast an official vote. In a 100-to-0 tally — enough to put him over the top in a full session of the 167-seat chamber — those present reelected Guaidó as head of the legislature. Twenty-eight of the 100 were votes from stand-ins of exiled lawmakers.

But Maduro, in an address to the nation, hailed what he called the National Assembly’s “new leadership.”

“A very corrupt person leaves the presidency of the National Assembly today, as a millionaire, a billionaire,” said Maduro, referring to Guaidó. He added, “to justify their defeat, they say that a security operation was launched” to stop them.

The attempt to replace Guaidó — who declared himself interim president a year ago and promised to oust Maduro for claiming reelection in a tainted 2018 vote — appeared to be a carefully organized plan many weeks in the making.

Opposition officials have warned since last month that Maduro’s government was handing out suitcases of cash to woo lawmakers. But they thought they had successfully countered the operation, and on Sunday, Guaidó began the day anticipating his reelection as head of the National Assembly, viewed internationally as the last democratic institution in the authoritarian South American state. Guaidó’s claim as the nation’s true president — recognized by nearly 60 countries, including the United States — has been based on his status as the assembly’s chief.

But security forces loyal to Maduro formed a cordon early Sunday around the assembly building in central Caracas, blocking some opposition lawmakers from entering. Lawmakers who back Maduro — including several allegedly involved in a government plot to buy votes — were allowed to pass. At one point, Guaidó sought to scale the spiked wrought-iron fence surrounding the assembly and force his way in, according to a video issued by the opposition.

At the same time, Luis Parra — a former opposition politician who was one of several lawmakers accused last month of accepting government bribes — announced his surprise candidacy against Guaidó via Twitter on Sunday morning. Hours later, his swearing-in was shown on state television.

Security forces loyal to the Maduro government stand guard outside the National Assembly on Sunday. (Yuri Cortez/AFP/Getty Images)Security forces loyal to the Maduro government stand guard outside the National Assembly on Sunday. (Yuri Cortez/AFP/Getty Images)

Parra is thought to have had the support of at least 40 lawmakers from Maduro’s party and an unknown number of others who the opposition claims have been bribed. But there was no evidence that an actual vote had taken place. The opposition also insisted that there had been no legal quorum because Guaidó, the chamber’s leader, had not been present to validate the session.

Sedition within the opposition, however, appeared to run deeper than some had feared. For instance, Luis Stefanelli, an opposition lawmaker who fled the country after claiming to reject a government bribe, had appointed a “loyal” stand-in to vote in favor of Guaidó on Sunday. But he said in a tweet that his stand-in had “betrayed him” and had instead stood with the government’s pick, Parra.

The government’s action appeared designed to complicate Guaidó’s international recognition and provide some nations that might be considering pulling their support for him additional legal cover to do so.

But the move also creates new logistical and technical hurdles for an already beleaguered opposition, including how and where to continue meeting and passing legislation.

Guaidó’s strongest backers — particularly in Washington — disregarded Sunday’s maneuvers in the National Assembly as dictatorial theatrics. The move comes as the United States — which has slapped tough sanctions on Maduro’s government, including an oil embargo — is weighing more confrontational steps, such as a possible naval blockade of Venezuelan oil being shipped to Cuba, the Maduro government’s chief regional ally.

In a statement, Secretary of State Mike Pompeo congratulated Guaidó on his “re-election” and condemned the “failed efforts” by Maduro to “negate the will of the democratically elected National Assembly.”

He charged Maduro’s government with seeking to “forcibly” deny access to Guaidó and other lawmakers after realizing its campaign of “bribery and intimidation” had failed to secure enough votes to oust him.

“Juan Guaido personifies the Venezuelan people’s struggle to reclaim the prosperity and democracy they once enjoyed,” Pompeo said in the statement. “No regime thugs, no jail cells, and no bribery or intimidation can subvert the will of the Venezuelan people.”
Few immediately saw Maduro as gaining international support from the move. A host of nations, including Brazil, Canada and Chile, quickly rejected Sunday’s attempt to install Parra. In a statement, the European Union said Sunday’s “serious irregularities” constituted “a new step in the deterioration of the Venezuelan crisis. As a consequence, the E.U. continues to recognize Juan Guaidó as the legitimate President of the National Assembly until the conditions for a proper voting session can be assured.”

The Maduro government has made attempts to declaw the National Assembly since the opposition won a sweeping majority in 2015. In 2016, the pro-Maduro Supreme Court officially stripped it of its legislative authority. A year later, the court announced it would dissolve the institution, a threat it never followed through on after the ruling generated internal controversy and street protests. In 2017, Maduro’s government created a “Constituent Assembly,” made up exclusively of its own backers, which sought to supplant the National Assembly’s authority.

But the opposition has managed to keep the institution at the center of its fight to oust Maduro, holding sessions weekly and using it as a legal backup to Guaidó’s claim to the presidency. It has given Guaidó constitutional legitimacy in the eyes of foreign powers, based on the fact that he and his supporters were elected by a majority in 2015 — the last time a vote here was seen as generally democratic.

The government’s bold move on Sunday comes at a dangerous time for the opposition. After a year in which many Venezuelans believe he overpromised how quickly Maduro could be forced from office, Guaidó has seen his popularity sharply slip. Attempts to turn the nation’s top military brass against Maduro have failed, and the opposition is reeling from accusations of turncoats and festering corruption within its own ranks.

Saudi Aramco has seen $200 billion of market value erased since its record-shattering IPO as Mideast tensions drag it lower

FILE PHOTO: A sign of Saudi Aramco's initial public offering (IPO) is seen during a news conference by the state oil company at the Plaza Conference Center in Dhahran, Saudi Arabia November 3, 2019. REUTERS/Hamad I Mohammed/File Photo

Saudi Aramco's market value has tanked by $200 billion since its post-IPO peak, and the stock is falling faster in the wake of heightened tensions between the US and Iran.

The world's most highly valued company fell 1.7% Sunday and as much as 1.2% Monday. Aramco became the first company to hit a $2 trillion valuation on December 12, but its market cap now sits at roughly $1.8 trillion.

Aramco shares have since pared some losses through Monday, trading roughly 0.1% lower at 34.50 riyals ($9.20) per share. The two-day drop placed shares at their lowest point since the firm's December 11 initial public offering, and just 7% higher than its offering price of 32 riyals ($8.53). 

Global stocks continue to fall as the US's assassination of Iranian Major General Qassem Soleimani late Thursday inflamed tensions between the two nations. Gold, a traditional safe-haven asset, on Monday hit its highest price since 2013.

Aramco stock fell despite oil surging to $70 per barrel, suggesting higher oil prices were overshadowed by boosted risk in the Gulf region.

Some analysts have said Iran could target oil infrastructure and raise the commodity's cost to hit back at the US. Any such retaliation could resemble the attacks on Aramco facilities in September. The firm's oil production was cut in half after explosive-armed drones disabled several of its facilities. The US and Saudi Arabia blamed Iran for the strike, while Houthi rebels from Yemen claimed responsibility.

Aramco returned to its normal output levels in just one month and pushed forward with its IPO, but the attacks left many investors mulling the company's exposure to geopolitical risk.

Though the US airstrike pushed Aramco lower, the state-run company has several defenses to keep its shares from falling too far. Saudi Arabia government institutions sank $2.3 billion into the company's stock ahead of its record-breaking IPO, giving the kingdom a stronger hold on Aramco's stock price. 

Saudi Arabia has also marketed Aramco shares as a stable investment in the kingdom's future. The oil giant and its December IPO are key components in the government's plan to diversify away from oil. The kingdom could intervene to keep the stock price stable, Asha Mehta, Acadian Asset Management senior portfolio manager, told Bloomberg in December.

"There's broad awareness that the government is a large investor and that they're willing to step in during times of market volatility to protect prices," Mehta said.

Friday, January 3, 2020

Dow drops 200 points after US airstrike on Iran’s top military leader spikes oil

Iranians tear up a US flag during a demonstration in Tehran on January 3, 2020 following the killing of Iranian Revolutionary Guards Major General Qasem Soleimani in a US strike on his convoy at Baghdad international airport.
Atta Kenare | AFP | Getty Images

Stocks fell sharply on Friday after the U.S. confirmed that an airstrike killed Iran’s top military commander, sending oil prices surging and hiking geopolitical concerns.

The Dow Jones Industrial Average plunged 212 points, or 0.8%. The S&P 500 slid 0.8% along with the Nasdaq Composite. The Dow briefly dropped more than 360 points at the open.

U.S. crude oil futures shot up around 3.5% to $63.31 per barrel, raising concerns about an energy shock on the global economy. Airline stocks fell broadly on the threat of higher oil prices. United, American and Delta all dropped more than 2%.

“Global oil markets will be volatile for weeks to come,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note. “There’s a reason, finally, for caution in the stock market.”
“Eventually there will be an uneasy truce ... But that’s a long, long way off; this will get worse before it gets better,” he added.

Investors largely fled risk assets such as stocks in favor of gold and Treasurys and other traditional safe havens. Gold futures jumped 1.3% to $1,547.80 per ounce. The benchmark 10-year Treasury yield, which moves inversely to the price, dropped to around 1.83%.

The Cboe Volatility Index (VIX), widely considered to be the best fear gauge on Wall Street, traded about 2 points higher, or 18.4%, at 14.77.

Energy stocks were the lone winner on Friday. The Energy Select Sector SPDR Fund (XLE) rose more than 1%. Concho Resources and Marathon Oil rose more than 2% each while Apache jumped traded more than 1.5% higher.

The U.S. announced late Thursday that it had killed Iran’s top commander, Gen. Qasem Soleimani, in Baghdad in an airstrike. Soleimani had been a key figure in Iranian politics, and his death has raised concerns over a potential retaliation from the Iranian forces.

Iranian Foreign Minister Mohammad Javad Zarif warned on Friday that Iran would retaliate against the U.S. for its actions.

“It’s a game-changer,” Dryden Pence, chief investment officer at Pence Wealth Management, told CNBC’s “Squawk Box” on Friday. “We now have vast, broader array of weapons systems that the president has at his disposal. We’ve been able to weaponize economic sanctions now where we can go after individuals … but now I think the ultimate sanction that the president is able to use is an airstrike.”

Pence added, however, that any market volatility “will be short-lived.”

Wall Street loaded up on safer assets on fears that an oil spike might spark a recession. That risk is also heightened by the fact that the global economy has been struggling amid a global manufacturing slowdown.

The market moves come after U.S. equities rose to all-time highs on Thursday on the back of a strong performance in the tech sector. However, the optimism entering the new year seems to be fading amid political tensions, including North Korea and the impeachment of President Donald Trump.