Venezuela’s impact on oil markets could be far worse than expected, RBC’s Helima Croft says

CNBC-01Oil traders expecting steep production losses from one of the world’s largest producers are likely to be underestimating the severity of the country’s crisis, according to analysts at RBC Capital Markets.

In a research note published Monday, analysts at the global investment bank said while oil production in Venezuela is poised to “plunge” in 2018, the extent of its losses could be far worse than investors were anticipating.

“Given the severity of the crisis, we think market participants would be unwise to assume that Venezuelan production losses will simply mirror the several hundred-thousand barrels per day losses seen in 2014,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said in the note. …

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During the last several decades, the United States has invested billions of dollars in trying to help the governments of Latin America and the Caribbean deliver better lives for their citizens. This has meant helping them increase internal security by combating the illicit growing and trafficking in narcotics and the activities of terrorist groups, as well as helping them to shore up their democratic and free market institutions.

Unfortunately, in recent years, continued progress in these areas has been threatened, not least by the elections of radical populist governments in Venezuela, Bolivia, and Ecuador. These governments have instituted retrograde agendas that include the propagation of class warfare, state domination of the economy, assaults on private property, anti-Americanism, support for such international pariahs as Iran, and lackluster support for regional counter-terrorism and counter-narcotics initiatives.

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