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Venezuelan Crisis Weighs On Oil Markets

Author: Arpit Chandna/Wednesday, January 30, 2019/Categories: Exclusive

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Venezuelan Crisis Weighs On Oil Markets

The political crisis in oil-rich Venezuela has turned the heads of various countries around the globe with fears of US-sanctions on the Latin American country rising, which would result in tighter oil supplies.

Venezuela has been in the midst of turmoil for a number of years. The latest trigger came on January 23 when the leader of the legislature Juan Guaidó declared himself as the acting President of the country, challenging the powers of President Nicolas Maduro. Maduro was elected to the office for the second term just two weeks earlier. Minutes after Juan Guaidó declared himself as the acting President, Donald Trump, President of the United States of America, recognised him as the legitimate head of state, enraging Maduro who severed ties with the US and asked US diplomats to leave the nation.

Countries across the world started taking sides, backing one of the two leaders claiming to be president of the crisis-stricken country that holds the world’s largest crude oil reserves. At present, communist countries like Cuba, Bolivia, Russia, China, and Turkey stand by Maduro, who explicitly thanked them for their support. As per reports from Moscow, “The President of Russia expressed support for the legitimate Venezuelan authorities amid the worsening of the internal political crisis provoked from outside the country. He emphasised that destructive external interference is a gross violation of the fundamental norms of international law”.

On the other hand, other Latin Americans nations such as Brazil, Colombia and Argentina have lent their support to Guaidó. European nations Germany and Spain have asked Maduro to “immediately” agree to hold new elections.

Meanwhile, India continues to trade with Venezuela despite the ongoing crisis. Indian refiners buy more than 400,000 bpd of oil from the troubled Latin American country. In the past months, Venezuela has been the fourth largest oil supplier to India with the country importing crude oil worth US$5.8 billion in 2017-18 from Venezuela. Imports between April and October 2018 were valued at US$4.6 billion. Therefore, reflecting neutrality, India is avoiding taking sides in this political crisis and keeping away from recognizing the Venezuelan opposition leader as its President.

The author is a fundamental research analyst, Karvy Comtrade

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