for Latin America
Populist candidates in Colombia, Brazil, and Mexico have campaigned on dramatic new reforms for state-run oil industries and are now gaining momentum in polls.
Upcoming presidential elections in Latin America could be decisive in advancing policies to maintain oil revenues. However, in the current climate of growing polarization and deeply unpopular incumbents, the elections are generating tremendous political uncertainty.
While crude and products will see only modest changes from the expansion of the Panama Canal, the effects for LNG and propane will be much greater. The U.S. LNG industry will now have access to a transit route that can accommodate larger tankers at a time the industry is primed to export volumes to Asia.
The combined effect of the economic collapse, lack of maintenance at oilfields and refineries, and power shortages could cut off at least a quarter of a million barrels per day of oil production this year.
Venezuela is set to vote on parliamentary elections on December 6, a possible turning point that could create the first major cracks in nearly two decades of uncontested Chavismo rule. A perfect storm is hitting Venezuelan President Nicolas Maduro all at once, with low oil prices at the center of the turbulence.
The two OPEC Latin American countries, Venezuela and Ecuador, have always held unique positions in the global oil market because of their geographical advantage of being close to the U.S. But both have seen their importance fade dramatically against the backdrop of rising North American production and the drastic fall in oil prices.
Mexico's historic initial auction, although it was a bust, is a positive reflection of how major producing countries in Latin America are moving away from resource nationalism—for now, at least—as they struggle in the current low oil price environment that shows no sign of turning around.