Cuba weighs odds of US thaw against Venezuela ties

  • Market: Crude oil, Electricity, Oil products
  • 12/11/20

Cuba is hoping the impending political shift in Washington will lead the US to ease its longstanding economic embargo, but any new rapprochement would likely come at the price of the island's close ties to Venezuela.

Cuba was among many countries that swiftly congratulated Joe Biden for his victory in the 3 November US elections in spite of incumbent president Donald Trump's refusal to concede. Russia, China and Turkey are still holding off.

In recognizing the "new course" chosen by the US electorate, Cuban president Miguel Diaz-Canel signaled an openness to "the possibility of a constructive bilateral relationship that is respectful of differences."

One Caribbean diplomat in Havana told Argus that Cuban officials felt "some relief" that the Trump era was giving way to a "more flexible" administration.

President-elect Biden served as vice president in 2008-16 under Trump's predecessor Barack Obama who spearheaded a short-lived thaw in relations with Cuba. During the presidential campaign in October, Biden signaled a willingness to resume that overture.

"The (Trump) administration's approach is not working. Cuba is no closer to democracy than it was four years ago," he said. Biden has expressed support for diplomacy over "regime change".

The US embargo on Cuba is a Cold War relic dating back to the early 1960s. After a 1990s "special period" of malaise that followed the collapse of its Soviet patron, Havana moved into Venezuela's orbit under late president Hugo Chavez, an acolyte of Cuba's late revolutionary leader Fidel Castro. In a bilateral deal signed in 2000, Venezuela began supplying oil to Cuba in exchange for the deployment of Cuban experts in healthcare, security, sports and other areas. The opaque arrangement has endured for two decades in spite of the steep decline in Venezuela's oil production under Chavez's successor, Nicolas Maduro.

One of the recent drivers of the energy ties is the escape valve that the island provides for Venezuela's state-owned PdV when oil storage fills up at home, because the US sanctions have impeded exports.

Under the Trump administration, the US levied financial and oil sanctions in a failed effort to depose Maduro in favor of opposition leader Juan Guaido. Over the past year, the US targeted tankers and shipping companies to try to cut off Venezuela's oil supplies to Cuba, with little direct impact.

Siege narrative

For Havana and Caracas, the sanctions drive a common political narrative that blames the US for prolonged hardship, manifested by severe shortages of fuel for transportation, agriculture and power generation. In an unusually detailed 22 October assessment, the Cuban government denounced Trump's more aggressive sanctions for blocking access to critical spare parts, worsening a fuel shortage and interrupting the island's offshore oil exploration campaign.

Both impoverished countries rely heavily on financial remittances from expatriates and their descendants, particularly in the US state of Florida where many of them voted for Trump.

The campaign of the outgoing Republican president appealed to this conservative subset of Latino voters with anti-socialist messaging that resonated with their past experiences of repression and exile, distorting the moderate slant of Biden's Democratic platform that includes temporary asylum for Venezuelan immigrants that Trump has rejected.

There is a realization across the region that any solution to Venezuela's impasse would have to include economic incentives for Cuba and possibly a mediating role similar to its participation in Colombia's 2016 peace deal.

But coupled with the priority of tackling the Covid-19 pandemic, the Florida-focused domestic political dynamic is likely to inhibit Biden from quickly reopening diplomatic channels to Havana. The Venezuela sanctions framework will probably remain in place as well. But a Biden administration would show more openness toward Venezuela and Cuba on humanitarian grounds, with fewer sticks and more carrots to free political prisoners and introduce democratic reforms.

The Trump administration's controversial shutdown of diesel swaps for Venezuela, for instance, could be lifted, even as a path for negotiations is reopened in line with EU-led efforts. For Cuba, some travel and financial restrictions could be eased.


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19/04/24

Limited strike on Iran opens door to de-escalation

Limited strike on Iran opens door to de-escalation

Dubai, 19 April (Argus) — A limited aerial assault on the central Iranian city of Isfahan earlier today could mark the beginning of the end of the latest escalation in the Mideast Gulf. Iranian state media reported in the early hours of Friday, 19 April, several explosions over Isfahan at 04:00 local time. These were later confirmed by the Iranian military to have been the result of air defences bringing down three small drones over the city. Isfahan is the home to a number of strategically important facilities, among them the Shekari airbase that houses some of Iran's F-14 Tomcat fighter planes and SU-24 Sukhoi bombers, and a uranium conversion facility. There was "no impact or damage" to either, according to Iranian army commander-in-chief Seyyed Abdolrahim Mousavi. Other Iranian officials also sought to downplay the strike. Hossein Dalirian, spokesman for Iran's National Center for Cyberspace, said on social media platform X that it was so minor "it would not be considered an attack anywhere in the world." Ice Brent crude futures rose by nearly $3/bl earlier today, but are now trading below the previous settlement level. Iran and the wider Mideast Gulf region were on high alert as Israel weighed its options for a response to Tehran's assault on Israeli territory last weekend. That attack, involving more than 300 drones, ballistic missiles and cruise missiles, was the first ever direct assault on Israel from Iranian territory. As yet, there has been no official confirmation from either side that today's attack originated from Israel. Media reports quoted unnamed US and Israeli officials saying Israel had launched the drones, and Oman's foreign ministry condemned Israel "for its attack this morning on Isfahan". Iran's attack on Israel last weekend was itself in response to a suspected Israeli air strike on an Iranian diplomatic compound in the Syrian capital, Damascus, at the start of April. That killed seven members of Iran's powerful Islamic Revolutionary Guard Corps (IRGC), including two generals. Despite its magnitude, the Iranian retaliation was not only highly choreographed, but also telegraphed to key stakeholders beforehand in an effort to limit damage and casualties. Israel said immediately after the attack that almost all of Iran's drones and missiles were intercepted with the help of allied forces in the region and that there were no fatalities, only "light" damage to the Nevatim military base in Israel's Negev desert. De-escalatory strike The limited nature of Iran's strike prompted Israel's western allies to urge it to show restraint. The US appealed to Israeli prime minister Benjamin Netanyahu to "take the win" and claim victory for its defence. But as it became increasingly clear that a response without a military dimension would be unpalatable for Israel, the US and Europe turned their efforts to making sure whatever Israel chose to do was also limited and fell below a threshold that could trigger yet another escalation in tensions. "This was probably the level of attack that on one hand was necessitated by internal Israeli calculations within the security cabinet and broader political coalition, and by virtue of the pressure by allies and what the US was willing to countenance," said Geneva Graduate Institute senior research associate Farzan Sabet. "It was a limited strike with the message that we can hit you anywhere, anytime, and without having to resort to a major strike involving 300-plus missiles." In the days following Iran's attack on Israel, several key IRGC figures said Tehran had "decided to create a new equation with Israel" ꟷ specifically that Tehran would retaliate to any Israeli attack on its interests or citizens from Iranian territory. This would be a shift from the previous status quo, which would see Israel regularly target Iranian interest and officials in third countries, many times without response from Tehran. But the limited nature of Israel's latest attack, and the very concerted effort by Iranian officials, military personnel and media to downplay its severity and impact so far, suggests it could feasibly provide a de-escalatory off-ramp for Iran. "Should Israel's response be limited to this, the Islamic Republic will not be under pressure to retaliate," said Arab Gulf States Institute senior fellow Ali Alfoneh. But is too early to say whether today's incident is the totality of Israel's response. "We're running up to [the Jewish holiday of] Passover [on 22-30 April]. The Israelis may not have wanted to carry out a major retaliation ahead of Passover so as to avoid the threat of war hanging over the country during the holiday," Sabet said. "So it is very possible that more [retaliatory attacks] could come after Passover." By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Karoon cuts 2024 guidance on lower US output


19/04/24
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19/04/24

Karoon cuts 2024 guidance on lower US output

Sydney, 19 April (Argus) — Australia-listed oil producer Karoon Energy has cut its production guidance for 2024 to reflect lower production from its stake in the Who Dat floating production system in the US' Gulf of Mexico. Who Dat's weaker well and facility performance has led to the lower guidance, with Karoon now expecting to produce 29,000-34,000 b/d of oil equivalent (boe/d) in 2024, down from a previous 31,000-37,000 boe/d guidance. Karoon said it and joint-venture partner LLOG Exploration will continue to prioritise higher value oil production over gas for the remainder of the year. The firm's January-March output rose by 17pc against October-December 2023 . Who Dat's production on a net revenue interest (NRI) basis was 9,000 boe/d for January-March, with Karoon downgrading its forecast NRI production from 4mn-4.5mn boe in 2024 to 3-3.5mn boe. But output from Karoon's Bauna asset offshore Brazil was 15pc lower than the previous quarter because of continuing reliability problems with Bauna's floating production, storage and offloading (FPSO) vessel, the shut-in of the SPS-88 well for the full period and natural field decline. Production for January-March at Bauna was 24,000 b/d, down from 28,000 b/d the previous quarter. Karoon expects to resume production from the well during July-September following an intervention, assuming no delays in regulatory approval. Bauna's annual maintenance will take place next month with a three-week shutdown of the FPSO planned to boost reliability. By Tom Major Karoon Energy results Jan-Mar '24 Oct-Dec '23 Jan-Mar '23 y-o-y % ± q-o-q % ± Sales revenue ($mn) 197 209 144 37 -6 Production (b/d) 34,000 29,000 22,000 55 17 Sales volume (b/d) 30,000 28,000 22,000 36 7 Average prices ($/bl) Bauna oil price 76 83 73 4 -8 Who Dat sales gas ($/mn ft³) 2.95 2.22 n/a n/a 33 Who Dat oil, condensate, NGLs 78 73 n/a n/a 7 Source: Karoon Energy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Australia’s Woodside records weaker Jan-Mar LNG output


19/04/24
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19/04/24

Australia’s Woodside records weaker Jan-Mar LNG output

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Wind capacity additions down 93pc under AMLO


18/04/24
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18/04/24

Wind capacity additions down 93pc under AMLO

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TUI Cruises receives methanol-ready ship


18/04/24
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18/04/24

TUI Cruises receives methanol-ready ship

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