The shale boom has created a world awash with crude, putting a lid on prices and markedly reducing U.S. dependence on imported energy. But there’s a growing problem: America is producing the wrong kind of oil.

Texas and other shale-rich states are spewing a gusher of high-quality crude — light-sweet in the industry parlance — feeding a growing glut that’s bending the global oil industry out of shape.

Refiners who invested billions to turn a profit from processing cheap low-quality crude are paying unheard of premiums to find the heavy-sour grades they need. The mismatch is better news for such OPEC producers as Iraq and Saudi Arabia, who don’t produce much light-sweet, but pump plenty of the dirtier stuff.

The crisis in Venezuela, together with OPEC output cuts, will exacerbate the mismatch. The South American producer exports some of the world’s heaviest oil and the Trump administration sanctions announced this week will make processing and exporting crude far more difficult. American refiners are scrambling for alternative supplies at very short notice.

“We still have some holes in our supply plan” over the next 30 days, Gary Simmons, a senior executive at Valero Energy Corp., the largest refiner in the U.S., told investors on Thursday. “We are not taking anything from Venezuela.”

Crude isn’t the same everywhere: the kind pumped from the shale wells of West Texas resembles cooking oil — thin and easy to refine. In Venezuela’s Orinoco region, it looks more like marmalade, thick and hard to process. Density isn’t the only difference — the sulfur content is also important, dividing the market into sweet and sour crude. Heavy crude tends to have more sulfur than light crude.

As Saudi Arabia, Russia and Canada cut production, and American sanctions force Venezuelan and Iranian exports lower, the market for low-quality crude is feeling the impact.

“The strength in the physical crude market continues, led by sour crude shortages,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London, echoing a widely held view within the market.

For consumers and politicians focused on the headline oil price for Brent and West Texas Intermediate, the most popular benchmarks, it may not matter much. Car drivers could even benefit, because too much light-sweet crude often leads to too much gasoline, and lower prices. On the flip side, truckers may find themselves short-charged, as refiners prefer heavy-sour crude to make diesel.

To oil traders in the physical market, it provides opportunities to profit from the changing price spreads between different crude varieties.

Few oil executives see the market changing anytime soon. The supply and demand balance could deteriorate further as OPEC deepens output cuts next month — Saudi Arabia has warned it will reduce production even further in February. Saudi oil exports into the U.S. last week fell to the second-lowest level in nearly a decade.

“OPEC cuts will sustain the tightness of heavy-sour crude,” Alex Beard, the head of oil at commodities trading giant Glencore Plc.

At the same time, U.S. shale production keeps growing, feeding the glut of light-sweet crude. The proportion of light crude in U.S. total petroleum output has risen to nearly 57 per cent, up from 51 per cent in early 2017, according to Bloomberg calculations based on U.S. Energy Information Administration data.

In the physical market, oil price differentials for some important varieties of heavy-sour crude — including Russia’s main export grade, Urals, and Mars Blend from the U.S. Gulf of Mexico — are at the strongest levels in five years, according to data compiled by Bloomberg.

Mars crude on Tuesday traded at a US$5.85 premium to U.S. benchmark West Texas Intermediate, compared with a discount of US$1.60 a barrel a year ago. Earlier this month, Heavy Louisiana Sweet crude traded at a rare premium to its sister variety Light Louisiana Sweet.

“OPEC is having the impact that they wanted in the physical market, which is tightening,” Marco Dunand, chief executive officer of commodities trader Mercuria Energy Group Ltd.

Heavy-sour crude is becoming so expensive — and gasoline refining margins are so low — that some U.S. refiners are running their most sophisticated kit at low rates in an effort to save money. Others are likely to follow.

The cracking margin for heavy-sour crude for the most sophisticated refineries in the Gulf of Mexico has fallen to about US$2.50 per barrel in recent days, compared with a five-year average of US$12 a barrel, according to data from consultant Oil Analytics Ltd.

The global refinery has no option but to adapt almost in real time. Valero is “changing the way it’s sourcing crude on a weekly, daily basis to try to get the best netback we can on the plants,” Joe Gorder, chief executive officer, told investors on Thursday.

In a new development, Iran has invited Pakistan’s legal team to thrash out if sanctions are effective on gas transactions or not after getting 10-12 legal questions from Islamabad side. Iran is of the opinion that Pakistan needs to get waiver from US on gas as India and other countries managed. Pakistan and Iran signed GSPA (gas sales purchase agreement) in 2009 under IP gas pipeline project in era of Pakistan Peoples’ Party. Since then the project could not get the shape, rather this mega project witnessed many upheavals in the shape of US sanctions first by Obama administration, and under latest scenario more stern curbs by Trump administration. The project was to be implemented under segmented approach meaning by that Iran had to lay down the pipeline on its side and Pakistan had to build the pipeline in its territory. The project was to be completed by December 2014 and come on stream from January 1, 2015. Under the penalty clause it was agreed by both sides that if Pakistan fails to have intake of Iranian gas from January 1, 2015, it will have to pay $1mn per day as penalty. Pakistan has failed to lay down pipeline of 781km in its territory on account of failure in arranging the funding mainly because of the sanctions imposed on Iran for its nuclear ambitions. But in 2016, the Nawaz government had shelved the project apparently in the wake of pressure of one of the leading UAE countries, but the then Petroleum and Natural Resources Minister Shahid Khaqan Abbasi had confirmed saying: “The government had deferred the project as government wanted the private sector to invest in the LNG terminals and import LNG in the country and to this effect, both new LNG terminals are being erected. “Now under the latest scenario, we have sent to Iranian legal team about 10-12 questions contesting the opinion of Iran on gas sanctions and in return Iranian side has invited Pakistan legal team to hold in-depth talks with its legal wizards over sanctions on gas transaction,” a senior official of Petroleum Division said.

However, Minister for Petroleum and Natural Resources, Ghulam Sarwar Khan said, “Yes, both the countries are engaged on this issue, but advancement on IP gas line is conditional with the lifting of the sanctions. However, the decision will be made keeping in view the supreme interests of the country.” The law firm of known international law expert of Ahmar Bilal Soofi on behalf of Pakistan has carved out a questionnaire of 10-12 for legal team in Iran. When contacted Bilal Soofi confirmed saying his firm has sent its response asking for the legal framework under which the sanctions become effective on some commodities not on gas. However, he opted to avoid to response when asked about the details of the questions saying it will not be proper to unravel the details as it is the prerogative of the government of Pakistan. Tehran earlier in November, 2018 asked Islamabad in official engagement held in Islamabad to get the waiver from US sanctions as India has managed, to implement the much delayed Iran-Pakistan (IP) gas line project. Iranian side in November talks had also emphasised arguing that there exists no sanctions particularly on gas transactions, so Pakistan should come forward and start working for IP gas line implementation. The Iranian team had asked authorities to initiate concerted efforts to get waiver from US for implementation of the IP gas line project if Pakistan considers that US sanctions are also active on gas- related transactions. Iranian side in favour of its arguments also said that India has managed the waiver and Pakistan needs to follow the suit. The Trump administration on November 5 imposed a new raft of sanctions on Iran after backtracking from landmark 2015 international agreement on Iran’s nuclear programme. However, the US has granted exemptions to eight countries that include China, India, Greece, Italy, Taiwan, Japan and South Africa allowing them to continue buying Iranian oil. Pakistan response said that waiver for eight countries exists for 6 months. And after that they will have to arrange other sources for oil business. However, Petroleum Division had assured Iran that it will consult the law firm which is on the panel of Inter-State Gas System (ISGS) which will be in touch with legal minds of Iran on this particular issue. “There were three kind of sanctions imposed from UN, US and EU on Iran,” a senior official said adding that EU sanctions have turned mild, but still there are some selected parameters. However, we need to examine all the sanctions’ impact and their nature and will come up with professional opinion on the issue Iran has raised with Pakistan.” Iran in February, 2018, according to the official, threatened to move arbitration court against Pakistan for unilaterally shelving IP gas line project invoking penalty clause of the Gas Sales Purchase Agreement (GSPA). Tehran had asked for the payment of over $1.2bn as under the penalty clause from January 1, 2015, as Pakistan is bound to give penalty of $1mn per day if it fails to have intake of gas from Iran under IP project.

BP has agreed to broaden its disclosure on greenhouse gas emissions to show how it thinks future investments in oil and gas align with UN-backed climate goals, it said yesterday.
Following talks with a large group of investors, BP also agreed to back a shareholder resolution on the measures at its annual general meeting (AGM), further evidence of the way the energy industry and investors are engaging on climate issues.
The agreement with a group of investors with $32tn under management, known as Climate Action 100+, comes weeks after rival Royal Dutch Shell agreed to introduce broad carbon emissions targets linked to executive pay.
Unlike other companies, BP has agreed to detail how major future investments in fossil fuels will be consistent with the 2015 Paris agreement to reduce carbon emissions to net zero by the end of the century by phasing out fossil fuels.
It will set out new metrics to measure greenhouse gas emissions from its operations.
BP said in a statement it would link carbon targets to the remuneration of 36,000 of its employees, including executive directors.
If the resolution is approved at the AGM, BP will introduce these changes into its reporting for 2019 onwards.
But the joint agreement revealed a fundamental rift with investors over BP’s statement that its strategy today was in line with the Paris agreement.
“Investors remain concerned that the company has not yet demonstrated that its strategy, which includes growth in oil and gas as well as pursuing low carbon businesses, is consistent with the Paris goals,” Climate Action 100+ said in statement.
BP plans to rapidly grow oil and gas production over the next five years thanks to more than a dozen new projects launched in recent years, as well as the $10.5bn acquisition of BHP’s US shale portfolio last year.
“We will be open and transparent about our ambitions and targets as well as our progress against them,” BP chairman Helge Lund said in a statement.
BP chief executive officer Bob Dudley has repeatedly said that while the oil and gas sector needs to play a role in the transition to low carbon energy, it still needs to meet growing demand for fossil fuels, particularly in emerging economies.
“BP is committed to helping solve the dual challenge of providing more energy with fewer emissions. We are determined to advance the energy transition while also growing shareholder value,” Lund said.
Investors and analysts have said many oil and gas projects, such as complex and expensive investments in Canada or some deepwater basins, will not be needed in the transition to a low carbon energy.
While BP agreed to increase its disclosure around climate, it also rejected another resolution tabled by climate activist group Follow This calling for emission reduction targets for all its operations, including emissions from products it sells to customers, known as Scope 3.
BP announced in April plans to keep carbon emissions flat over the decade to 2025 even as its oil and gas output was set to grow.
It also plans to invest up to $500mn per year on renewable energies such as solar, wind and power storage.

LONDON (Reuters) – Freezing temperatures across much of the northern United States have caused barely a ripple in natural gas markets showing how plentiful supplies have become thanks to the shale revolution.

In a sign of improving resilience, the gas and electricity networks have come through the most recent polar vortex with far less stress on gas supplies and electric generators than during the last major vortex in January 2014.

While policymakers in Washington debate whether the increasing interconnectedness of gas and electricity systems poses a risk to reliability, both industries are improving their ability to cope with extreme cold events.

Temperatures across the Midwest fell to multi-decade lows this week and daily gas consumption is forecast to have hit record levels on Jan. 31 (“U.S. natgas use hits record during freeze”, Reuters, Feb. 1).

Even before the cold snap, gas stocks were 13 percent below the five-year average at the end of last week, according to the U.S. Energy Information Administration (“Weekly natural gas storage report”, EIA, Jan. 31).

But futures prices for gas delivered in March continued to fall and are now close to their lowest levels for the last four years, well below $3 per million British thermal units.

Gas stocks have remained reasonably comfortable as a result of a relatively mild winter so far and plentiful supplies that have ensured stocks have drawn down more slowly than in previous years for any given level of cold.

The winter heating season has now passed the half-way point and, so far, temperatures have been slightly warmer than the long-term average, according to government data.

Cumulative population-weighted heating degree days between July 1 and Jan. 30 were 3 percent lower than the long-term average (“Degree day statistics”, U.S. Climate Prediction Center, Jan. 31).

This winter has been significantly colder than the exceptionally mild winters of 2015/16 and 2016/17 but about the same as winter 2017/18 and is still warmer than average so far.

The current cold snap is expected to be relatively short-lived, with temperatures forecast to rise significantly in the next few days and heating demand expected to fall back below the seasonal norm.

The impact on gas stocks and prices of generally mild temperatures has been compounded by much smaller draws on stockpiles for any given level of heating demand this year than in either 2017/18 or 2016/17.

The limited drawdown on gas stocks reflects the tremendous surge in production which is easily able to meet growth in domestic demand including from electricity generators.

U.S. gas production hit a record 2.70 trillion cubic feet in October and another near-record 2.65 trillion cubic feet in November, according to the Energy Information Administration.

U.S. gas production has been growing at rates of around 13 percent per year, the fastest rate for at least two decades.

Production is growing so fast that even with some of the coldest weather in decades supplies have remained adequate with no spike in prices and no forced curtailments by generators or significant loss of load.

John Kemp is a Reuters market analyst. The views expressed are his own.

SINGAPORE, Jan 31 (Reuters) - Asian refining margins for 10ppm gasoil eased on Thursday, a
day after hitting a one-week high, as crude prices firmed, but posted their first month of gains
following two straight months of declines.
    Refining margins or cracks for gasoil with 10ppm sulphur content were at
$13.89 a barrel over Dubai crude during Asian trade, down from $14.22 a barrel on Wednesday. 
    Crude oil prices rose on Thursday, pushed up by lower imports into the United States amid
OPEC efforts to tighten the market, and as Venezuela struggles to keep up its crude exports
after Washington imposed sanctions on the nation.
    The benchmark gasoil margins have risen about 11 percent in January, the biggest monthly
gain since August 2018. 
    Lacklustre demand amid availability of ample supplies, however, has kept the current
refining margins for the industrial fuel about 15 percent lower than this time last year.
    Cash discounts for 10ppm gasoil GO10-SIN-DIF were at 42 cents a barrel to Singapore quotes
on Thursday, compared with a discount of 34 cents per barrel a day earlier.
    Meanwhile, cash discounts for jet fuel narrowed to their smallest in over two weeks, buoyed
by expectations for a tighter market going forward as some refineries in the region are
scheduled to go for spring maintenance.
    Jet cash discounts JET-SIN-DIF were at $1.42 a barrel to Singapore quotes on Thursday,
compared with a discount of $1.55 a barrel on Wednesday.
    The February/March time spread for the aviation fuel narrowed for the fourth
consecutive session to a discount of 40 cents a barrel on Thursday, their slimmest in three
weeks. They were at a discount of 57 cents on Wednesday.
    Refining margins for jet, which also determines the profitability of
closely-related kerosene, edged higher to $14.24 a barrel over Dubai crude, 18 cents higher from
Wednesday. 
    
        SINGAPORE INVENTORIES
    - Singapore onshore middle-distillate stocks fell 4.6 percent to 11.8 million barrels in the
week to Jan. 30, according to data from Enterprise Singapore released on Thursday.
    - The inventories have averaged 11.9 million barrels in the first five weeks of this year,
having averaged 9.6 million barrels a week in 2018. In 2017, the weekly average was about 12
million barrels, Reuters calculations showed.
    - Overall, onshore middle-distillate inventories were about 27 percent higher year on year.
    - Light distillates stocks dropped 169,000 barrels to a two-week low of 15.7 million barrels
in week ended Wednesday, while fuel oil stocks rose 478,000 barrels to a six-week high of 20.3
million barrels.
    
        EIA INVENTORIES
    - U.S. crude oil stockpiles rose less than expected last week due to a drop in imports,
while gasoline and distillate inventories fell as refiners slowed down production, the Energy
Information Administration said on Wednesday.
    - Crude inventories rose 919,000 barrels in the week to Jan. 25, compared with
analysts' expectations for an increase of 3.2 million barrels.
    - Distillate stockpiles, which include diesel and heating oil, fell 1.1 million
barrels, versus expectations for a 1.4 million-barrel drop, the EIA data showed.
        
    SINGAPORE CASH DEALS
    - No gasoil deals, no jet fuel trades.

SINGAPORE (Reuters) – PetroChina Co plans to drop Petroleos de Venezuela SA (PDVSA) as a partner in a planned $10 billion oil refinery and petrochemical project in southern China, said three sources familiar with the matter this week.

The company’s decision adds to state-owned PDVSA’s woes after the United States imposed sanctions on the company on Jan. 28 to undermine the rule of Venezuelan President Nicolas Maduro.

However, dropping the company was not a reaction to the U.S. sanctions but follows the deteriorating financial status of PDVSA over the past few years, said two of the sources, both executives with China National Petroleum Corp, the parent of PetroChina.

“There will be no role of PDVSA as an equity partner. At least we don’t see that possibility in the near future given the situation the country has been through in recent years,” said one of the executives, asking to remain unidentified because he is not authorized to speak to the media.

The move illustrates the fading relationship between Venezuela and China, which has given $50 billion to the South American country in the form of loans-for-oil agreements. China, the world’s largest oil importer, is now the second-biggest buyer of Venezuelan crude in Asia, taking in 16.63 million tonnes, or about 332,000 barrels per day (bpd), in 2018.

That relationship began to fray in 2015 when Venezuela requested a change in the payment terms on the debt to ease the impact of its falling crude output and declining oil prices. Instead of handing out large fresh loans, Beijing has shifted to small investments or granting extensions in the grace periods for the outstanding loans.

The sanctions were imposed at the same time the United States and other nations have backed opposition leader Juan Guaido as legitimate ruler instead of President Nicolas Maduro. During Maduro’s rule, oil production has plunged while millions have left amid hyperinflation and as consumer goods have vanished from market shelves.

PDVSA was originally a 40 percent equity partner in the refinery project, located the city of Jieyang in the southern province of Guangdong. PetroChina and PDVSA received environmental approval for the project in 2011.

Initial plans were for the refinery to process 400,000 bpd of strictly Venezuelan crude oil. The plans have now been expanded to focus on petrochemical production including a 1.2-million-tonnes-per-year ethylene plant and a 2.6-million tpy aromatics plant. The plant is expected to be operational by late 2021, Caixin reported on Dec. 5.

Under the revised plan, the refinery will not be restricted to Venezuelan oil but could process other so-called heavy crude grades that could come from Middle Eastern producers such as Saudi Arabia and Iran, said the third official, a PetroChina trading executive.

Hyundai Heavy Industries, the world’s biggest shipbuilding group, has announced a share swap deal worth 2.1tn won ($1.98bn) to take over second-ranked Daewoo and create a global heavyweight controlling over 20% of the market.
The move comes as the worldwide shipbuilding sector recovers from a global economic downturn that led to massive losses, widespread job cuts and, in 2017, the $2.6bn bailout of South Korea’s Daewoo Shipbuilding & Marine Engineering Co Ltd.
State-funded Korea Development Bank (KDB) owns 55.7% of Daewoo, and has said it intends to sell the stake and consolidate the country’s three biggest shipbuilders – which includes Samsung Heavy Industries Co Ltd – into two.
The combination of two of the giant shipbuilders would ease competition and excess capacity, which have depressed ship prices, KDB chairman Lee Dong-gull said at a news conference.
The deal will “raise the fundamental competitiveness of Daewoo, at a time when the threat from latecomers in China and Singapore is growing,” Lee said yesterday.
Hyundai and Daewoo hold a combined market share of 21.2%, followed by Japan’s Imabari Shipbuilding with a 6.6%, showed data from Clarksons Research.
Lee said it will take several months to gain approval from antitrust regulators from related countries. He said the size of the resulting entity’s market share would not be detrimental to the interests of customers.
Daewoo will also receive liquidity support of 2.5tn won ($2.25bn) from KDB and Hyundai, Hyundai said in a stock exchange filing.
KDB also said it would approach Samsung Heavy to gauge any interest in taking over Daewoo. A Samsung Heavy spokesman said it has received a proposal from KDB and that it needs to review the matter.
Daewoo shares rose as much as 22% yesterday, before ending up 2.5%.
Those of Hyundai Heavy Industries Holdings Co Ltd and unit Hyundai Heavy Industries Co Ltd fell about 4% on concern about a high purchase price, analysts said. Meanwhile, Samsung Heavy shares ended up 2.5%, as investor concerns of it bidding for Daewoo eased. “Consolidation is good for the industry, but not for the company which buys the stake,” said analyst Um Kyung-a at Shinyoung Securities, citing overlapping businesses between Hyundai and Daewoo.
The shipbuilding industry accounts for 7% of both exports and employment in Asia’s fourth-biggest economy. Hyundai Heavy’s workers’ union said it will delay a vote on last year’s wage deal in protest of a purchase it says could threaten job security.
It said it would be “angered” if the shipbuilder ploughed money into buying another big firm having released workers after reporting losses and shrinking orders. KDB’s Lee ruled out any job cuts after the combination.
Hyundai’s holding company is set to raise funds for acquisitions through the sale of part of its stake in refiner Hyundai Oilbank Co Ltd to Saudi Aramco for up to 1.8tn won.

It has now been just over 100 years since the opening of the Paris Peace Conference, which produced the Treaties of Versailles, Saint-Germain-en-Laye, Neuilly-sur-Seine, Trianon, and Sèvres, bringing an end to World War I. To this day, resentment over the Treaty of Trianon fuels Hungarian nationalism and revisionism, particularly under the current government of Prime Minister Viktor Orbán.
Indeed, the Paris peace process is generally remembered as an example of how well-meaning international co-operation and democracy-promotion can go wrong. Now that we are living through a moment when multilateralism and democracy are again under strain, it is worth asking why efforts to promote the two so often fail.
In 1919, US President Woodrow Wilson’s attempt to forge a lasting peace by destroying the world’s autocracies proved overly high-minded, even as it inaugurated the interventionist consensus that has dominated US foreign-policy thinking ever since. Though US President Donald Trump claims to have abandoned that tradition, he has nonetheless ordered strikes against government military sites in Syria and recognised Venezuela’s opposition leader as the country’s legitimate president.
The Paris process failed because it set expectations too high. The victory of democratic powers did not mean that democratic wishes would be fulfilled, particularly when those wishes would require the losers to pay. Throughout WWI, every side simply assumed that an eventual peace settlement should saddle the vanquished with the material – and even the emotional – costs of the war, all but ensuring an unsatisfactory resolution to the conflict.
Likewise, in 2019, the problems resulting from rapid technological change and globalisation might not admit of any widely acceptable solutions. As a result, different countries will produce their own narratives about being cheated by globalisation. And, as in 1919, they will invent “villains” to bear the blame. For example, the Trump administration routinely complains about China’s unfair trade practices, Germany’s excessive current-account surplus, aid to developing countries, and so forth. Needless to say, compiling a litany of grievances hardly amounts to a solution.
A second explanation for the failure of the Paris process is that some of those involved – French Prime Minister Georges Clemenceau, British Prime Minister David Lloyd George, and Wilson – were uniquely incompetent or otherwise ill-disposed. Clemenceau was a lifelong nationalist, monomaniacally dedicated to the pursuit of French interests, whereas Lloyd George was the opposite, and thus too pliable and unprincipled for the task at hand. He was prone to attacking others personally, only to forget that he had done so when encountering those people again.
For his part, Wilson’s lofty aspirations far exceeded his acumen for political deal-making, both domestically and internationally. And his mounting health problems certainly didn’t help. Owing to his stratospherically high blood pressure, which went largely untreated, Wilson suffered a major stroke shortly after the Paris proceedings. One obvious lesson from this episode in history is that it is important to monitor the physical and mental health of world leaders, particularly the president of the United States, during periods of consequential decision-making.
When it comes to leaders’ character flaws, 2019 offers just as much fodder as 1919 did. Trump and British Prime Minister Theresa May could not be more different in terms of their personalities, yet both have dispensed with expert advice and done serious damage to their respective countries’ political systems. While French President Emmanuel Macron is often criticised for relative inexperience, German Chancellor Angela Merkel is seen as too experienced at preserving an outdated status quo.
The third reason the Paris process failed is perhaps the most important. The conference’s overly ambitious goals, and the flawed personalities of those pursuing them, were so obvious as to invite a lethal public rebuke. That rebuke came from the British economist John Maynard Keynes, one of the most brilliant minds of the age, in his 1919 book, The Economic Consequences of the Peace.
Keynes’s critique of the Paris process and its participants was devastating, and he knew it. In October and November of 1919, he attended meetings, hosted by the Dutch banker Gerard Vissering, where bankers from the US and various neutral powers developed a sophisticated plan for leveraging private US finance for the reconstruction of Europe. The plan showed great promise, but Keynes could not associate himself with it, because his brilliant polemic had alienated the political leaders who were needed to carry it out. In the end, only a few elements of the plan were adopted, and not until 1924, when it was already too late.
The lesson is that an overwritten critique can be counterproductive. Setting political leaders on the right course of action requires persuasion, not polemics. Hence, when it came time to remake the world in 1944-45, Keynes adopted a very different approach. He elaborated a complex reconstruction plan, but this time he operated behind the scenes. It would not have been difficult to attack British Prime Minister Winston Churchill and US President Franklin D Roosevelt for their past economic policies, but nor would it have accomplished anything.
True, Churchill and Roosevelt were far better leaders than Lloyd George and Wilson. But even if they had been just as flawed, Keynes had learned the costs of focusing too much on the foibles of bad leaders during bad times. Whether it is 1919 or 2019, obsessing over individual leaders can distract us from working toward the solutions that today’s most pressing problems demand. – Project Syndicate

* Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation.

Venezuela’s state oil company and its customers will be blocked from using the U.S. financial system by late April, as the Trump administration ratchets up the pressure on President Nicolas Maduro to step aside and allow an opposition leader to take his place.

The U.S. already announced it would effectively prohibit imports of Venezuelan crude and bar companies from selling cargoes of light oil to the Latin American country, which are needed to keep its pipelines flowing. The latest measures posted on the U.S. Treasury’s website suggest the sanctions could have an even wider impact on the petroleum exports that constitute the nation’s economic lifeline.

Any transactions with Petroleos de Venezuela SA, or any entity in which it has a controlling stake, involving U.S. citizens or passing through the country’s financial system must be wound down by April 28, the Treasury said. Americans who work for non-U.S. companies must stop doing any business with PDVSA by March 29.

“Thinking about oil as being a dollar-denominated business, if U.S. banks are jittery and concerned about what they can do, that will cause them to decline all transactions,” said Daniel Martin, a partner at law firm Holman Fenwick Willan. “What is happening is that if you’re a non-U.S. entity you’ll be restricted as to what you can do with PDVSA, if that involves a U.S. person or nexus.”

The U.S. government’s decision to impose sweeping sanctions on Venezuela’s state-run oil firm already look like a de facto oil embargo on the country. The administration of U.S. President Donald Trump has made clear it believes Maduro’s re-election was illegitimate and is applying intense economic pressure after recognizing opposition leader Juan Guaido as interim president.

John Bolton, Trump’s national security adviser, tweeted that “bankers, brokers, traders, facilitators, and other businesses” should not deal in any Venezuelan commodities that he alleged were being stolen by the “Maduro mafia.”

Some European oil traders had temporarily stopped dealing with PDVSA while their lawyers weighed whether it’s possible for non-U.S. entities to continue buying Venezuelan crude without falling foul of American sanctions, people familiar with the matter said earlier this week.

Venezuela pumped 1.2 million barrels a day of crude in December, a decline of almost 50 percent in four years, according to data compiled by Bloomberg. About 500,000 barrels a day of that output was exported to the U.S., but could potentially be diverted to other markets, if buyers are able to find ways to avoid using the American financial system. Some tankers have already turned away from Venezuela without loading crude, Bloomberg data show. Disruption could reach as much as 1 million barrels a day, Citigroup analysts including Ed Morse wrote in a report on Friday.

“The combination of ongoing domestic protests, global political pressure, and concerted economic pressure via sanctions could hasten a transition as well as lift oil prices,” the analysts said.

Turkey’s top economic body ruled out seeking support from the International Monetary Fund, in an effort to end market speculation that Ankara is in touch with the Washington-based lender to negotiate a rescue package.
Those spreading the rumours are carrying out a propaganda war to “harm the Turkish government, the Turkish economy and Turkish people,” the Treasury and Finance Ministry said in an e-mailed statement on Friday. “This sick state of mind has reached a dangerous level.”
Market chatter about a possible agreement with the IMF intensified after the lira lost more than a quarter of its value in August last year. The currency crash pushed consumer inflation to over four times the official target of 5%.
Turkish officials have repeatedly said the economy’s fundamentals are strong notwithstanding the turmoil in financial markets. The Treasury cited its level of indebtedness, rollover ratios and its fiscal discipline as reasons why “it’s out of the question for Turkey’s path to cross with that of the IMF.”

After last year’s market rout, President Recep Tayyip Erdogan said Turkey would never take another loan from the IMF as the lender’s conditions make it impossible to pursue an independent foreign policy.
The Treasury’s latest intervention is unlikely to silence Turkey watchers who are convinced that the nation will eventually need an IMF anchor to stabilise its economy.
“If Turkey actually went on an IMF programme, it would reduce risk premiums, rally the lira and bring forward” interest rate cuts, said Timothy Ash, a strategist at BlueBay Asset Management in London.