The People Are Speaking
26.10.2016
Most days, when writing these articles, we try to bring you stories that have a direct impact on a stock, asset, commodity or index that you can trade, information which is directly relevant and important to anyone trading binary options, we provide you with information you can directly use to help your portfolio grow further, but sometimes we provide you with information which would lead you to think it might not be important, until you dig into it, that is the case today with out article about Venezuela and its recent troubles.
If we were to ask you, point blank, to name just 3 oil producing nations, you would probably name Iran or Iraq, Russia, maybe the U.S, perhaps even go to Saudi Arabia or Dubai, some may even name China, but we’re willing to bet good odds that not too many of you would have placed the south American nation of Venezuela anywhere on your list, which may be a shame.
Venezuela is currently #12 on the list of oil producing nations (by barrels per day), ranking above nations like Qatar, India and others, in terms of overall supply, Venezuela is currently responsible for supplying roughly 4% of the world’s oil, and it is also a founding member of OPEC, which does provide it a certain amount of clout within the industry of oil producing nations.
Venezuela is also a nation deep in trouble and has been teetering on the brink of utter collapse for months, which may not sound like a major problem for you as a trader of binary options, but if you’ll recall what we wrote just a couple of paragraphs ago – this is one of those cases where the impact on you isn’t direct, but can still be quite significant, and here’s why.
As it turns out, being in possession of a valuable natural resource that the world sorely needs is not a guarantee for success and wealth, and the people of Venezuela have been learning that over their collective backs over the last few years.
Even before oil prices collapsed in mid-2014, The Venezuelan economy was not doing too good, and as a result, the people were understandably slightly less than thrilled with their situation.
But the 2014 was the starting point for Venezuela’s quick decline to the verge of anarchy, prices of oil declined, which meant the government was forced to rely heavily on alternative means to keep up with rising prices, and when those dried up, inflation started spiraling out of control.
Venezuela’s yearly inflation rate for 2016 is predicted to end up north of 725%, but that is not the end of its problems.
Mass shortages in practically every major food, shortages in medicine, medical care, municipal services, police and fire services and nearly every major part of day to day life has been impacted by the country-wide crisis.
With no end in sight, the people finally had enough a few months ago and started staging a series of protests, aimed ay ousting president Nicolas Maduro, those protests climaxed in a demonstration that organizers said had over 1 million participants.
It was only after that demonstration that the opposition controlled parliament announced a referendum on Maduro’s continued presidency, but it was not to be, and Maduro, along with his supporters in other governmental branches announced they are not accepting the call for a referendum, causing the parliament to announce that Maduro has essentially executed a coup in Venezuela and is now illegally holding ofiice.
But how will all of this impact you as a binary options trader?
Well, the answer is quite simple – even if Maduro manages to hang on to power and eventually calm down demonstrations in his country, Venezuela will not rebound instantly and could face at least a rough couple of years before it does.
That means that under the best case scenario, oil production from the country may be diminished somewhat.
But what if the best case scenario is not what takes place?
If that happens, major problems could be ahead for both Venezuela, and the global oil market.
Given enough backwind, protests could potentially escalate, and as sometimes happen, another coup, military or otherwise could be on the horizon, which, in turn, may cause a complete shutdown of oil exports from the south American nation, and that will have consequences for anyone trading oil, including you!
Venezuela’s currency, the Bolivar, is now holding steady at 0.10 vs. the U.S dollar, and has been at that level for nearly 7 months, which may sound ok, but when you consider that it went from 0.15 vs. the dollar to 0.10 in the space of a single week, losing 30% of its value, you begin to grasp the severity of the situation in Venezuela.
The bolivar is not a highly traded currency, and you may be hard pressed finding it, but that does not mean that you should ignore Venezuela’s sad story when you trade.
Keep a close eye on the going on in the troubled nation, because if a major shift does occur, you can bet it will be felt in the oil trade, giving you the opening to major profits.
Jay Gerrick
The post What Is The Problem With Venezuela? appeared first on UK Options.
