Manonthestreet
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- May 20, 2014
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But it took the recent freefall in oil prices for Havana to take the plunge and finalize the deal. The reason is that the considerable help Venezuela sends Cuba is in the form of barrels, not dollars. As oil prices fall, the value of Venezuela’s aid falls. In the final quarter of last year, Cuba’s state finances began to look worse and worse.
You start to see why the alarm bells went off in Havana when the price of oil started to fall. It’s not just that the re-export business is a lot less juicy with oil at $50 per barrel than at $110. It’s that the Cuban elite is well aware that Venezuelan volumes may not hold up for much longer. If the collapse in oil prices is bad news for Cuba, it’s a kind of cataclysm for its benefactor. Cuba Is Hoping To Replace Venezuelan Oil With American Tourists FiveThirtyEight
You start to see why the alarm bells went off in Havana when the price of oil started to fall. It’s not just that the re-export business is a lot less juicy with oil at $50 per barrel than at $110. It’s that the Cuban elite is well aware that Venezuelan volumes may not hold up for much longer. If the collapse in oil prices is bad news for Cuba, it’s a kind of cataclysm for its benefactor. Cuba Is Hoping To Replace Venezuelan Oil With American Tourists FiveThirtyEight