Editorial: Titanic Events: Syriza, Saudi & Plunging Petrobras
The death of Saudi ruler King Abdullah bin Abdulaziz Al Saud and uncertainty over the future of the Eurozone have sent the oil markets into a further loses at the beginning of this week.As the 90-year old Gulf monarch passed away, leaving the world’s largest oil producer in the hands of his 79-year old brother, another dollar was knocked off of the world oil price in a rout that has continued for the past seven months.
The dramatic success of Far Left party Syriza in Greece’s general election sent West Texas Intermediate (WTI) to six year lows as the Eurozone braced itself for the possibility of the dreaded "Grexit": the opt out of the Greek state from the ECB’s swingeing austerity programme.
As the potential for radical change in the Aegean and Near East claws at Europa’s chiton, some 10,000 kilometres away others are also feeling the sting of talons. In Brazil’s second largest city, the sword of Damocles swings above the Southern Hemisphere’s largest company. Petrobras,Brazil’s semi-public multinational energy corporationwas in debt to the tune of $115 billion in 2013, a sum analogous with the GDP of Angola.
An ongoing corruption scandal and plummeting oil prices have left the organization in a state of degenerative paralysis, with ratings agency Moody’s set to downgrade the company’s credit rating to BAA3, one tier above "Non-investment grade speculative" status.
The fate of Petrobras will depend on the exorcism of an unholy troika of conspiring factors: plunging revenues, ratings relegation and currency decline. Should these be ridden from the body corporate, the Latin colossus will fight to live another day. Should the expulsion fail, this giant may well suffer the Fall of the Titans.
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