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Venezuelan anti-government protesters in Sao Paulo, Brazil. Photo: Cris Faga/NurPhoto via Getty Images

International ratings agency Fitch warned Wednesday that Venezuela's ongoing political and diplomatic crisis raises the risks of increased near-term economic pain as well as further oil market disruptions.

One big quote, per Fitch: "In the short term, new U.S. sanctions imposed on state-owned oil company PDVSA will deepen the country's economic crisis. Oil production will likely fall further and more quickly affecting economic output, exports and government revenues."

Driving the news: U.S. Sen. Marco Rubio (R-Fla.) said Wednesday that Venezuela's newly declared Interim President Juan Guaidó will name a new board for U.S.-based oil company Citgo, which is owned by PDVSA. Citgo is weighing the possibility of bankruptcy and other contingency plans.

  • Nicolás Maduro has steadfastly held that he is the rightful president of Venezuela and shows no signs of conceding to demands from the U.S.
  • If Maduro is able to retain power, Fitch warns, "the prospects of reforms to stabilize the economy and end hyperinflation are likely to be diminished, at least in the near term."
  • "The military's position will be key to the country's political future and there is the potential for a protracted stalemate."
  • "Even in the case of a political transition, a debt restructuring is likely to be a lengthy process. A political transition will be complex and likely culminate in elections."

What's next? Guaidó's economic plan includes seeking financial aid from multilateral organizations, bilateral loans, restructuring Venezuela's debt and bringing private investment back into the country's oil sector. He has also called for eliminating currency controls and privatizing state assets.

  • "PDVSA would need to be restructured from the ground up and incentives put in place for private investment," Fitch continued. "Institutional capacity, rule of law and political stability will be key after years of weakening government institutions."

On the bright side: "Should a successful political transition combined with economic stabilization reforms be implemented," Fitch analysts said, "Venezuela would have significant potential."

Go deeper

Obama stumps for McAuliffe, urges Virginians not "to go back to the chaos"

Photo: Win McNamee/Getty Images

Former President Barack Obama framed a Nov. 2 gubernatorial race as a bellwether for the Democratic Party and the country, telling a crowd at a campaign event for Terry McAuliffe on Saturday that "I believe you, right here in Virginia, are going to show the rest of the country and the world that we're not going to indulge in our worst instincts."

Why it matters: With just over a week to go before Election Day in the Commonwealth, McAuliffe is bringing out the big guns. The 44th president appeared on the campus of Virginia Commonwealth University to urge supporters to get to the polls.

Bryan Walsh, author of Future
4 hours ago - Politics & Policy

Axios AM Deep Dive: America’s murder surge

Photo illustration: Sarah Grillo/Axios. Photo: Erik McGregor/LightRocket via Getty Images

Homicides rose at the fastest rate in at least six decades last year. This Axios AM Deep Dive, led by Future correspondent Bryan Walsh, looks at the state of gun crime.

8 hours ago - Politics & Policy

Senate Democrats target billionaires

Illustration: Annelise Capossela/Axios

After failing to get a deal on other planned tax increases, key Senate Democrats are pivoting to a billionaires' income tax to pay for President Biden's social spending.

The big picture: No advanced economy has attempted anything similar on such a scale.