Executive Summary
The Big Picture: Cuba’s fuel emergency entered its third day on Thursday with aviation kerosene commercially unavailable at all international airports through at least March 11. Russia began organizing evacuation flights for stranded citizens—Aeroflot scheduled Varadero-Moscow departures on February 12, 14, 17, 19, and 21, with all subsequent flights cancelled starting February 24. The U.S. dollar surpassed 500 Cuban pesos on the informal market for the first time.
Mexico’s two Navy ships carrying 814 tons of humanitarian aid are expected to arrive in Cuba today, four days after departing Veracruz. President Sheinbaum confirmed Mexico has definitively halted all oil shipments under Trump’s tariff threat—marking Cuba’s first month without oil imports in a decade—but pledged to “continue all necessary diplomatic actions to resume oil shipments.”
In Brazil, the Banco Master fraud scandal—R$40 billion in losses, Supreme Court justices under scrutiny, Lava Jato comparisons—is overshadowing a record-setting equity rally (Ibovespa ~188,000, real at R$5.19) and a historic policy shift opening Mercosur-China trade talks for the first time. A Quaest poll shows Lula leading Flávio Bolsonaro 43%–38% ahead of October’s presidential vote. Carnival begins Saturday.
Argentina’s January CPI data showed inflation at 2.9% month-on-month—a 0.1 percentage-point acceleration from December—while the MERVAL plunged 9.6% over seven sessions amid the INDEC leadership crisis. The Senate begins debate on Milei’s labor reform bill today.
The Panama Canal standoff deepened as President Mulino declared the CK Hutchison concession will “never again” be issued to a single company, while ICC arbitration proceedings continue. China’s retaliatory measures—state enterprise investment freeze, cargo rerouting threats—remain in place as Hong Kong’s Chief Executive summoned Panama’s envoy in protest.
Venezuela’s amnesty process faces its most consequential test: the National Assembly’s February 13 deadline for releasing all remaining political prisoners arrives tomorrow. The Guanipa episode—seized by armed men hours after his Sunday release, now under house arrest in Maracaibo—has cast doubt on the credibility of the process. Jorge Rodríguez ruled out near-term presidential elections on Newsmax.
Colombia’s historic February flooding has killed 44 people across 16 departments, with 72,000 families affected and the Urrá reservoir exceeding 109% capacity—inflows at 20 times the February average.
Risk Snapshot
| Country | Risk Signal | Key Driver |
|---|---|---|
| Brazil | Constructive | Lula leads 43-38, Banco Master scandal deepens, Mercosur-China trade shift, Ibovespa 188K |
| Cuba | Critical | Day 3 of jet fuel shutdown, dollar tops 500 CUP, Russia evacuation flights |
| Mexico | Elevated | Oil shipments halted, 814-ton humanitarian aid arriving today |
| Argentina | Watchful | Jan CPI 2.9% (accelerating), MERVAL -9.6% in 7 sessions, INDEC crisis |
| Colombia | Elevated | 44 dead in historic flooding, Urrá dam at 109%, COLCAP worst weekly decline |
| Panama | Critical | CK Hutchison ICC arbitration, China investment freeze, Mulino holds firm |
| Venezuela | Active | Feb 13 prisoner deadline tomorrow, Guanipa under house arrest, no near-term elections |
| Chile | Constructive | IPSA pulled back from all-time highs, Kast inauguration March 11 |
Cuba / Mexico — Fuel Emergency Day 3; Russia Begins Evacuation Flights; Mexico Aid Ships Arriving
What Happened
- —Jet Fuel Day 3: Cuba’s jet fuel shutdown enters its third day with kerosene commercially unavailable across all nine international airports since February 10 through at least March 11. The government imposed a four-day workweek, shortened school hours, closed tourist establishments, and restricted inter-provincial transport.
- —Russia Evacuation Flights: Aeroflot organized evacuation flights from Varadero to Moscow on February 12, 14, 17, 19, and 21, and Havana to Moscow on February 16. All subsequent flights to Cuba will be cancelled starting February 24. The Russian Embassy confirmed “constant contact” with local aviation authorities.
- —Airline Suspensions: Air Canada suspended all flights on February 9, operating empty southbound aircraft to repatriate approximately 3,000 stranded passengers. WestJet and Air Transat continue with contingency measures including technical refueling stops. Kremlin spokesman Peskov described the situation as “truly critical.”
- —Mexico Aid Arriving: Two Mexican Navy vessels—the ARM Papaloapan (536 tons of food) and BAL-02 Isla Holbox (277 tons of powdered milk)—departed Veracruz on Sunday with 814 tons of humanitarian aid and are expected to arrive today. An additional 1,500 tons of powdered milk and beans are planned for future shipments.
- —Mexico Confirms Oil Halt: President Sheinbaum confirmed Mexico has definitively halted all oil shipments to Cuba under Trump’s tariff threat. Bloomberg reported this marks Cuba’s first month without oil imports in a decade. Pemex’s director disclosed that Mexico sent oil valued at $496 million to Cuba in 2025.
- —U.S. Sanctions Expand: The U.S. announced sanctions on February 11 against participants in acts of repudiation directed at the U.S. Embassy in Havana. Cuban-American members of Congress separately filed murder charges against Raúl Castro. The dollar surpassed 500 Cuban pesos on the informal market for the first time (February 10).
Why It Matters
Russia’s decision to organize evacuation flights—rather than fuel shipments—is the most telling signal of the week. Moscow, Cuba’s most vocal diplomatic ally, is effectively conceding that it cannot or will not challenge the U.S. oil blockade and is instead pulling its citizens out. The cancellation of all flights after February 24 suggests Russia sees no near-term resolution.
Mexico’s two-track strategy has crystallized: comply with Washington on oil (avoiding USMCA-threatening tariffs) while maintaining solidarity through humanitarian shipments. The question is whether this distinction holds politically—both in Mexico City, where Morena’s base demands more, and in Washington, where Florida Republicans are pushing to make any aid to Cuba a red line.
The UN warned on February 5 of potential humanitarian “collapse” if Cuba’s oil needs go unmet. Cuba requires approximately 100,000 barrels of crude per day; by January 30, reserves were estimated at just 15–20 days’ supply.
Risk Level: Critical
Brazil — Election Year Takes Shape as Banco Master Scandal Deepens; Mercosur-China Trade Shift; Markets at Record Highs
What Happened
- —Election Race Crystallizing: A Genial/Quaest poll released Wednesday shows Lula leading Flávio Bolsonaro 43%–38% in a head-to-head presidential scenario ahead of the October 4 vote. Lula, 80, is seeking a historic fourth term; Flávio assumed the Bolsonaro dynasty’s mantle after his father Jair began serving a 27-year sentence for the January 2023 coup attempt. Bloomberg reports Lula is considering adopting “anti-establishment” messaging targeting the financial elite—a strategy previously associated with the Bolsonaro camp. Security (38% top concern in Quaest polling), not the economy, may determine the outcome.
- —Banco Master Scandal Widens: The Banco Master fraud investigation—Brazil’s largest financial scandal since Lava Jato—continues to generate near-daily revelations. The bank was liquidated by the BCB in November after police uncovered R$12 billion ($2 billion) in fraud. With R$40 billion ($7.6 billion) in estimated losses and 1.6 million affected creditors, the case has drawn in Supreme Court justices (Toffoli and Moraes face media scrutiny over links to founder Daniel Vorcaro), federal regulators, and Lula allies. Bloomberg describes it as “more of a Ponzi scheme than a legitimate financial institution.” A congressional investigation (CPI) is being sought.
- —Mercosur-China Trade Shift: In a major policy reversal, senior Brazilian officials told Reuters (Feb 6) that Brazil is now open to a partial trade agreement between Mercosur and China—having long vetoed such talks to protect domestic manufacturers. The shift is driven by Trump’s tariff waves and China’s deepening commercial courtship. A joint statement during Uruguay’s President Orsi’s Beijing visit (Feb 3) called for talks to begin “as soon as possible.” This runs in parallel with the EU-Mercosur deal, which the European Parliament referred to the EU’s top court on January 21.
- —Belo Monte Ruled Noncompliant: A federal court ruled that the Belo Monte dam—Brazil’s second-largest, supplying 10% of the country’s electricity—has operated for nearly a decade in breach of environmental and social requirements. The Supreme Court ordered R$19 million in compensation to affected Indigenous communities. Starting this month, new legislation will fast-track infrastructure approvals from 6–7 years to 12 months, raising concerns about reduced environmental scrutiny.
- —Markets at Record Highs: The Ibovespa rose ~1% to near 188,000 on Wednesday, led by Suzano (+6%), TIM Brasil (+7.5%), and Klabin (+2%). IPCA inflation came in at 4.44% YoY for January. The real tested R$5.19/dollar—strongest since May 2024. BCB minutes signaled March rate cuts from the 15% Selic. Foreign inflows hit R$23.1 billion in January alone. Banco do Brasil, Assaí, and TOTVS report after close today.
- —Carnival Begins Saturday: Rio Carnival officially launches February 14 with 462 blocos and five nights of Sambódromo parades (Special Group Feb 15–17, Champions Parade Feb 21). The event is both a cultural milestone and an economic test: Rio expects record tourism revenue amid a strong equity market and firming real.
Why It Matters
Brazil in February 2026 presents a paradox: record-high equity markets and a firming currency coexist with the country’s deepest financial scandal since Lava Jato, an increasingly competitive election campaign, and a geopolitical trade realignment that could reshape its relationship with both Washington and Beijing. The Banco Master case is particularly dangerous for Lula because it implicates allies and Supreme Court justices who were central to Bolsonaro’s conviction—giving the opposition an opening to argue institutional hypocrisy.
The Mercosur-China opening is arguably the most consequential trade development in the hemisphere this year. If realized, even a partial deal would formalize a commercial axis that the Trump administration has explicitly sought to prevent—potentially triggering tariff retaliation against Brazil just as Lula enters his re-election campaign. The Belo Monte ruling, combined with new fast-track licensing legislation, creates a collision between infrastructure development and environmental governance that will define Lula’s climate legacy heading into October.
Risk Level: Constructive
Panama — Mulino Says Concession “Never Again” to Single Company; China Retaliation Deepens
What Happened
- —Mulino Holds Firm: President José Raúl Mulino stated on February 11 that the port concession will “never again” be issued to a single company, calling the Supreme Court’s decision definitive and dismissing China’s threats. He “firmly rejected” Beijing’s statements, saying Panama is a “rule-of-law country.”
- —ICC Arbitration Underway: CK Hutchison’s subsidiary Panama Ports Company commenced ICC arbitration proceedings against Panama on February 3 after the Supreme Court nullified its nearly three-decade concession to operate the Balboa and Cristóbal port terminals. The company said it will pursue “extensive damages.”
- —China’s Calibrated Response: Beijing directed state firms to halt new project talks in Panama and asked shipping companies to consider rerouting cargo (Bloomberg, Feb 5). The Hong Kong and Macao Affairs Office called the ruling “extremely absurd,” warning Panama would pay a “heavy price.”
- —Hong Kong Escalation: Chief Executive John Lee summoned Panama’s envoy to Hong Kong on February 10, saying the court decision “undermined Panama’s credibility” and would cause “far-reaching damage to its business environment.”
- —Maersk Transition: APM Terminals (Maersk subsidiary) has been appointed temporary administrator of both Balboa and Cristóbal ports, ensuring minimal operational disruption. The $23 billion CK Hutchison port sale to a BlackRock-led consortium remains entangled, with China demanding merger review and proposing state-owned Cosco join the buyer group.
Why It Matters
The Panama Canal dispute has settled into a legal and economic war of attrition. CK Hutchison’s arbitration could take years and the damages sought could be substantial, creating a long-term fiscal contingency for Panama. Approximately 40% of all U.S. container traffic and 5% of world trade transits the canal annually.
For the rest of Latin America, Panama is the precedent case. Governments watching from the sidelines are calibrating their own China positions based on whether Beijing’s retaliation produces real economic pain or proves largely performative. The answer will shape investment and diplomatic decisions across the hemisphere.
Risk Level: Critical
Venezuela — February 13 Prisoner Deadline Tomorrow; Guanipa Under House Arrest; No Near-Term Elections
What Happened
- —Feb 13 Deadline: National Assembly President Jorge Rodríguez told prisoners’ families that all remaining detainees would be freed by Friday February 13—tomorrow. Foro Penal has confirmed 383 releases since January 8, but estimates nearly 680 remain jailed for political activities.
- —Guanipa Episode: Opposition figure Juan Pablo Guanipa was seized by approximately 10 armed men in civilian clothes in Caracas’s Los Chorros neighborhood on Sunday night, hours after his release. He is now under house arrest in Maracaibo. Interior Minister Cabello said Guanipa was re-arrested for “calling people to the streets.” Machado and his Primero Justicia party called it a “kidnapping.”
- —Amnesty Bill Advancing: The Amnesty Law for Democratic Coexistence passed its first unanimous vote on February 5. The second and final vote is expected imminently. The bill would absolve crimes including treason, terrorism, and rebellion committed in the context of political protest (2007, 2014, 2017, 2019, 2024) and lift candidacy bans on figures including Machado.
- —No Elections: Jorge Rodríguez told Newsmax (published Feb 10) that Venezuela will not hold presidential elections “in this immediate period of time,” saying stability must come first. The State Department outlined a three-phase plan: stability, recovery (oil investment), then transition to a “reliable regional partner.”
- —Oil Sector Opening: Acting President Rodríguez signed a new oil reform law granting foreign companies greater rights. ExxonMobil CEO Darren Woods told a White House meeting that Venezuela remains “uninvestable” without significant legal and commercial reforms but said Exxon is “ready to put a team on the ground.” Venezuelan crude was reportedly sold to an Israeli refiner under the Trump-enforced administration of oil exports.
Why It Matters
The February 13 deadline is the most consequential commitment the Rodríguez government has made since the Maduro capture. Meeting it would represent the clearest signal yet that the interim government is serious about political normalization. But the Guanipa episode—released, then seized by armed men within hours, now under house arrest—suggests the security apparatus has not fully accepted the new terms.
The amnesty bill’s lifting of candidacy bans could transform Venezuelan politics by allowing Machado and other opposition leaders to participate in future elections. Whether the Rodríguez government intends competitive elections or simply a managed transition under Chavista control remains the central question.
Risk Level: Active
Argentina — January CPI 2.9% (Accelerating); MERVAL Plunges 9.6%; Labor Reform Debate Begins
What Happened
- —CPI Acceleration: INDEC reported January inflation at 2.9% month-on-month, taking the 12-month rate to 32.4%—up 0.1 percentage points from December. The result complicates Milei’s 2026 budget target of 10% annual inflation and was released under new INDEC head Pedro Lines, following the resignation of Marco Lavagna over the shelved CPI methodology overhaul.
- —MERVAL Selloff: The MERVAL plunged 9.6% over seven sessions as the INDEC leadership crisis rattled confidence. Country risk spiked to 516 basis points. Buenos Aires city’s consumer price index has accelerated month by month since August 2025—a “bad omen” for the national figure.
- —Debt Auction: The Economy Ministry held a closely watched debt auction on February 11 with nearly ARS 10 trillion in maturities, about ARS 9 trillion held by private investors. A separate $1.228 billion zero-coupon Treasury bill was issued February 9, maturing February 2027.
- —Labor Reform Today: The Senate begins debate on Milei’s labor reform bill today (Feb 12) in extraordinary sessions. Milei is set to attend the first meeting of Trump’s Board of Peace on February 19 in Washington, after praising Trump as “an example of courage” at Mar-a-Lago.
- —Monetary Framework Risk: The BCRA’s new 2026 framework expands the peso’s trading bands at the rate of inflation prevailing two months earlier (2.8% for February). The PIIE warned on February 11 that this lagged indexation risks imparting inflation inertia and discards the nominal anchor that had been forcing disinflation. Argentina faces ~$19 billion in debt maturities in 2026.
Why It Matters
The disconnect between the MERVAL selloff and the broader Argentine story reveals the Milei trade under stress. Each episode of institutional interference—the INDEC shakeup, the shelved methodology—accumulates as a credibility deficit that becomes costly if the disinflation trend reverses. The CPI rebasing was part of Argentina’s IMF program commitments, and the delay signals that political convenience can override institutional independence.
The labor reform debate beginning today is the legislative test of Milei’s strengthened congressional position following the midterm victory. Success would provide genuine reform momentum; failure would highlight the gap between electoral mandates and legislative execution.
Risk Level: Watchful
Colombia — Historic February Flooding: 44 Dead, 72,000 Families Affected; Urrá Dam at 109%
What Happened
- —Unprecedented February Flooding: Severe flooding triggered by persistent heavy rainfall since January 26 has killed 44 people across 16 departments as of February 11. Authorities report 12,000 homes damaged, 4,000 destroyed, and approximately 72,000 families affected in 104 municipalities.
- —Urrá Reservoir Crisis: Inflows reached 2,654 cubic meters per second—more than 20 times the February historical average of 121 m³/s, breaking all records since measurements began in 1960. Emergency water releases from the dam at 109% capacity worsened downstream flooding along the Sinú River. Montéria’s mayor ordered evacuation of 13 neighborhoods.
- —Petro vs. Energy Industry: President Petro accused energy companies of deliberately keeping reservoirs full to manufacture a gas shortage and profit from contracts, calling it an “environmental crime.” Acolgen head Natalia Gutiérrez rejected the claim, noting spot electricity prices averaged 213 pesos/kWh vs. the 308-peso contract average—meaning cheap hydro was being used, not wasted.
- —Agricultural Devastation: An estimated 157,000 hectares of agricultural land are submerged in Córdoba alone, affecting crops including plantain, yucca, and African palm. More than 5,500 livestock animals affected. World Central Kitchen deployed to the region.
- —Markets Under Pressure: The COLCAP index dropped 4.23% on the week—its steepest decline of 2026—despite a 2.14% Friday rebound. The Ecuador–Colombia trade war deepened after a summit in Quito failed to break a tariff deadlock threatening $2.8 billion in annual bilateral trade.
Why It Matters
The flooding has exposed Colombia to dual risks: an immediate humanitarian crisis (February is normally dry season, making relief infrastructure unprepared) and a political crisis over dam management and energy policy that Petro is weaponizing ahead of the March 8 legislative elections. IDEAM warns that March and April could bring usual seasonal rains, compounding the already dire situation.
Risk Level: Elevated
Regional Snapshot
Chile
The IPSA index fell 1.53% on Thursday to 11,251.62 but Chile remains the world’s top-performing equity market over three months at +36.6%. Kast inauguration on March 11 approaches with a technocratic cabinet drawn from the private sector. Bachelet’s UN Secretary-General candidacy formalized at the General Assembly.
Peru
April 12 general elections approaching with crime and corruption as top voter concerns. The papal visit organizing commission set to form in March, advancing Leo XIV’s planned 5–6 day November visit from aspirational to operational. Pre-election period remains calm.
Costa Rica
Laura Fernández of the Social Democratic Progress Party is preparing for her May 8 inauguration following her first-round victory on February 1, promising continuity with the Chaves administration’s pro-U.S. orientation and pro-business economic policies.
Bolivia
President Rodrigo Paz continues to consolidate governance following his November inauguration. Lithium sector opening to private investment proceeds, while a $200 million World Bank emergency loan was approved for cash transfers to up to 8 million Bolivians. Departmental elections on the calendar for March 22.
Sports
Serie de las Américas baseball semifinals Thursday (Feb 12) after final round-robin day. Panamá defending 2025 title. CONCACAF U-17 Qualifiers conclude today. Milan-Cortina 2026 Winter Olympics Day 5—Norway leads medal table with 6 golds and 12 total medals; no Latin American athletes have medaled. Rio Carnival officially begins Saturday, with 462 blocos and five nights of Sambódromo parades.
Markets at a Glance
| Index / Currency | Level | Daily Change | Context |
|---|---|---|---|
| Ibovespa (Brazil) | ~188,000 | +~1% | Suzano, TIM, Klabin lead earnings-driven rally |
| USD/BRL | ~R$5.19 | Real firming | Strongest since May 2024, BCB March easing signal |
| MERVAL (Argentina) | — | -9.6% (7 sessions) | INDEC crisis, country risk at 516 bps |
| COLCAP (Colombia) | ~2,320 | -4.23% (weekly) | Steepest weekly decline of 2026, flooding weighs |
| Mexico IPC | ~68,858 | All-time highs | Banxico hold at 7.00%, easing paused |
| Chile IPSA | 11,251 | -1.53% | Pullback from all-time highs, +36.6% over 3 months |
| S&P 500 | ~6,932 | +2.0% | Dow crossed 50,000 for first time |
The Week Ahead
| Date | Event | Significance |
|---|---|---|
| Feb 12 | Argentina Senate labor reform debate begins | Milei’s legislative test post-midterm victory |
| Feb 12 | Serie de las Américas baseball semifinals | Panamá defending 2025 title |
| Feb 12 | Brazil: Banco do Brasil, Assaí, TOTVS earnings (after close) | Rally sustainability test |
| Feb 13 | Venezuela prisoner release deadline | Rodríguez government credibility test |
| Feb 13 | U.S. January CPI (delayed from shutdown) | Outsized repricing risk for global markets |
| Feb 10–Mar 11 | Cuba jet fuel suspension window | Tourism and airline disruption for one month |
| Feb 14 | Rio Carnival Sambódromo parades begin | Five nights of desfiles through Feb 18 |
| Feb 19 | Milei at Trump’s Board of Peace (Washington) | U.S.-Argentina bilateral optics |
| Mar 8 | Colombia legislative elections & primaries | Presidential race bellwether |
| Mar 11 | Kast inauguration (Chile) | Policy direction, Bachelet candidacy fate |
| Mar 22 | Bolivia departmental elections | Test of Paz consolidation |