Venezuela is struggling to meet its international bond payments, raising the spectre of an Argentine-style default despite the Opec country’s massive oil reserves.

Yields on Venezuelan bonds, the third-largest constituent of JPMorgan’s global emerging bond index, have risen since Caracas put Citgo, the country’s US refining operation, up for sale and scrambled to reassure investors it can refinance $7bn coming due this year on its more than $80bn of sovereign debt.

“We’re prepared to meet our international obligations in their entirety . . . down to the last dollar,” Nicolás Maduro, the president, said on late Wednesday after blasting what he called an international campaign to sully the country.

Rodolfo Torres, the finance minister, added: “Venezuela’s resources allow it to meet its needs.”

A Venezuelan default could be widely felt. The country accounts for 7 per cent of emerging market benchmarks, meaning a default could force redemptions of other investments by passive index-tracking funds. As Morgan Stanley wrote in a research report late last year: “Venezuela may affect your . . . portfolio, even if you don’t own it.”

Mr Maduro, in office for 17 months, has struggled with a host of political and economic troubles since Hugo Chávez, his mentor, died in 2013. And these problems – from public riots to shortages of basic goods and 63 per cent inflation – have grown to a new intensity this year.

Until recently, bond investors drew comfort from Venezuela’s $85bn annual oil exports. But confidence was shaken this week as yields on short-dated bonds issued by PDVSA, the state owned oil company, shot above 25 per cent. Venezuelan credit default swaps also rose to levels comparable to Argentina, even though Buenos Aires is already in default after it refused to comply with a controversial US legal ruling ordering it to pay holdout creditors.

“The [Venezuelan] government is clearly exploring any and all options to generate additional cash in order to stay afloat, with an eye on short term fixes,” commented Risa Grais-Targow, Latin America analyst at Eurasia, the risk consultancy.Venezuela’s public finances certainly look tight. Despite $21bn of reserves, less than $3bn of these are liquid. The government also has about $9bn in obscure off-budget funds, plus eventual proceeds from Citgo’s sale.

“The difference between Argentina defaulting and Venezuela is that Argentina had nothing to lose,” said Luis Vicente León of Datanalisis, a respected local pollster. “By contrast, Venezuela has substantial foreign assets under risk – from Citgo, to oil shipments, to PDVSA receivables . . . That makes default risk devastating.”

Venezuela’s market rout began in July after Citgo, which operates three refineries and 6,000 gas stations in the US, was put up for sale with a reported price tag of $10bn – versus market valuations of $7bn, plus $2bn of debt. The move rattled investors because a Citgo sale would deprive them of a valuable asset to seize in the event of a government default.

Unease accelerated after economic tsar Rafael Ramírez was demoted to foreign minister as part of last week’s cabinet shuffle. Ricardo Hausmann, a former planning minister and widely respected pro-opposition economist, may have added fuel to the fire by this observing week that Venezuela had already defaulted on a number of domestic obligations and that this could eventually extend to bonds, too.

“The fact that his [Maduro’s] administration has chosen to default on 30m Venezuelans, rather than Wall Street, is not a sign of moral rectitude,” Hausmann wrote in a column. “It is a sign of its moral bankruptcy.”

On Wednesday, BNP Paribas recommended buying Venezuelan bonds. Other investment banks also said Venezuela had enough funds to meet import needs and short-term debt payments, although to continue doing so it needed to embrace politically costly reforms. Loosening price and currency controls rather than default are the keys “to restoring Venezuela’s macroeconomic health”, said Francisco Rodríguez at Bank of America Merrill Lynch.

In Argentina, President Cristina Fernández has enjoyed an unexpected boost in approval ratings, despite the default and a worsening economy, thanks to her uncompromising stance against holdout creditors, or what she calls “vulture funds”. But it seems unlikely Mr Maduro can expect a similar reaction. With midterm elections looming in 2015, his approval ratings have fallen to just 35 per cent.

“I don’t think Venezuela is going to default, although the probability has greatly increased,” said Russ Dallen of Caracas Capital Markets. “It is a case of the ‘devil you know versus the devil you don’t’. And the problem is we don’t know.”

The Financial Times