Venezuela: Oil price rise offers little relief to battered economy
January 11, 2018
Oil prices continued to climb in December, hitting the highest price since November 2014. The average price of Venezuela’s mix of crude oil traded at USD 56.6 per barrel (pb), which was 2.5% higher than in the previous month (November: USD 55.2 pb). Oil prices have risen steadily since June thanks to renewed demand and production cuts by key producers. Despite the recovery in oil prices, the price hike remains too low to stem Venezuela’s rampant economic crisis.
Oil production plunged sharply last year due to insufficient investment, mismanagement of oil fields and electricity rationing. The latest production data from OPEC revealed that output in Venezuela fell to a multi-year low of 1.83 million barrels per day (mbpd) in November, below the country’s OPEC target and down from 1.88 mbpd in October. The number is abysmal for the country with the largest proven oil reserves in the world.
Venezuela’s oil sector is also reeling from crisis following a dramatic purge by President Nicolás Maduro, who has fired or arrested several of the industry’s top players in recent months. Reports have suggested that state oil company PDVSA has been nearly paralyzed by the arrests of over 60 executives, and concern is growing about the organization’s ability to finance itself.