Venezuela: Venezuelan oil prices tumble to over-five-year low in December
January 15, 2015
In December, the average price of Venezuela’s mix of crude oil fell a sharp 23.0% over the previous month, reaching USD 54.0 per barrel, which was the lowest price that had been recorded since May 2009. The reading followed the 11.1% decrease recorded in November and represented the largest monthly decline since December 2008, mainly reflecting a strong U.S. dollar, ample availability of oil in the international markets and weakening global economic growth.
According to the latest report from the Organization of Petroleum Exporting Countries (OPEC), Venezuelan oil production reached 2.32 million barrels per day (mbpd) in December, which was unchanged from the 2.32 mbpd tallied in November.
The Venezuelan government relies heavily on oil revenues to balance its budget and to comply with its international obligations. Oil accounts for about 95% of Venezuela’s exports and for more than half of public sector revenues. The recent plunge in oil prices is expected to put additional pressure on the country’s battered finances. While the 2015 budget assumes an oil price of USD 60 per barrel, analysts point out that the government needs a breakeven oil price that is well above USD 100 per barrel and that the country loses USD 700 million a year for every USD 1 decline in oil prices.
In an attempt to boost oil prices and secure financial aid, President Nicolás Maduro visited some members of OPEC early in January. While Maduro could not persuade his fellow OPEC leaders to cut oil supply, he did state that Qatar will provide Venezuela, “sufficient oxygen to help cover the fall in oil prices and give us the resources we need for the national foreign currency budget.” Moreover, on 7 January, during a visit to China, Maduro unveiled that China will invest around USD 20 billion in Venezuela. Maduro stated that the funds will be used for social, infrastructure and energy projects.