Published On: Mon, Mar 19th, 2018

The decline in exports of Venezuelan oil to the United States was threatening

nicolas_maduro_barbozaThe decline in exports of Venezuelan oil to the United States has assumed alarming proportions – he fell to a 15-year low. According to Thomson Reuters, in February, PDVSA and its joint venture sent to the United States only 21 batch of oil – half of the monthly norm.

Venezuela exported to the United States in February of 378 thousand barrels per day, this is 21% below the January level and 43% below the February 2017. The largest recipients of oil from Venezuela began its division in USA Citgo Petroleum, and Valero Energy Corp. and Chevron Corp. Companies Phillips 66 and PBF Energy Inc, formerly the most important customers, not bought from PDVSA oil in February.

Production in the country fell to 28-year low, and may soon get even worse, warns Dow Jones. Analysts believe the probable overthrow of Nicolas Maduro, which will lead to chaos in the country and the fall in oil production as low as possible.

Presidential elections in Venezuela are scheduled for April 22. Maduro will remain the head of state or they will elect another leader, to solve the accumulated problems quickly would be impossible. The country is experiencing hyperinflation, oil production, which previously was 2.2 million barrels per day from 2016 dropped significantly and will continue to decline even in the absence of us sanctions.

Now it barely exceeds 1.6 million barrels per day, and if the country comes anarchy, then it may fall to 1 million barrels, and possibly below. Last month British Bank Barclays predicted drop in oil production of Venezuela, after June, to 1.35 million barrels per day.

Given that oil export is the main source of currency receipts in the budget of Venezuela, the economy is already in a catastrophic situation. Bolivar is practically worthless, inflation is measured in thousands of percent, Venezuelans are facing famine.

Everything that happens could trigger foreign intervention, says Joe Mcmonigle, chief analyst of the energy division at Hedgeye Risk Management and a former senior official of the U.S. Department of energy: “We are already seeing how the next (Venezuela) countries prepare for global change.”

The possible overthrow of the Venezuelan government will immediately lead to a short-term drop in economic activity, and after that the economy will recover sufficiently long time until the necessary reforms.

“Oil production can continue, however, the sale of oil will be hampered, because buyers would not know who you are dealing with,” notes Mcgonigle. Anyway, the supply of Venezuelan oil on the world market will be violated. “This will have very serious impact on prices, which have increased in a short time could be up to $ 10 per barrel”, – said the analyst.

However, it can’t stretch. Adam Siminski, an analyst at CSIS, I am sure that in the event of a critical fall in Venezuelan production in the situation to intervene in Saudi Arabia, which compensates for the lack of growth of their prey. Possibly a partial activation of the strategic petroleum reserves of the United States. As a result, prices are very soon back to the corridor 60-70 dollars per barrel.

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