Venezuela˘s oil production goes down, whereas China is unable to help due to its own problems

Venezuela˘s oil production goes down, whereas China is unable to help due to its own problems
Venezuela˘s oil production goes down, whereas China is unable to help due to its own problems
Wednesday June 22, 2016

Venezuela’s status as a troubled oil producer is going from bad to worse, with its rolling power blackouts resulting in a 4.8% decreasing in production for May to 2.37 million barrels per day according to reports.

The country has also diverted natural gas, a move that will likely increase the drop, say analysts.

Moreover economists call these developments a concerned trend and note that although the majority of Venezuela’s oil production does not depend on grid –provided electricity, about 200 kb per day is dependent on electricity and the rationing of the latter has likely to decline in the country’s output. 

A research from an analyst revealed if May’s decrease becomes a new trend then average production could fall 400-500 kb per day and end the year at about 1.7 million barrels per day.

In the meantime and in noting Venezuela’s economic and political crisis, the analyst claimed that it is increasing our expected decline in average oil production for 2016 to 300-500 kb per day from 200-250 kb per day, to end the year at about 2.1 million barrels per day.

The situation is getting worse and worse due to Venezuela’s valued trading partner (China), whose own economic challenges are preventing it from providing financial support.

Other analyst said that this for sure clinched the balance and increases the call on shale oil, during the peak summer months, people will realize how much stock has been drawn down.

With daily power shortages, drought, lack of basic supplies like food and medicine, and the highest inflation in the world, Venezuela in the minds of many observers is on the brink of complete collapse. Current and former leaders of the country are blamed for these economic woes due to social blueprint instead of embracing free-market reforms.

On the other hand economists says that even if oil went to about 100 US dollars per barrel, as it was midway through 2014, the country would not be able to escape the economic crisis; it needs double that.


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