Venezuela: Oil prices edge down in June
The average price of Venezuela’s mix of crude oil came in at USD 64.5 per barrel (pb) in June, falling 1.2% from May’s average of USD 65.2 pb. Despite the fall, oil prices are still at one of the highest levels in years, and Venezuelan oil prices were up 57.9% over the same month last year in June.
Global oil prices have climbed gradually since early 2017, reflecting restricted supply from key producers and healthy global demand. On 22 June, however, OPEC members and non-OPEC oil-exporting nations agreed to raise oil production, reducing the production restrictions previously imposed. Despite higher expected output among key oil-exporting nations, oil prices are expected to remain firm due to falling production in Venezuela and negative spillovers from the U.S. sanctions on Iran.
Chronic mismanagement, insufficient investment, a vacuum of skilled labor and electricity rationing have caused oil production to plummet in Venezuela in recent years. The latest OPEC production data for May revealed that production dropped to 1.39 million barrels per day (mbpd), down from April’s 1.43 mbpd. Moreover, state oil company PDVSA has been struggling to fulfill supply contracts hindered by financial woes and by ConocoPhillips’ seizing of some of the company’s Caribbean assets, limiting PDVSA’s export capacity. However, on a bright note for the battered energy sector, Finance Minister Simón Zerpa stated in early July that the China Development Bank has agreed to invest around USD 250 million to help boost Venezuelan oil output.