The world market is yet to respond to the fall in Venezuelan oil production

6 february 2019

The fall in oil production has hit Venezuela hard, however, the market as a whole is yet to show any response. This opinion was voiced by the chief advisor of Leonid Grigoryev, Head of the Analytical Center, speaking at the MIA Russia Today press center, host to a roundtable called "The Venezuela situation: the oil factor."

The expert reminded listeners that the decline in oil production in Venezuela began back in 2016, significantly deteriorating this year.  However, the loss of Venezuelan oil is compensated for on the world market by shale oil, the production of which the US increased as of December. "The reduction of American imports is as follows: in 2004, the United States purchased 1.5 million barrels daily, while now that number is at 0.5 million barrels.  For the Americans, imported oil is no longer a necessity. Although, enterprises are well adapted to specific grades of oil, so they can't turn their back on importing oil altogether.

With such a significant drop in production, Venezuela is unable to meet the demand for the required imported goods, while sanctions will only aggravate the situation.  The world market will weather the storm, largely thanks to agreements reached by OPEC+, which is set on stabilizing the market," said the expert.

Virtually, the key objectives of OPEC+ are to provide participating countries with steady export revenues, balance the market and defuse conflicts, - indicated Grigoryev. - In short, it ensures economic growth worldwide. This is no small feat, one clearly undervalued as far as the benefits it brings to improvement the world over.

In order for oil production in Venezuela to develop, the industry has to seriously invest in its modernization, added the expert.  This will take top priority, right after stabilizing the political situation in the country.  However, this is projected to take place no sooner than April.

Source: MIA Russia Today

Photo from MIA Russia Toda