May 21, 2019 - Energy & Environment

The grand fall of Venezuelan oil

Reproduced from a chart by the U.S. Energy Information Administration; Chart: Axios Visuals

Venezuela's oil production has dropped to the lowest level in more than 15 years, driven by widespread power outages, mismanagement of the nation's oil industry, and U.S. sanctions directed at the nation's energy sector, according to new U.S. Energy Information Administration data.

By the numbers: In April 2019, Venezuela's oil production averaged 830,000 barrels per day, down from 1.2 million at the beginning of the year. That's the lowest level since January 2003.

  • "The number of active oil rigs — an indicator of future oil production — also fell from nearly 70 rigs in the first quarter of 2016 to 24 rigs in the first quarter of 2019," EIA states.

The intrigue: Via Bloomberg's Tina Davis: "Venezuela has gone from Latin America's largest oil producer to the fourth-largest, behind Brazil, Mexico and Colombia."

One level deeper: The sanctions on Venezuela — namely their impact on oil prices — could play a role with inflation too.

  • Oil prices hit a 3-week high Monday and are primed to rise further as the possible OPEC production cuts and U.S. sanctions on Venezuela and Iran are further priced into the market.
  • Gas prices have managed to hold throughout much of the U.S. this year, but prices now are facing a doubled-edged sword — the transition to more expensive summer gasoline blends and lower U.S. gasoline stocks, currently at a 7 million barrel deficit from 2018.

Go deeper: Oil prices fall after Venezuela's opposition uprising cools down

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