Business & Finance

Venezuela’s political upheaval leads to oil price hike – experts

KUWAIT, The political upheaval in Venezuela will lead to a hike in oil prices and also will cause a shrinkage in global demands due to the lack of Venezuelan exports, said experts Saturday.

Speaking to KUNA in separate interviews, the experts affirmed that supplies this year will face danger if the status quo continued in Venezuela.

The US sanctions imposed on Venezuelan oil exports will lead to huge disturbance in the global market with buyers surely seeking other suppliers to cover their oil needs, indicated the experts.

On his part, economic expert Hajaj Bu Kheder stressed that the political and economic crises witnessed by Venezuela in the last two decades had affected the country’s production capacity, which in turn will have an impact on the global market.

The crises has led to the decrease of Venezuelan production from 1.2 million barrels per day (bpd), a capacity not fitting with a country that has a staggering oil reserve of 280 billion barrels, pointed out the expert.

He predicted that the Venezuelan production might decrease by 300,000 barrels, bringing the number to about a million bpd.

Bu Kheder revealed that the price of future contracts of the Brent crude reached USD 61.38 per barrel since the political disturbance began in Venezuela.

OPEC saw it fit that no action needed to be taken thus far in regards to their production cut deal due to the minimal effect of the current situation, said the economic expert.

However, the international organization is keeping a close eye on the situation in Venezuela, affirmed Bu Kheder.

On his part, oil expert Dr. Abdulsamee Behbehani revealed that most of the oil reserves in Venezuela were of heavy crude oil, which the South American country produces around 1.7 million bpd.

Dr. Behbehani forecasted that Brent crude prices might reach around USD 70 pb by the end of the year due to the crisis in Venezuela.

Despite American companies boycott of Venezuelan oil, it is still sought by French, Italian, and Russian companies, said Dr. Behbehani who added that Venezuela might seek exporting its heavy crude oil to China and India with the latter country eager to buy around 500,000 barrels to cover its needs.

He said that the increase in medium to heavy crude oil prices had boosted the gap between the Brent crude and the West Texas Intermediate, revealing that the price of the Brent crude might have gone up beyond USD 65 pb if it was not for the increase in the US Dollar exchange rate and investors’ fears of weak commercial growth, which led the price to roam around the USD 60 pb margin.

Source: Kuwait News Agency