Saudi Arabia fears political turmoil in Venezuela will impact oil market

Saudi Arabia fears political turmoil in Venezuela will impact oil market

Saudi Arabia fears political turmoil in Venezuela will impact oil market

/ Policy & Regulations / Wednesday, 30 January 2019 11:45

Saudi Arabia has expressed its fears that the current political crisis in OPEC member country Venezuela will have a severe impact on the oil market.

The Venezuelan president has become embroiled in a bitter power struggle with the opposition and there shows no signs of an easy resolution to the situation which has seen violent demonstrations occur on the streets of the South American country.

Khalid al-Falih expressed his grave concerns at the ongoing issue and said he was monitoring the situation closely.

He said, “Of course, developments in Venezuela may have an impact on the (oil) markets. We are watching developments there and we’re acutely aware that there could be an impact on the oil market balance.”

The political unrest has seen Venezuela’s oil production drop sharply over the last few months. Its output was around 2 million barrels per-day, but that has dropped to about 1.4bpd.

The Latin American nation sits on the world's largest crude reserves of over 300 billion barrels, most of it heavy crude that is costly to produce.

Venezuelan President Nicolas Maduro and opposition leader Juan Guaido have been locked in a power struggle since Guaido proclaimed himself as ‘acting president’ on Wednesday amid angry protests over the country's economic woes.

The standoff has split the international community between nations that recognize Guaido as president, including the United States and a dozen countries in the region, and those that still recognize socialist leader Maduro, including Russia and China.

OPEC members and their non-cartel producers late last year decided to cut output by 1.2 million bpd to shore up sluggish prices. The six-month agreement that includes major non-OPEC producer Russia took effect from the beginning of this month.

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