Falling oil prices are a perfect storm for the Maduro regime’s cash flow

Already reeling from the impact of the Coronavirus outbreak on the Chinese economy and U.S sanctions, now state oil firm PDVSA must sell its oil at an ever deeper discount as a result of the price war between major oil producers, Saudi Arabia and Russia


Venezuelan oil experts told El Pitazo that the recent drop in oil markets will have a severe and adverse effect on the already impacted cash flow of the Nicolas Maduro regime.

A mix of factors -standing U.S sanctions against state oil firm PDVSA and the effects of the Coronavirus outbreak in the world economy- means the Maduro regime is facing the perfect storm, Francisco Monaldi, a Venezuelan expert that teaches in Texas’s Rice University, wrote Tuesday in the New York Times.

The professor and oil author Rafael Quiroz said on Tuesday: “If the price of an oil barrel falls below 27 dollars, PDVSA will producing at a loss. The oil extracted in the Orinoco Belt costs between 27 and 33 dollars per barrel because it is a product that needs a lot of refining since it is extra heavy”.

You must read: PDVSA using foreign partners to circumvent US oil sanctions

PDVSA reports oil export prices weekly. On Friday it reported that was selling its oil at $45 per barrel, but on Monday the price fell by more than 50% worldwide. It has since recovered some, but the full impact will only be known again this Friday if the Maduro regime decides to publish again the weekly oil figures.

The expert added that the collapse of oil prices means that the value of the Petro will also fall because the crypto-currency created by Nicolas Maduro is anchored to the price of the oil barrel.

In an interview, Quiroz assured that “the fall in the value of petroleum will harm fiscal, budgetary and public spending in Venezuela”.

About the impact of the coronavirus on the world economy, specifically, in the energy field, Quiroz warned that, in the case of China, “oil consumption has decreased a lot, which has also affected the economies of other countries”.

To Venezuela involved in a complex humanitarian crisis, not selling oil or selling at a skinny chicken price, would mean that the government would not even have enough to buy the disputed CLAP, the boxes of food used as a social control tool.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.