22.7 C
Thursday, 29 July, 2021

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.

- Advertisement -

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.

Behind the news that you just read, there is another story. The story of a team of journalists who appreciates independence, just like you. A team who has the commitment to unveil injustice and the abuse of power. But to keep doing it, we need your support. Join our cause: to make the kind of journalism that shows you the facts and keeps you awake.SUPPORT JOURNALISM THAT SHOWS YOU THE FACTS AND KEEPS YOU AWAKE


What expect from Venezuelan National Assembly in 2020?

This January 5 begins a new period in Venezuela National Assembly, and it seems Juan Guaido will be reelected as Parliament...
Tu indignación es necesaria
Hazte Aliado