Fears of potential shortages from the implosion of Venezuela’s production, and the imposition of sanctions on Iran, have catapulted the Brent oil price marker to $80. However, there are great uncertainties about how much oil supplies will be disrupted over the balance of 2018, and what the supply response will be from OPEC and other producers, such as Russia and the United States.
Venezuela’s production fell by 45,000 b/d in April from March, averaging 1.47 million barrels per day. The April decline was equal to the average monthly drop thus far in 2018. Whether the rate of decline will increase, or stay the same, is unknown, but what is known is that oil workers have been leaving the country, unpaid.
The May 20th presidential election has been called a sham. And President Trump is considering sanctioning Venezuela's oil or prohibiting the crude to be sold in the U.S. If he does, Venezuela’s economy is expected to collapse because it is totally dependent on oil revenues. Continue reading "Oil Market Risks For 2018: Upside Then Downside"