The deepening chaos in Venezuela could have profound consequences for the global oil markets.
«We simply don’t know what is happening on the ground,» said Helima Croft, global head of commodity strategy at RBC Capital Markets. «I would be cautious about saying we are in the final chapter.»
Croft, a former CIA analyst, said it’s unclear if the uprising is supported by senior military officers.
«Junior officer coups tend to be bloody, erratic and the success rates are lower,» she said.
The crisis in Venezuela comes at a tricky time in the oil markets. Crude prices have surged in 2019 in response to deep supply cuts by OPEC and the Trump administration’s crackdowns on two OPEC nations: Iran and Venezuela.
In the United States, the average gas price has climbed by 63 cents a gallon since the beginning of the year to $2.88, according to AAA.
Venezuela’s oil exports plummet
The crisis in Venezuela has led to mass human suffering marked by shortages of food and medicine as well as widespread power outages.
Even though Venezuela has more oil reserves than any nation on the planet, production there has collapsed following years of underinvestment, recent blackouts and US sanctions on PDVSA, the state oil company.
Venezuela’s daily oil production plunged from 1.2 million barrels in December 2018 to 750,000 barrels in March 2019, according to field level data from Rystad Energy.
Shipments to the United States, long Venezuela’s leading customer, have vanished after the PDVSA sanctions.
