Tuesday, November 18, 2014

Venezuela and the Plummeting Oil Price

Venezuela depends on oil sales for over 95% of its export earnings, with the hard currency being used to pay for imports, social programs, external debt and arbitration settlements. As a result the decrease in the price of oil this year has been viewed with concern. Brent crude has fallen from a previously stable US $105 in July down to $78 currently.

Brent Crude Oil Price in USD/barrel from Nov 2013 - Nov 2014

Lower oil prices are an additional strain on Venezuela’s ailing economy. But $75-80 oil won’t send the country into default...yet, but the D-word is being whispered by some analysts.