This is Venezuela's dependence on oil exports | Markets

This is Venezuela's dependence on oil exports | Markets



There is no other country in the world that has the oil reserves that Venezuela has. The 300.9 billion barrels of oil in the South American country far exceeds 266,000 million Saudi Arabia and 169,000 million Canada, the other two nations that are on the podium.

Nor is there another country that has reduced its oil production one third in the last twenty years, from the 3 million barrels it produced per day in 1999, the year in which Hugo Chávez was inaugurated president, up to 1.3 million barrels which produced by day in 2018, According to the statistics of the Bloomberg agency.

"Economic war against Venezuela", the Venezuelan government claims to explain this decline and its other terrible economic numbers, among which is the fall of 18% of GDP in 2018, according to the International Monetary Fund (IMF). "Terrible administration", counterattacks the opposition led now by the self-proclaimed president, Juan Guaidó, who received the recognition and support of the US president, Donald Trump, last week.

Just the US is the main buyer of Venezuelan oil. 41% of the South American country's oil sales in 2018 went to the US, according to the US Office of Energy Information (EIA, for its acronym in English). The North American nation only buys more oil from its neighbors Canada and Mexico and its ally from the Middle East, according to EIA data.

But this Monday the US president has given a change of direction and has decided to impose sanctions against Venezuela. Trump ordered that they be frozen the funds of the state oil company Petróleos de Venezuela (PDVSA) in the United States, representing some 6,100 million euros. This measure will mean losses in PDVSA exports worth 9,649 million euros this year, according to the US government.

This decision of Trump will be a serious blow to the government of Maduro and the Venezuelan economy. The South American nation, historically, based its economy on the export of oil. It practically does not produce basic goods, so it has to import a large part of the food and essential products it needs, such as medicines. And it does so thanks to oil exports, which represent 98% of its total exports, according to the data of the Organization of Petroleum Exporting Countries (OPEC, for its acronym in English).

The resounding fall in the price of crude, which went from being worth $ 112 a barrel of Brent oil, a world reference, in June 2014 to $ 34 in January 2016, hurt the Venezuelan economy completely. Despite the fact that the OPEC countries agreed in 2017 on reduce its oil production in order to increase the price, still a barrel of oil is far from the values ​​reached five years ago. This Tuesday Brent oil It sells for $ 60 a barrel.

The decline in the price of oil is linked to the great problem of Venezuela's economy, which is the lack of foreign exchange: dollars that it needs for imports and for society to have access to basic goods. The scarcity of foreign currency also produces speculation with the exchange rate and the exponential increase in the price of the dollar and euro in the illegal market. Maduro ordered on Monday to equate the official exchange rate with that of the parallel market. After the devaluation of 34.5%, one euro is sold on Tuesday in Venezuela at a price of 3,773 bolivars officially.

The shortage of products generates inflation, since there are very few products in the market for a lot of demand. The South American country had a vertiginous inflationary escalation in the last four years: it was 57.3% in 2014; of 111.8% in 2015; of 254.4% in 2016; from 1,090% in 2017 and ended 2018 with a 1,000,000% price increase, According to IMF statistics. The international organization predicts an inflation of 10,000,000% by 2019. Beyond the diverse political opinions, the statistics reflect that the economic situation is already unsustainable.

The cheapest gasoline in the world

There is no nation in the world where filling a car tank is as cheap as in Venezuela. Due to state subsidies, the liter of gasoline sells for $ 0.01, according to Global Petro Prices. Sudan, the second country where less is paid for gasoline, sets a price of $ 0.13 per liter. The liter, in Spain, has a value of $ 1.38, a price 13,800% greater than that of Venezuela.

The interests of China

China is the main international power supporting the government of Nicolás Maduro. The Asian nation has made important investments in infrastructure and extractive activities in recent years. China is the second country that Venezuela sells the most crude, with a percentage barely less than 20% of its total oil exports. China, in addition, is the main lender in Venezuela. Since 2007 it has lent a total of 54,561 million euros. And Venezuela, likewise, is the country in Latin America to which China has lent the most money, above Brazil and Argentina.

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