Venezuela prods OPEC, Russia for oil summit
February 2, 2016, 8:10 am

File photo shows Venezuela’s Maduro and Russia’s Putin, right, who several times this year discussed the oil glut plaguing their economies [Xinhua]

Venezuela’s Oil Minister Eulogio Del Pino is to meet with his Iranian, Qatari and Saudi counterparts this week in a bid to persuade them to change output policy.

In an OPEC meeting last December, production quotas were all but lifted fuelling a drastic drop in oil prices to $26 a barrel.

Oil prices have fallen 80 per cent since 2014; there was a 30 per cent decline in 2015.

On Tuesday morning, US benchmark West Texas intermediate was down 2.15 per cent to $30.95, ending a four-day rally sparked last week by Russian officials who said they could meet with Saudi oil officials to find a means to curb production.

Del Pino met with Russian Energy Minister Alexander Novak in Moscow Monday before traveling to Qatar, Iran and Saudi Arabia.

His mission is a pivotal one as oil exports account for 95 per cent of Venezuela’s economy.

According to Venezuelan media reports, Novak signaled Russia was ready to meet with OPEC to reach a mechanism to curb output.

The Russian news agency TASS said that any prospective talks between Novak and OPEC (or non-OPEC) oil producers will likely focus on an across-the-board production cut of five per cent.

While some Saudi officials appeared to indicate that an OPEC summit including Russia was premature, analysts say member Iran is likely to refuse to curb output as it just returned to global markets after US and UN sanctions were lifted.

Iraq, too, which is struggling with a substantial deficit leaving it short of cash, is unlikely to cut production.

Last week, it announced that its production output had reached record levels in decades.

With January’s removal of output caps, OPEC is selling 32.5 to 33.5 million barrels of oil – well above market demand.

According to the International Energy Agency, Saudi Arabia produced at least 10.2 million barrels a day in January. By comparison, Venezuela pumped into global markets only 2.5 million barrels a day.

Russia, meanwhile, injected into the markets nearly 11 million barrels a day.

While economists say that Russia can manage in the interim with oil as low as $30 a barrel, Venezuela has been in fiscal turmoil.

As oil prices slid, the inflation rate in Venezuela jumped to over 68 per cent; with food prices quickly rising street protests broke out in February 2014.

Since then, the central bank has not released inflation figures but in October 2015, opposition parties said it had reached an annual rate of 180 per cent.

Citizens have complained of a lack in basic amenities such as sugar, milk, and toilet paper, as well as some medicines, saying they have had to stand in long queues or buy overpriced products on the black market. Riots broke out, which Maduro blamed on opposition figures.

With less cash in its coffers – the strategic foreign reserves have fallen from $24 to below $20 billion in recent months – the government has imported less and less commodities.

The BRICS Post with inputs from Agencies