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Four Countries that Could Send Oil Prices Up

By Editorial Dept | Mon, 24 February 2014 15:38 | 0

The week of February 17 has been a violent one, with protests, intense political unrest, and many casualties in several countries around the world. Protestors in Ukraine are stealing the headlines, with a Molotov-cocktail fueled ring of fire. These events are significant, but for the energy world, it is the sudden wave of instability in oil producing countries that are on investors’ minds – unrest that threatens to send oil prices skyward.

With shale oil surging in the United States, sometimes we in the West forget how much we depend on some politically wobbly countries to meet global demand. Oil markets are extremely tight, so it only takes one or two of them to get oil markets into a tizzy. As of this writing, there are four important oil producers that are literally at the brink of disaster. These four countries could seriously rattle oil markets:

Venezuela. The South American country has the largest oil reserves in the world – yes, that’s right, more than Saudi Arabia – but it has punched way below its weight in terms of being a global energy player. Mismanagement, underinvestment, and outright corruption have plagued Petróleos de Venezuela (PDVSA), the state-owned oil company. It was long used as a piggy bank for social programs by the late Hugo Chavez. With revenues pillaged by the government, PDVSA has failed to raise oil production over the last twenty years, despite the rapid rise in oil demand and prices. In 1994,…

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