• 2 days Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
  • 2 days Statoil Changes Name
  • 2 days Tillerson just sacked ... how will market react?
  • 1 day Russian hackers targeted American energy grid
  • 1 day Is $71 As Good As It Gets For Oil Bulls This Year?
  • 2 days Petrobras Narrows 2017 Loss, Net Debt Falls Below $85bn
  • 2 days Proton battery-alternative for lithium?
  • 2 days Ford Recalls 1.38 Million Vehicles (North America) For Loose Steering Wheel Bolt
  • 1 day Oil Boom Will Help Ghana To Be One Of The Fastest Growing¨Economies By 2018!
  • 1 day Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 2 days I vote for Exxon
  • 2 days UK vs. Russia - Britain Expels 23 Russian Diplomats Over Chemical Attack On Ex-Spy.
  • 2 days Why is gold soooo boring?
  • 2 days South Korea Would Suspend Five Coal - Fire Power Plants.
  • 1 day Spotify to file $1 billion IPO
Will Rosneft Move Forward In The Arctic Without Exxon?

Will Rosneft Move Forward In The Arctic Without Exxon?

U.S. sanctions against Russia have…

Glut Or Deficit: Where Are Oil Markets Headed?

Glut Or Deficit: Where Are Oil Markets Headed?

Wildly diverging forecasts by oil…

Venezuela Starts 95,000 Bpd Production Cut As Part Of OPEC Deal


Venezuela - one of the staunchest supporters and promoters of OPEC’s oil production cuts - has said it would start reducing supply by 95,000 bpd beginning January 1, complying with its commitment to the total cartel cuts.

OPEC’s much-hyped deal aimed at reducing global oversupply and ‘stabilizing’ oil prices stipulates that Venezuela cut its output to 1.971 million bpd from 2.067 million bpd. As part of the agreement, OPEC members and 11 non-OPEC producers pledged to cut production by almost 1.8 million bpd, of which 1.2 million bpd would come from OPEC and 558,000 bpd - from non-cartel producers, including Russia with a 300,000-bpd promised gradual cut in the first half this year.

Venezuela’s state-held company PDVSA, which made the announcement of the cuts by instruction from the oil ministry, said that it and its subsidiaries would begin to “implement a reduction of the volumes of the main crude oil sales contracts without prejudice to PDVSA’s international contractual commitments and in accordance with the terms and conditions of current contracts”.

PDVSA barely escaped bankruptcy two months ago and if OPEC’s cuts manage to lift oil prices, they would give a lifeline to the struggling oil company and Venezuela’s oil revenues, which are almost all of its foreign currency revenues.

Related: The Silver Stock For 2017

According to Venezuelan Oil Minister Eulogio Del Pino, the removal of 1.8 million bpd from the oil market would reduce supply in around 100 days by between 180 million and 200 million barrels, which would lead to a rebalance of inventories. This, in turn, would see Brent prices at around US$60-65, which would mean that Venezuelan crude would trade between US$45 and US$55, Del Pino said, as quoted by the Energy Ministry.

So Venezuela, whose economy is in total collapse, is desperate to see oil prices rise and has no incentive to cheat with production cuts. Ironically, it has to rely on OPEC and non-OPEC producers which it had tried so hard to get on board with cuts to also stick to their promises.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment
  • gulag Pittsburgh on January 03 2017 said:
    How can anybody say Venezuela has no incentive to cheat when they are so desperate to find foreign currency that they are selling gasoline in pesos near the Colombian border. Plus, their entire govt is based on corruption, including cheating.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News