The current events in Venezuela have unprecedented consequences on Venezuela seen as an oil power and an influential country.
With the protests spreading across the country, the US recognition of Juan Guaido, the situation was yet unstable. But it became more insecure with the possible U.S. sanctions on imports of Venezuelan crude oil announced on February 2nd, 2019. These sanctions will hurt the Venezuelan economy which is dependent at 90% of oil production.
This decline is not recent, in fact under Chavez’s presidency, the oil production was damaged but this phenomenon has accelerated with the recent uprising and instability in Venezuela. According to the latest data, Venezuela’s crude oil production now stands at its lowest level in several decades. The crude oil production was in 2018 around 1.4M and it tends to keep on plunging towards 1 million barrels per day compared to the 3 million per day at the beginning of Maduro’s presidency. This fall tends to dramatically continue. According to CSIS, U.S. imports of Venezuelan crude oil are also low, having rapidly declined over the past year along with the fall of its crude oil production. This economic collapse affects the Venezuelan since the government run out of money and thus they could not provide basic needs as said Reinaldo Quintero “We can’t charge, we can’t receive money. Our finances are paralyzed,”
Besides the dramatic domestic consequences, Venezuela is also weakened internationally. Venezuela cannot subsidize oil to its allies because of debt to pay back to China and Russia and thus it is losing its influence across Latin America and the Caribbean islands. China replaced Venezuela, in 2016.
The PDVSA (Petroleo de Venezuela SA) is the main concerned. With this terrible economic situation, PDVSA was forced to pay debt and its refineries are not at 100% of capacity. Moreover, it is the main target of US sanctions to punish Maduro. Bolton said the sanctions would block $7 billion in PDVSA assets. However, it seems that this company manages to bypass these sanctions thanks to Russia help. Russian NOC, Rosneft, agreed to continue providing Pdvsa with vital oil products in exchange for Venezuelan crude oil. According to an analyst, Paola Rodriguez-Masiu, the sanctions would be lower than planned and Maduro has alternatives. But these latter could damage even more the population, already fragilized.