Oil prices rise amid escalation between Israel and Iran. Just like when Russia invaded Ukraine, The market takes advantage, benefiting the producing countries, however this is not the case of Venezuela.
According to the criteria of
Although the country has the largest proven oil reserves in the world, its production barely reaches 904,000 barrels per day (bpd), which, although it represents an increase of 4.62 percent compared to the first three months of 2024, has not yet been achieved. manages to reach one million, according to reports from the Organization of Petroleum Exporting Countries (OPEC).
The main Venezuelan market continues to be the United States. The Latin American country is the third largest supplier of oil to the United States according to figures from the Energy Information Administration (EIA), an entity of that country’s Department of Energy.
Venezuelan exports to that country are about 308,000 bpd below the 561,000 bpd it sold in 2019, according to EIA data.
The deterioration of the Venezuelan oil industry prevents a rebound in production, which has recovered given the presence of some transnationals, including the American Chevron, which renewed license 41 this October 1, which allows it to continue operating in Venezuela.
The license is renewed every six months, but it prohibits the payment of taxes or royalties to the Government of Venezuela, payment of dividends to Petróleos de Venezuela, and the sale of crude oil to a country other than the United States.
For the Venezuelan economist José Guerra, the situation of the country’s main industry is regrettable and he emphasizes that its production prevents it from being competitive in the world market if it exports 308,000 barrels to the United States, about 150,000 to other countries and about 250,000 to internal consumption.
“In the midst of the conflict, Venezuela cannot supply some 2,000,000 barrels in the market because it does not produce them. We are no longer in 1998 when production was 3,500,000,” Guerra highlights.
But another factor that the former deputy also considers is that “the oil countries are not at war,” referring to those from the Middle East. In this case it would only be Iran and he sees a ground escalation in the 2,000 kilometers that separate Israel from Iran as unlikely – for the moment.
The markets regain calm after the Iranian attack, although the
oil continues to rise
The markets regain calm after Iran’s missile attack against Israel this Tuesday, although oil prices maintain their upward path. With investors awaiting a possible Israeli response, the main safe-haven assets, such as gold and public debt, are losing steam and stock markets continue uneven trends.
The price of Brent, Europe’s benchmark oil, which had lost the level of $70 per barrel before the Iranian attack, rose around 3 percent and was approaching $76.
West Texas Intermediate (WTI), a benchmark in the US, also rose by around 3 percent and was around $72. The member countries of OPEC+ (the members of OPEC and other oil powers such as Russia) are holding a teleconference this Wednesday to analyze the market situation.
The meeting was called when the main concern was the stagnation of demand, a factor now added to by the escalation of tension in the Middle East. The price of gold, which rebounded on Tuesday, is down 0.4 percent and stands at $2,653 per ounce. The demand for sovereign bonds subsides, which lowers prices and increases their profitability.
The yield on the ten-year German bond, considered the safest, rises to 2.09 percent. The euro, which depreciated against the dollar when Iran’s plans became known, maintains positions against the US currency and is exchanged at 1.1067 units.
In the European stock markets, falls predominate, although they are moderate. Madrid loses 0.5 percent; Frankfurt, up 0.4 percent, and Milan, up 0.1 percent, while London and Paris are trading flat. According to analysts at Link Securities, “investors’ attention will continue to be focused on the conflict in the Middle East, waiting to know how Israel responds to Iran’s attack.”
This Wednesday’s macroeconomic agenda highlights the publication in the US of the private employment report for September. Banca March analysts believe that the markets’ reaction to the Iranian attack has been “lukewarm”, although “it remains to be determined Israel’s response and whether this action will trigger a conflict on a regional scale.”
Israeli Prime Minister Benjamin Netanyahu said Tuesday that Iran has made “a big mistake” and “will pay for it.” Michaela Huber and Mario Montagnani, from the management company Vontobel, asset manager of the Swiss banking group of the same name, maintain in a market commentary that the Iranian attack against Israel “brings closer to a situation of regional conflict.”
In his opinion, “as usually happens in scenarios of growing geopolitical tension, the greatest impact has been felt in raw materials markets.” “Oil markets always react very nervously when Iran is involved, but, in the longer term, the interaction between supply and demand usually comes back to the fore,” they specify.
ANA MARÍA RODRÍGUEZ BRAZÓN – EL TIEMPO CORRESPONDENT – CARACAS
With information from EFE
#Venezuela #supply #oil #market #face #crisis #Middle #East