Market Currents: Venezuelan struggles seen in their oil exports
Monday October 24, 2016
1) Venezuelan President Nicolas Maduro was in Saudi Arabia yesterday to discuss oil market stability, while scrutiny of his country’s economic situation increases, and bankruptcy fears rise.
As our ClipperData illustrate below, 60 percent of Venezuela’s oil exports go to three countries: the U.S., China and India. While flows to the U.S. make sense, not only given its proximity, but given how the sophisticated refineries on the U.S. Gulf coast are able to refine Venezuela’s heavy crude.
Citgo’s Corpus Christi and Lake Charles refineries on the U.S. Gulf further solidify crude flows betwixt the two nations. The U.S. has been the destination for just under a third of Venezuela’s crude exports this year, ticking slightly higher from last year.
India’s share of Venezuelan exports has also increased this year, at 19 percent through September, compared to 16 percent last year. As Russia’s ties with India grow ever closer amid acquisitions and joint ventures, Venezuela is likely to benefit as Russia pivots towards Latin America for supply, as opposed to its adversaries in the Middle East.
China’s share of Venezuelan crude has also ticked one percent higher in the last year, up to 9 percent. Venezuela’s relationship with China is one of necessity, however, than one of choice. For China has loaned Venezuela $45 billion over the last decade, with the debt to be repaid in oil.
If this isn’t bad enough, the drop in oil prices means that Venezuela has to send twice as much to service its debt, compared to when prices were twice as high at $100/bbl.
