Venezuela to Freeze Oil Production under New OPEC Deal

Venezuelan Oil Minister Eulogio del Pino confirmed Wednesday the world’s largest oil cartel, OPEC, has reached an agreement to freeze crude output between 32.5 and 33 million barrels per day.

petroleo.jpg

Venezuela is heavily dependent on oil exports for foreign revenue. (Archive)
Venezuela is heavily dependent on oil exports for foreign revenue. (Archive)
By Lucas Koerner
Short URL

Caracas, September 29, 2016 (venezuelanalysis.com) – Venezuelan Oil Minister Eulogio del Pino confirmed Wednesday that the world’s largest oil cartel, OPEC, has reached a preliminary agreement to freeze crude production during a special meeting in Algeria.

Under the deal, all 14 of OPEC’s member states agreed to freeze oil production at the combined daily total of between 32.5 and 33 million barrels.

The precise ceiling and duration of the freeze will be decided during the cartel’s November 30 meeting in Vienna, Austria, which will also discuss the possible incorporation of non-OPEC producers.

Del Pino hopes that the deal will facilitate a recovery of world crude prices, which have fallen by 60 percent over since late 2014, sparking acute economic difficulties in countries such as Venezuela, Russia, Saudi Arabia, and Nigeria.

“We as oil producers have the right to a just price, a price where we can recoup [revenues] in order to make investments, to sustain production at the global level,” stated Del Pino, via his official Twitter account, from the summit.

Venezuela– which depends on oil exports for 96 percent of foreign currency earnings– has been particularly hard hit by historically low prices over the past year. The price of the country’s costly heavy crude dropping to under $25 per barrel in February.

Over the last year and a half, the Maduro government has tirelessly lobbied fellow oil exporters for a production cap – efforts that have born little fruit until now due to the resistance of Saudi Arabia.

In April, Del Pino blamed the staunch US ally for unexpectedly pulling out of a high level meeting of 18 OPEC and non-OPEC countries that was close to achieving the much anticipated freeze.

Markets responded favorably to Wednesday’s deal, with Brent crude, the international benchmark for oil, rising nearly 6% to almost $49 per barrel.