24 June 2016, Caracas — Oil prices will likely rise by $10 per barrel this summer, Venezuela’s oil minister said on Thursday, adding that the South American OPEC nation’s output could increase as much as 200,000 barrels per day in the next six months.
Eulogio Del Pino told a local radio station in an interview that increased demand and lower supply would help boost oil prices in the coming months, which began falling dramatically two years ago as a result of a global supply glut.
“Two million barrels more in demand and a million barrels less supply will translate to a recovery of prices that we estimate to be some ten dollars,” he said.
Del Pino said state oil company PDVSA has launched a broad effort that includes co-operation with joint ventures and new contracting arrangements with service companies that will help it boost output, which has been weakened by low prices.
“We have no doubt that within three to six months, we are going to be raising production between 150,000 and 200,000 barrels per day,” Del Pino said. “We will get up to levels very close to our potential, in the order of 2.9 million barrels per day.”
Venezuela is struggling under a severe economic contraction resulting from a decaying socialist economic system, low oil revenue and power rationing due to a prolonged drought.
Data from the Organization of the Petroleum Exporting Countries published last week shows Venezuela’s output dropped to 2.37 million barrels per day, b/d, in May.
Del Pino, in an interview with Reuters this month, said output was currently at 2.7 million bpd and would rise to 2.8 million b/d by the end of the year.
That is more optimistic than most analyst projections.
“The downside risks for Venezuela’s oil production seem to be increasing,” Barclays said in a report this week. The country’s output could decline to end the year at around 2.1 million bpd, the bank added.
Amid a cash crunch, Venezuela’s oil industry is suffering from shortages of spare parts, the retreat of oil services companies due to unpaid bills, maintenance issues, and crime.
*Diego Ore; Editing – Sandra Maler & Bill Rigby – Reuters