Americas News
Venezuela Says Oil Needs to be $88/bbl, but Forecasts a Drop to $40/bbl in 2016
On Tuesday in a presentation on its 2016 budget, Venezuela said it has set the target export price for its oil at $40 per barrel, less than half of the $88 per barrel Venezuelan President Nicolas Maduro believes it needs to be, the BBC reports.
"Excess oil supply has resulted in the sustained fall in oil prices," Minister of Economy, Finance, and Public Bank Rodolfo Marco Torres was quoted as saying.
"Considering the trends in the international oil market, the 2016 budget has been estimated [at] an average export price of the Venezuelan oil basket [of] $40 per barrel."
The figure is a marked change from last year, when the government's 2014 budget targeted oil at $60 per barrel for 2015.
No forecasts for 2016 oil production have yet been disclosed, though oil export profits have already been cut in half from the crude plunge this year.
The $40 figure comes in contrast to comments made by Venezuelan President Nicolas Maduro ahead of Wednesday's meeting between the Organization of the Petroleum Exporting Countries (OPEC) and eight invited non-OPEC members, where he called for an average global oil price of $88 per barrel.
"We are going to present proof, technical elements, at this meeting, that the average price needed to guarantee global investment in the next five to 10 years should be $88," he said.
The $40 level is also significantly lower than the $70 price floor that the country had been widely expected to have presented a plan for at the October 21 Vienna meeting.
Venezuelan oil minister Eulogio del Pino has also previously warned that oil producing nations other than his own were the most at risk if talks to raise oil prices failed to be fruitful, but some analysts have suggested the country could run into serious production problems next year if prices do not improve.
Earlier this week, Ship & Bunker reported that Iraq is planning for $45 per barrel oil in its 2016 budget, while Iran last month priced oil between $42 and $50 per barrel in its draft budget.
Given the historical relationship between Brent and bunker prices, $40 to $50 oil would suggest IFO380 buyers could expect to see product priced in the $200 to $300 range next year.
