Oil Producers Like Venezuela, Iran, Russia and Saudi Arabia Continue to Face Price Drop Crisis
The oil industry has entered a challenging phase recently with oil prices dropping and oil-producing nations continue to face financial crisis. These include Venezuela and others like Iran, Russia and Saudi Arabia, per The Wall Street Journal.
The news comes after yet another downslope in prices of crude oil on Tuesday.
The publication reports that oil prices went down to $30 per barrel and the global benchmark, Brent, is now down to 18 percent as 2016 began along with other benchmarks. The news is not so appealing, especially for global exporters who have been facing a financial crisis in their home countries following the oil price drop crisis.
The publication further reports that the cause of the recent global oil price slide include investors facing deep debts as well as some political effects like leaders being questioned for their response to the rising global issue.
The news agency revealed that in light of this, Nigeria's oil minister is calling all the members of the Organization of the Petroleum Exporting Countries for an emergency meeting. However, the agenda remains unknown but the global oil price slide will definitely be at the top of the agenda.
Meanwhile, as many countries experience financial crisis which is hugely contributed by the current oil price, Venezuela may be forced to have drastic economic changes to be able to wade out the global crisis in crude.
"Chavismo's economic model can only work with a high oil price," Asdrubal Oliveros, head of the local firm Ecoanalitica told Fox News Latino. Meanwhile, the newly seated opposition leader President Nicolas Maduro has already announced Venezuela's oil selling price which is at $24 per barrel.
"If prices stay like this, it would mean the government has a cash deficit of $25 to $30 billion to pay its debts and import the products the country needs," Oliveros said as quoted by the news outlet.
While Venezuelan government continue to push through despite the crisis, Oliveros revealed his analysis and his suggestion for the leaders to take into consideration. To gain financial resources, Venezuela must "request a bailout from the International Monetary Fund (IMF), privatize public companies or get into further debt. Or they could also mix those options," Oliveros continued.
However, going for the IMF, Alexander Guerrero, economist and professor at Universidad Catolica Andres Bello, analyzed that the IMF may want something in between their aid. "They will request an immediate end to economic controls like price regulations and currency exchange restrictions, the base of Chavismo's economic model," he said as quoted by the publication.
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