| 12:35 PM EDT, 04/26/2018 (MT Newswires) -- The oil industry in Venezuela, the country with the world's largest crude reserves, is on the brink of collapse, National Bank Financial said in a geopolitical briefing note, limiting downside risk for oil prices already boosted by production cuts from the world's biggest exporters and the threat of new Iran sanctions. Angelo Katsoras, the investment bank's geopolitical analyst, says PDVSA, Venezuela's state-owned oil company, has replaced skilled employees with political hangers-on and cannot afford to pay a living wage, leaving workers too undernourished for heavy labor and leading to an estimated 25,000 resignations and mass absenteeism from a workforce last pegged at 146,000. The country's near-worthless currency and the withdrawal of Chinese financial support for the Maduro regime has intensified the collapse of Venezuela's oil industry, where production has fallen from about 3 million barrels per day a decade ago to 1.38 million bpd by year end, according to an International Energy Agency Estimate. As well, Venezuela is now importing about 200,000 barrels of light oil to dilute its heavy oil production. With the U.S. looking ready to abandon an international accord to limit Iran's nuclear ambitions May 12 and impose new sanctions on Iran, Venezuela's problems are likely to support international oil prices, which rose above US$75 per barrel this week for the first time since 2014. "Continued depressionary economic,conditions, dangerously low foreign currency reserves, China's refusal to lend more money, reports of oil workers increasingly abandoning their jobs the inability to import much needed machinery/spare parts for the oil sector, and the likely imposition of more sanctions by the United States all point to a further significant decline in (Venezuela's) oil production by the end of this year," Katsoras writes. "Given the shrinkage of global oil stockpiles, the ongoing collapse of oil production in Venezuela and Iran-U.S. tensions, we see very limited downside potential to oil prices from current levels in 2018. |