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Venezuela has lost 30% of revenues from drop in oil prices

Venezuela has lost 30% of revenues from drop in oil prices

Posted by Dubraswka Aguilar on November 14, 2014

Venezuela lost 30 percent of its foreign exchange revenue in the last month because of a “tremendous” drop in oil prices, President Nicolas Maduro said.

Venezuela’s average oil-export price last week fell to $72.80 a barrel, the lowest in four years, pushing the yield on the country’s benchmark bonds to almost 19 percent for the first time since the global financial crisis. Oil accounts for 97 percent of foreign exchange income, which the country needs to pay about $28.5 billion of bond principal due in 2016.

To defend oil prices, Maduro said he sent the country’s foreign minister to five oil producers, including Mexico and Russia, to drum up support ahead of the Nov. 27 meeting of the Organization of the Petroleum Exporting Countries, which Venezuela co-founded. Back in the late 1990s, Venezuela ended a slump in oil prices by cutting production along with other OPEC and non-OPEC producers.

“We are in a campaign to defend Venezuela, Venezuelan oil, international markets and the price of oil,” Maduro said last night in a televised national address from Caracas. “Oil sustains the development of our economic and social life.”

Venezuela will earn $16 billion less in 2015 than this year because of the decline in oil prices, Jefferies Group LLC Latin America analyst Siobhan Morden wrote in a Nov. 12 note to clients. At current spending rates, Venezuela needs oil to rise to $110 a barrel to balance its accounts.

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