Over the next 3–4 years, the situation in Venezuela will not have a significant impact on the global oil market, including the price of Azerbaijani oil. This is the view of economist Emin Garibli, Associate Professor at the Department of Economics of the Azerbaijan State University of Economics (UNEC), who commented to Minval Politika on the situation surrounding Venezuelan oil and global oil prices.
According to him, Venezuela currently produces around 1 million barrels of oil per day. At the same time, Venezuelan oil is heavy crude, whereas Azerbaijani oil is light, which makes them incomparable in terms of production costs and technological requirements. The extraction of heavy oil requires substantially higher investments.
The economist recalled that despite Venezuela possessing some of the world’s largest oil reserves, political developments and changes of power led to a sharp decline in production. At present, Venezuela’s oil sector involves, among others, the U.S. company Chevron as well as several European companies, which has helped raise output to around 1 million barrels per day.
Garibli estimates that increasing production to 2–3 million barrels per day over the next 5–6 years would require significant additional investment, as well as time and appropriate resources. Overall, in his view, no changes in global oil prices should be expected in the short term as a result of the situation in Venezuela.
“A great many things may happen in the future. Naturally, in the long term there may be risks — prices could rise sharply. We know that the United States, unlike OPEC, pursues its own policy, and Venezuelan oil will also be among those volumes not accounted for within OPEC+. But again, many developments are possible. I do not think this poses any threat to us. The issue is that the main consumers of Venezuelan oil are China and Cuba, which could affect their economies. In particular, China used to purchase oil at $20–25 per barrel. Of course, that will no longer be the case. Prices will rise, and the United States will sell oil at higher prices. As for global oil prices, I believe there are no grounds for concern in the next 3–5 years. That said, the oil market is very difficult to forecast because there are many factors involved. We know there is a threat in the territory of Iran. Iran also exports oil to China. If any changes occur there, oil prices could soar in the short term,” the economist noted.
Garibli also recalled that during Donald Trump’s previous presidency, everyone observed his opposition to rising oil prices. “I think that today, despite volatility, stability will still be maintained. Again, force majeure situations may occur that could influence the market in one way or another. Venezuela, in particular, is not a reason for concern and is not a factor that could affect our exports. If we look at Venezuela’s recent macroeconomic indicators, we see that inflation stood at 70 percent and then declined to 40 percent. In principle, this is not a high figure. Economic growth was about 15 percent in 2022 and approximately 4–5 percent in 2025.”
“We are observing a certain degree of economic stability. While the overall social standard has remained low in recent years, the trend has been positive. If over the past five years Venezuela has managed to reach oil production of 1 million barrels per day, I do not think Venezuelan oil will now be able to influence global markets,” the economist concluded.
Meanwhile, Azerbaijani oil has risen in price on the global market. The price of a barrel of Azeri Light crude increased by $1.04, or 1.6 percent, to $65.64. It should be recalled that the minimum price of Azeri Light was recorded on April 21, 2020 ($15.81), while the maximum was in July 2008 ($149.66).
