Business | Oil & Gas
Another Venezuela crisis will add $11 to price
Oil prices could jump by as much as $11 a barrel if world markets faced another loss of Venezuelan crude, says a US Government Accounting Office report.
- Reuters
- Published: 00:00 June 17, 2006
New York: Oil prices could jump by as much as $11 a barrel if world markets faced another loss of Venezuelan crude, says a US Government Accounting Office report.
The Opec nation's industry was severely disrupted by a two-month strike at Venezuela's state oil firm PDVSA that ended in early 2003, cutting off exports to its main customer the United States and pushing up world prices. The strike prompted the GAO to examine what would happen if Venezuelan supplies were again cut off as relations between Caracas and Washington deteriorate.
"A loss of 2.2 million barrels of crude per day per day about the size of the loss during the Venezuelan strike would, all else remaining equal, result in a crude price spike of up to $11 per barrel," said a draft of the report obtained by Reuters on Thursday.
The United States is the top buyer of Venezuelan oil, but ties have been strained since President Hugo Chavez first won office in 1998. Left-winger Chavez accuses the administration of US President George W. Bush of backing a failed 2002 coup attempt against him.
Washington denies the charges but Chavez says any attempt by the United States to invade the South American nation or assassinate him will result in a suspension of US oil sales.
US consumers would face higher prices at the pump in such an event,
according to the GAO report, which also studied the possibility of a reduction in exports or closure of PDVSA's refineries in the US.
"A Venezuelan oil embargo against the United States would increase consumer prices for petroleum products in the short-term because US refiners would experience higher costs getting replacement supplies," said the draft report.
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