Venezuela to slash budget after OPEC steadies output

Venezuela to slash budget after OPEC steadies output

Oil prices have fallen by a third in the second half of this year, hitting government revenue in an indebted nation that gets 96 per cent of its hard currency from oil sales. “I have ordered a set of cuts in the nation’s budget,” Maduro, whose country has faced shortages of basic goods and high inflation, said during an event with public servants.

Maduro said his economy minister, Rodolfo Marco Torre, would travel to China to “deepen economic and financing agreements” that would help Venezuela cover the oil revenue shortfall.

Venezuela, a member of the 12-nation Organization of Petroleum Exporting Countries with the world’s largest proven oil reserves, had urged the cartel to lower production in order to make oil prices rise. But Saudi Arabia and other Gulf monarchies refused.

OPEC opted on Thursday to maintain its collective output ceiling at 30 million barrels per day, where it has stood for three years, despite oversupply, sending prices plunging. Analysts have warned prices could yet fall further.

US benchmark West Texas Intermediate for delivery in January closed at US$66.15 a barrel on the New York Mercantile Exchange, down US$7.54 from the closing price on Wednesday. It was the lowest WTI close since September 2009. The NYMEX was closed on Thursday for a holiday.

As the New York market closed in an abbreviated session Friday, in London, Brent oil for January delivery sank below US$70 for the first time in four and a half years, to US$69.78 a barrel. Brent settled at US$70.15 a barrel, down US$2.43 from Thursday’s close.

Maduro said Venezuela “firmly” believes that oil prices should not be lower than US$100.

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