Venezuela’s Oil Collapse Makes it Expensive for Russia and Cuba to Prop up Maduro

Venezuela’s oil production has dropped by 40% since the end of 2018 and is now one-third of its 2012-2014 level.

OPEC says Venezuela only produced 960,000 barrels per day in March. This is down from the 1.4 to 1.5 million barrel per day through most of 2018.

Power outages and the continuing economic dumpster fire that is Venezuela is reducing oil production even more.

If Maduro Does Not Have Oil Money Then It is Costly for Russia and Cuba to Keep Him in Power

Nextbigfuture noted the cash crunch that faces Venezuela and its leader Maduro.

Every 100,000 barrels of oil per day is about $1.4 billion per year or $120 million per month. Oil is at $50 per barrel but Venezuela cannot get market prices. They have costs to refine their heavy oil to more valuable lighter oil.

Venezuela had domestic oil consumption of 450,000 barrels per day and they have to make oil shipments to Russia, China and Cuba for debt repayment and security services. This is basically protection money.

Venezuela needs at least 200,000 barrels per day internally. They have to run the military and police. Russia, China and Cuba have to be paid or Venezuela’s security (aka prevention of a coup) will be crippled.

Venezuela has made several settlements to pay several debt holders to prevent the seizure of its US oil refinery assets and other foreign assets.

PDVSA has various debt obligations. The US has placed sanctions and has recognized the new leader Guido. It is unclear how much money Maduro is getting and what can be paid and kept.

Russia and Cuba might get paid to prop up Maduro and they would be propping him up for geopolitical reasons.

It would become a long-term financial drain because a US-sanctioned Maduro led Venezuela will not fix its oil industry.

SOURCES – OPEC, Tradingeconomics, IEA

Written by Brian Wang,

35 thoughts on “Venezuela’s Oil Collapse Makes it Expensive for Russia and Cuba to Prop up Maduro”

  1. anybody have a succinct explanation for why relations between the United States and Cuba have not improved much?

  2. absolutely not true of Syria, 5 years ago, it was not wracked by civil war and had 3 million more residents. and cities that were not piles of rubble. Syria lost an entire Generation and at least 2 decades of progress so Russia could have an ally in the middle east.

    Try again.

  3. The Bolsheviks purge out the Mensheviks. Same old story.

    It is even happening in the US Democrat Party…and they haven’t even seized power yet.

  4. So says Luca Who Hates America. Nevermind that the average Venezuelan is starving to death and thus could care less for Luca’s trolling.

  5. One, if true: Hahahahahaha!
    Two, I thought the US imposed trade sanctions conducting oil business on Russia because of Ukraine? Unless they are doing this through third parties.

  6. I think it’s slightly more than that.
    There is a lesson here, and that lesson is that predicting political events is harder than some other areas.

  7. I mean, who cares? It’s not like Brian is Nostradamus and his legitimacy is linked to a supernatural power to see the future. He said what he thought was likely. He was wrong. Big deal. We could argue that he’s being too sensitive by deleting comments like that, but it’s sort of a jerk move to hound him for it anyway.

  8. IIRC, the deleted comment was about Brian’s prediction about a coup happening before the end of 2018.

  9. Venezuela is free to trade with whomever they want and those parties are likewise free to trade with Venezuela as well. They just can’t clear transactions through the U.S. financial system.

  10. They’d need an awful lot of help to make it to the U.S. If they plan on doing it on foot they’ll have to figure out how to get through the giant swamp that separates Panama and Columbia. No roads, no…. anything. Just impassable, inhospitable swamp that nobody has ever bothered to do develop in any capacity.

  11. If Venezuela was allowed to trade freely then there would be no issue. It so happens the US is sanctioning Venezuela from doing just that. Totally EVIL from the US.

  12. I’m inclined to think that Russia would prefer for Venezuela to remain out of the U.S. sphere of influence but otherwise impoverished (e.g. crippled oil production) so as to bolster the price of one of Russia’s main exports and to increase the sway Russia has with China.

  13. From what I’ve read, Guido isn’t actually anything other than another socialist. He’s just not part of the particularly corrupt and violent group that Maduro is running.

    No guarantee that Guido will be much better at running the place once he gets in. And we know that once they get power, the “non violent” part of a socialist government starts to fade away.

  14. The only reason Russia is there is to spite the US and to show their citizens that Russia can still mess with the Americans.


    Stabilizing the area is cheaper in the long run and in America’s long term interest.

    Sorry. But they said the same thing about nation-building in both Iraq and Afghanistan. History proves what a total guaranteed failure that is as well as a total waste in US lives and treasure.

    It will be far, far cheaper and easier to just have Panama stop them at their southern border (which isn’t very large) and for us to pay/equip/train them to do so. Make the Isthmus of Panama geographically work for us.

  15. The only reason Russia is there is to spite the US and to show their citizens that Russia can still mess with the Americans.

    Why clean up Venezuela? I would rather have them there than here, that’s why. So, go in, clean up, make a profit and get out. Stabilizing the area is cheaper in the long run and in America’s long term interest.

  16. But thats not what the MSM reports so people squee with feels and say let them in.

    Hey know what happens when you take a countries middle class and lower upper class away and replace it with nothing?

    Yep Haiti

  17. Depends on Panama giving migrants pass-through rights.

    Also, the migrant caravans we’ve seen so far are all funded by George Soros and others. They are ‘astro-turf’ caravans…especially since the vast majority of their migrants have openly told Mexican officials that they are going for purely economic reasons, which destroys their case for asylum.

  18. Why would Russia want Venezuelan crude? Russia is an oil exporter itself.

    And why should the US ‘go in’ let alone ‘clean up’ Venezuela? There’s no upside for the US. It’s far cheaper to just give Guido (sounds like a mob enforcer) aid money for US domestic virtue signaling purposes. After all, the American public is not into foreign adventures any more (see support for Trump and Bernie if you think otherwise) and Bill Kristol and his warmongering Neocons have been turned out on their butts.

  19. On the one hand, yes. That’s why I joke about all the failed states that Russia collects and props up.

    On the other hand, no. If you think migrant caravans are bad now wait for Venezuela to completely collapse.

  20. Let China and Russia bleed money they can’t afford for oil that will never arrive. The US can go in later and clean up the mess when they give up.

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