From petrostate to oil crisisWith an annual crude oil production of more than three million barrels per day, Venezuela was once, along with Mexico, one of the two largest oil-producing countries in Latin America. Nowadays, however, after nearly two decades of persistent decline in output, the country has dropped to fourth in the region, overtaken by Brazil and Colombia. In early 2022, Venezuela's monthly crude output reached an average of 700 thousand barrels of oil per day. While this represented a year-over-year growth, production declined by more than 70 percent in comparison to a decade earlier.
Venezuela’s refining throughput has also suffered. With the decline in crude output, aggravated by a scarcity of chemicals required in the process, the petroleum-rich country saw its refinery production dip below 200 thousand barrels per day in the past three years, or roughly 15 percent of its refining capacity. As a result, shortages of fuels such as gasoline – for years heavily subsidized by the government, and considered by its citizens a birth-right – have become a constant struggle.
A history of dependencyThe development of Venezuela’s economy is inextricably entangled with that of its oil industry. This sector has historically accounted for more than 80 percent of Venezuelan exports, even reaching a whopping 96 percent share in 2013. Petroleum is such an important lifeline for the nation that, even with the continual drop in production, Venezuela still managed to maintain an average of 1.7 million daily barrels of crude oil exports for most of the decade.
Nevertheless, gradually increasing economic sanctions imposed by the U.S. government since 2017 have added further strains to the sector. Previously the leading destination for Venezuelan oil exports, trade with the U.S. came to a complete halt by mid-2019. As Venezuela’s GDP forecasts continue to deteriorate and poverty levels reach all-time highs, the future looks grim for the richest oil nation in Latin America.