Venezuela—the sick man of Opec

Production will continue to collapse, while the spectre of default looms large in 2018

The Venezuelan oil industry is, like the country's economy, in a free fall. Oil production declined by 12% in 2016 and another 10-to-12% in 2017—about 250,000 barrels a day to less than 2m b/d, a level not seen since the late 1980s. The supply collapse is triple Venezuela's commitment under the Opec cut deal. The accumulated output decline amounts to more than 0.7m b/d in the past six years—down a quarter. More than 90% of Venezuela's hard currency is earned through oil sales. As a result, even though the price bounced back in 2017 compared to 2016, the country didn't significantly improve its cash situation and foreign exchange reserves kept declining. The oil industry collapse mirrors Vene