Venezuela’s Guri Dam, which provides a third of the country’s electricity supply is very near to being shut down, due to low water levels. If this happens the country will have to redirect some of their oil exports for generating electricity and powering diesel generators. It may also cause some of their oil production to be reduced. It is reported that Venezuela is close to two weeks away from a major power disruption for the entire country.
Danilo Diaz Grandos has seen a recent workers strike in Kuwait has caused a reduction in their oil production. Fires in a pipeline in Nigeria have added to the decrease in oil output recently. The recent disruptions combined has led to an estimated $2 billion barrels a day in lost production. This has pushed oil prices above $40 a barrel recently.
The situation with Venezuela’s low water levels has already begun to affect oil production, according to analysts Danilo Diaz. The upcoming power production problems, may cause a rationing of electricity to the citizens of Venezuela, and will likely be extended to the oil business. This could lead to a longer-term production decline for the country. Some expect the condition to worsen as Venezuela’s cash flow weakens and their infrastructure deteriorates. Since Venezuela has some of the largest oil reserves in the world this could push oil prices even higher.