Global oil glut sends prices plunging
Oil prices posted their biggest one-day drop in nearly two years as a U.S.-led wave of crude crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others. World-wide demand is stagnant, and the International Energy Agency cut its full-year oil-demand growth forecast to the lowest level in five years. U.S. output is expected to increase again this year, and Venezuela could veer into political crisis because of sharply lower crude prices, some analysts say. Venezuela was already running low on hard currency because of rampant spending at home and other problems. When prices of oil were close to US$ 100 a barrel earlier this year, Venezuelans across the country rose up to protest shortages and what many leaders of the demonstrators called the government’s bungled management of the economy. OPEC – has not heeded Venezuela’s calls for an emergency meeting. Indeed, Saudi Arabia, Iran and Iraq, which account for half of OPEC’s output, are currently selling crude to Asian buyers at a discount in order to maintain market share. Asdrubal Oliveros, head of Caracas-based consulting firm ECONANALITICA, said Venezuela has few options. “Venezuela can generate as much noise as it wants within OPEC, but it’s Saudi Arabia that calls the shots,” he said.