Oil observer: Venezuelan oil sector may collapse

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"Although there are signs that the situation [with electricity] it improves, the degradation of the electrical system is such that we can not be sure that the solutions are sustainable, "said the agency, a watchdog of Western countries oil consumers, in a message posted Friday on his site.
Much of the country was deprived of electricity for much of last week. The current government of Nicolas Maduro said Thursday that the current had been restored, but that failures were still reported.

Venezuela produces about 1.2 million barrels of oil a day when it is operating normally, said the IEA. But the agency said that a number of factors could mitigate the loss of Venezuelan oil in the global oil market.

First, it is the reduction in production agreed between OPEC and some non-OPEC countries, which is equivalent to 1.2 million barrels a day.

"Much of this available capacity is made up of crude oil of similar quality to that of Venezuela's exports," the agency said. "Therefore, in case of significant loss of supply from Venezuela, the potential way to avoid serious disruptions in the oil market is theoretically at hand."

In addition, signs of a slowdown in the global economy could reduce oil demand, according to the IEA. And the growing export trend of Canada and the United States could also partially fill this gap.

In an effort to force Maduro out of office, the United States imposed sanctions on Venezuela and its domestic oil industry in January, blocking exports of its oil to US customers.

The sanctions have another impact on the Venezuelan oil industry, which draws the bulk of its naphtha from the United States. Its supply of liquid hydrocarbon mixture, used to dilute the crude, was cut. Without it, Venezuela's heavy crude could not be easily transported.

Rystad Energy expects some operators in Venezuela will run out of naphtha by this month.

– Matt Egan from CNN Business contributed to this story

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