Unrest at Petróleos de Venezuela SA (PDVSA) has severely interrupted Venezuelan oil exports, with the situation substantially worsening at the end of last week.
Seven executives who were reportedly behind recent strikes were fired the second week of April, while 12 others were forced into early retirement. The government threatened to fire additional employees if protests continued. Later in the week, pro-government gunmen and the country's National Guard opened fire on 150,000 protesters. Reports listed at least 13 killed, including a journalist, and 110 wounded. On Friday, April 12, Venezuela President Hugo Chavez resigned. Two days later, after his supporters organized demonstrations in his favor, Chavez was back in the presidential palace. Chavez, who became president in 1998, retains considerable support from a large segment of the population. But the question that remains is not so much one of government stability, but one of the stability of PDVSA.
Venezuela, a member of OPEC, has not been able to fulfill its production obligations since the situation at PDVSA escalated and work stoppages and strikes halted oil exports. The political ups and downs are affecting oil prices and energy stock prices. According to the publication "Equity Research," a primary concern at present is where PDVSA goes from here. Even if oil exports resume, there is some apprehension that Venezuela might defect from OPEC. The ramifications of that decision could be far reaching and will certainly impact the price of oil and the quantity available on the market.
Although hostilities in the Middle East have been the primary concern of most analysts, events in Venezuela threaten to seriously impact the price of oil.
