The death of Hugo Chávez and the prospect of a regime change in Venezuela will cause no more than a momentary blip in the oil market. This is a remarkable change from the situation a few years ago, when developments in Carcacas would have destabilised prices across the world.
In reality, Chávez diminished Venezuela’s potential role in the international oil business by undermining the status of the state company Petróleos de Venezuela SA and excluding major international investment. Production and exports from Venezuela are now well below their potential levels.
To restore PDVSA to its former glory will take time. Many of the people best able to build the company and the country now live comfortably in London or New York and will take some persuading to go back home. Oil industry investors will be circling the airport in their private jets, but there is no new consensus as yet as to the terms on which they might be allowed to return. That too will take time. Read more