Venezuela and Equatorial Guinea evaluating ways to promote output cut

Several nations attending the Gas Exporting Countries Forum have reached energy agreements during the course of the event held in Bolivia.

Venezuela’s Oil Minister Eulogio del Pino and his Equatorial Guinean counterpart Gabriel Obiang Lima announced they had evaluated several mechanisms to promote the oil output cut deal signed by the Organization of Petroleum Exporting Countries (OPEC) and 11 non-member producers.

Both nations are OPEC members and signatories of the agreement that limits crude production to 1.8 million oil barrels.

Currently, the oil market has its sight on the OPEC meeting scheduled for November 30 in Vienna, Austria, where the members will discuss a possible extension of the pact, which expires on March 2018.

OPEC moving forward with production cuts

The implementation of the output cut deal has allowed balancing the market and boosting prices by over 20 percent.

This agreement has contributed to fighting crude oversupply and rising oil prices above the $50 mark, from the $30 prices per barrel recorded during the first quarter of 2016, the lowest price seen in 14 years.

The decline in oil prices, the main source of income for both Venezuela and Equatorial Guinea, has deepened these countries’ economic crisis and significantly diminished their currency reserves.

The case of Venezuela has been the most notorious, where lately chavismo has been using foreign currency allocations meant for the private sector to pay its external debt, an important commitment for the country to survive.

Still, it has had difficulties facing international challenges and was declared in partial default.

Venezuela and Equatorial Guinea are both included in the most recent forecast prepared by The Economist Intelligence Unit (EIU), The Economist Group’s research and analysis unit as two of the three economies that will have the poorest performance in 2018.

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