The average price of Venezuela's mix of medium grade and heavy crude oil has now slipped below $40 a barrel – two-thirds of the figure reckoned essential to financing state spending without resorting to drastic cuts.
The price closed the week at $39.59 a barrel, continuing the slide seen since September. The average for November as a whole of $44.90 a barrel was way down on the peak of $129.54 a barrel recorded in mid-July this year. the average last week was $40.68.
News of the latest fall comes amid signs that the government, however reluctantly, is gradually moving towards recognizing that the global financial crisis and its knock-on effect on oil demand and prices mean that cuts in the 2009 budget may be inevitable.
This, however, has yet to be stated out loud in public by anyone in power, least of all Finance Minister Alí Rodríguez Araque, although earlier this week he conceded that some changes might be necessary during the course of next year.
Venezuela is pushing for member states of the Organization of Petroleum Exporting Countries (OPEC) to reduce production by a further one million barrels a day (bpd). A new cut was needed to ensure stability in the market, he told reporters on arriving in Cairo on Thursday for the extraordinary meeting of oil ministers. OPEC then promptly decided to delay a decision on cuts until its meeting in mid-December.
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