Venezuela May Have to Start Shutting Oil Wells Soon

Core Viewpoint - Venezuela is facing a potential shutdown of oil production due to a lack of storage space amid U.S. tanker blockades, which could lead to significant production curbs in the near future [1] Group 1: Oil Production and Storage - Venezuela's largest oil storage hub and tankers at its ports may reach full capacity within 10 days, necessitating production cuts [1] - The International Energy Agency reported that Venezuela's crude oil production is declining, with an estimated output of 860,000 barrels per day in November, down from 1.01 million bpd in October [3] - Further declines in oil supply are anticipated in December due to U.S. actions in Caribbean waters, including the seizure of tankers carrying Venezuelan crude [4] Group 2: Impact of U.S. Actions - Approximately 11 million barrels of Venezuelan crude are currently stranded at sea, leading to deeper discounts and changes in spot contracts demanded by buyers [2] - The U.S. is reportedly prepared to seize more tankers, with a list of targeted vessels already in place [4] - The blockade is also affecting Venezuela's supply of Russian naphtha, which is essential for diluting heavy crude, as at least one tanker carrying 32,000 metric tons of naphtha turned back to Europe [5] Group 3: Potential Production Loss - In a worst-case scenario, Venezuela could lose up to 500,000 barrels per day of oil production due to additional restrictions and a shortage of diluents [6]