Experts reacting to the recent US-Venezuela developments said that the current crisis involving Venezuela is unlikely to have a significant impact on global prices of gold, silver and crude oil, as the country has been under sanctions for many years and its role in formal global supply chains is limited. Banking and markets expert Ajay Bagga told ANI that Venezuela’s economic importance in the global system has declined sharply over the past decade due to prolonged sanctions.
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In fact, Venezuela’s gross domestic product (GDP) is projected to fall from US$350 billion in 2012 to US$80 billion in 2025 as a result of sanctions, experts said. This is not a special figure in the global economy of US $ 116 trillion. As for oil, despite vast reserves, the oil infrastructure is poor, and Chevron is the only state oil producer operating a few oil fields. In such a situation, Venezuela’s total production loss of 950,000 barrels per day does not matter much in the global supply chain of 103 million barrels per day.
Bagga said that even if Venezuela completely lost its current production of about 950,000 barrels per day, the impact on the global oil market would be negligible, as the global market produces about 103 million barrels per day. Commenting on precious metals, Bagga said the recent fluctuations in gold and silver prices are more linked to purchases made as safe haven investments rather than Venezuela-related factors. He further said that similar demand for safe investments is also visible in the US dollar, which has strengthened.
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“With respect to gold and silver, the reaction has been safe-haven buying, as is the case with the US dollar, which has strengthened today. Thus, Venezuela itself is not a major reason for the rise in gold and silver prices today, rather the fundamental issues of the past year are playing a role,” he said. Energy policy expert Narendra Taneja also told ANI that Venezuela is unlikely to cause any immediate disruption to global oil prices. He said most refineries around the world are not designed to process Venezuelan crude (which is heavy oil).
