Venezuela is juggling yet another economic problem as plummeting oil prices this week threaten to squeeze Caracas’ main source of revenue. The added pressure on Venezuela’s economy heightens some fears that the country may be on the brink of default.
Harvard economists Carmen Reinhart and Kenneth Rogoff predicted this week that Venezuela would likely default on its foreign debt. “They have extensive domestic defaults and an economy that is really imploding,” Reinhart told Bloomberg.
Global crude oil prices are plunging. The price of a benchmark U.S. crude oil, West Texas Intermediate, dropped to about $80 on Thursday, a four-year-low, due in part to slowing demand and rising oil production, particularly in the United States. Venezuelan crude oil is of a lower quality than West Texas Intermediate and thus sells for less.
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