By Mike Bird
Despite being one of the largest oil producers in the world, Venezuela has started buying light crude oil from Algeria for the first time, Bloomberg reports.
Until recently, the Venezuelan government had been buying naphtha on open markets to treat its oil. That’s because the extra heavy crude produced by Venezuela needs to be diluted before it can be exported. But a combination of falling oil prices (which makes the country’s major export less profitable) and devalued currency (which makes buying things abroad increasingly expensive) has created a conundrum.
Naphtha is more expensive than buying light crude, which is mixed with the heavy crude to dilute it. Earlier in October, sources told Reuters that Venezuela was also importing light crude from Russia.
While the government holds an official exchange rate of 6.2 Venezuelan bolivars to the dollar, the bolivar is worth far less on the black market and the dollar is worth far more.