March 29 (UPI) -- Data in a U.S. report suggests that as Venezuela depends on oil revenue, and it's a top oil exporter to the United States, pressure could cuts both ways.
The U.S. Energy Information Administration reported Venezuelan oil production dropped from 2.4 million barrels per day in 2015 to an average of 1.6 million bpd in January.
"A combination of relatively low global crude oil prices and mismanagement of Venezuela's oil industry has led to the accelerated decline in production," EIA's report read.
Washington already imposed sanctions on the Venezuelan government and military officials in December in response to allegations of corruption and repression under President Nicolas Maduro's administration.
Those sanctions, coupled with high debt, are limiting financing for the state oil company, Petróleos de Venezuela, or PDVSA.
"Venezuela's economy is extremely dependent on oil revenue, so the production declines are having a negative impact on the country's finances as well," the report read.
The International Monetary Fund estimates inflation in Venezuela could run as high as 13,000 percent this year, while the economy shrinks by 15 percent. With more than $8 billion in bond payments due this year, a general default is possible, EIA stated.
Venezuela is one of the largest crude oil exporters to the United States, accounting for about 41 percent of the nation's total exports last year. Those exports, however, are on the decline as the United States draws more on suppliers like Canada and Mexico.
"The fall in exports to the United States is especially harmful to Venezuela's economy because U.S. refiners are among the few customers that still remit cash payments to Venezuela," EIA stated.
In mid-March, the U.S. Treasury Department followed through on an executive order signed by President Donald Trump by targeting a digital currency designed to maneuver around existing sanctions on Maduro's Venezuela. The executive action prohibited transactions made with the digital currency on behalf of a Venezuelan government facing increased isolation.
Trump last year considered tightening sanctions on Venezuela, a move would've created problems for the United States because, for the refiners concentrated on the U.S. Gulf Coast, Venezuela is one of the largest sources of crude oil.
Swiss global financial services company UBS said in a market report that concerns about U.S. sanctions on Iran and Venezuela were contributing to hikes in the price for crude oil. That spike is showing up in consumer gasoline prices, which are up more than 30 cents per gallon from this time last year.