Oil markets are taking the death of Venezuelan President Hugo Chavez in stride, with the price of crude little changed Wednesday.
Chavez, who died Tuesday after a two-year battle with cancer, oversaw a decline in oil production during his 14 years as the leader of Venezuela, and analysts don't expect that trend to change immediately. The full impact of his death may not be felt until Venezuela, which sits on the world's second-largest oil reserves, picks a new leader — one who might choose a course different from Chavez.
"Problems in Venezuela will undoubtedly impact the market, but may not be too much of a problem for the market to cope with," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "It is well supplied and it still has reasonably high prices in relation to the current demand-supply balance."
But the country's production began to fall soon after Chavez assumed power because he declined to invest in new drilling to replace depleting fields.
By 2011 the country's output had dropped 2.5 million barrels a day from 3.5 million barrels per day in 2000, according the Energy Department, and exports had fallen to 1.7 million barrels a day. Oil accounts for 95 percent of Venezuela's export earnings.
Chavez invested Venezuela's oil wealth into social programs including state-run food markets, cash benefits for poor families, free health clinics and education programs. But those gains were meager compared with the spectacular construction projects that oil riches spurred in glittering Middle Eastern cities, including the world's tallest building in Dubai and plans for branches of the Louvre and Guggenheim museums in Abu Dhabi.