Venezuela is facing economic turmoil, and it seems that it could put their strong and historic relationship with Cuba at risk. Venezuela’s oil prices have been falling, and this could put strain on Cuba.Cuba is a communist Country, which has had poor relations with the U.S. in recent years, although they have improved. Venezuelan oil exports to Cuba are down by almost 20% so far in 2016, resulting in rationing (similar to what was done in the 90s.)
An article recently posted on Fox News gave more details on the relations between Cuba and Venezuela. It reads, “Venezuela and Cuba started strengthening ties soon after Hugo Chavez, a socialist and open admirer of Fidel Castro, came to power in 1999. The alliance, fueled by a close personal friendship, helped the Castro brothers keep the island afloat amid the Soviet Union domino collapse. Currently – and for more than a decade now – Venezuela supplies more than 50 percent of the island’s intake of oil at very preferential terms. In exchange, starting 2003 Cuba started providing human resources to Venezuela, mostly teachers and medical doctors to support Chavez’s various social programs, like Barrio Adentro and Misión Robinson, which focused on reducing analphabetism.”
Leader of Cuba, Castro has recently admitted that the external economic crisis (mainly cheap crude oil) is causing issues in Cuba. He said “”Logically that has caused additional tensions in the functioning of the Cuban economy.” The U.S. has huge oil reserves, and they have been looking to improve relations for a while.
The cost of a barrel of Brent Crude is currently trading at around $43.50, near a 3-month low. Earlier this year, the value of Brent Crude fell below $30 a barrel, due to less demand, caused by weaker growth in China, and an oversupply of oil. The glut was worsened by Iran’s entry into the world oil market.