Oil is one of the most important commodities in the world. It drives economies, strengthens currencies, and influences global markets—including Forex.
But here’s the paradox:

Venezuela has the biggest oil reserves in the world… yet Saudi Arabia is the richer, more stable and more powerful oil nation.

Why? The answer lies in economics, oil quality, political stability, technology, and global influence.

In this article, we break down the real reasons behind this striking difference—and what Forex traders can learn from it.

1. Oil Quality: Saudi Oil Is Light, Venezuela’s Is Heavy

Saudi Arabia produces light crude, which is:

• Easy to extract
• Easy to refine
• Cheap to produce
• High demand globally

Venezuela’s oil, however, is extra heavy crude, thick like tar. It requires:

• Heating
• Dilution
• Complex processing
• High production cost

Saudi profit per barrel is far higher, even if total reserves are smaller.

This is why Saudi oil is more profitable and more attractive to the global market.

2. Saudi Produces More Oil—A LOT More

Even with fewer reserves, Saudi Arabia pumps out far more oil daily.

Daily Production (Approx):

• Saudi Arabia: 9–10 million barrels/day
• Venezuela: Less than 1 million barrels/day

Reserves only matter if you can actually extract and sell.

Saudi Arabia has:

• Modern infrastructure
• Reliable drilling technology
• Stable production capacity

Venezuela faces:

• Frequent breakdowns
• Old equipment
• Low investment
• Skilled labor migration

This production gap is a major reason behind the wealth difference.

3. Economic Stability: Saudi Arabia Managed Its Oil Wealth Better

Saudi Arabia:

• Reinvented Aramco into a powerhouse
• Built huge sovereign wealth funds
• Reinvested profits into new industries
• Used Vision 2030 to diversify the economy

Venezuela suffered from:

• Corruption
• Hyperinflation
• Mismanagement of PDVSA
• Currency collapse

Even if oil money comes in, without proper management, the country cannot grow wealth.

4. Sanctions Crippled Venezuela’s Oil Exports

Venezuela faces heavy sanctions, especially from the US.
This limits:

• Oil exports
• Equipment imports
• Financial transactions
• Foreign investments

Saudi Arabia, on the other hand:

• Has strong ties with the US, EU, and China
• Faces no export restrictions
• Plays a leading role in global supply decisions

This alone places both countries in completely different financial positions.

5. Saudi Arabia Controls Global Oil Influence (OPEC Power)

Saudi Arabia is the leader of OPEC.
It decides:

• Whether to cut or increase oil supply
• How to stabilize global prices
• How to react during crises

Venezuela, once influential, now plays a very minor role.

In Forex:
When Saudi Arabia makes decisions, oil-related currencies react immediately:

• USD
• CAD
• NOK
• RUB
• MXN

Saudi Arabia has real market-moving power. Venezuela does not.

6. Forex Traders: Why This Matters to You

Oil fundamentals strongly affect currency movement.
Saudi Arabia’s influence affects:

• USD strength
• CAD volatility (Canada is a major oil exporter)
• Oil-linked sentiment in global markets

Understanding why Saudi Arabia dominates the oil market helps you recognize:

• Fundamental shifts
• Risk sentiment
• Commodity currency trends
• Long-term macroeconomic cycles

If you’re trading Forex, commodities, or indices, oil economics should be part of your strategy.

Conclusion

Even though Venezuela holds the largest oil reserves in the world, it lacks:

• Efficient extraction
• Economic stability
• Infrastructure investment
• Political stability
• Global influence
• Sanction-free exports

Saudi Arabia, meanwhile, maximizes every barrel with:

• Low extraction costs
• High production levels
• Stable governance
• Strong global alliances
• OPEC leadership

This is why Saudi Arabia is richer, more influential, and more dominant in global oil economics—and why oil traders pay more attention to Riyadh than Caracas.

ADMIN
02/12/25