Drought is on going in Venezuela

Supply-chain Risk Briefing: Ongoing Drought in Venezuela

1. Summary

A moderate-level (Green level) drought is persisting in Venezuela as of December 19, 2025. While the current alert level is green, indicating low immediate severity, the drought situation in Venezuela, a major South American oil producer, could potentially impact energy and agricultural supply chains.

2. Supply-chain Impact

• Oil Production: Venezuela holds the world's largest oil reserves, and if drought intensifies, there could be disruptions to cooling water supply for refinery facilities and extraction operations
• Agricultural Production: As a major exporter of coffee, cocoa, sugar and other agricultural products, continued drought could lead to production decreases and upward pressure on South American agricultural commodity prices
• Power Supply: Potential impacts on Venezuela's power grid, which has high dependence on hydroelectric generation, raising concerns about industrial production and port operation disruptions
• Regional Logistics: Possible reduction in freight transport via inland waterways, leading to increased alternative overland transportation costs

3. Watch Points

• Drought Alert Level Changes: Need to track whether status escalates from Green to Orange/Red and timing of precipitation recovery
• Power Generation Indicators: Monitoring reservoir levels at major hydroelectric plants (Guri Dam, etc.) and power supply stability
• Oil Production Data: Verification of Venezuelan crude oil production disruptions through OPEC production reports