From Venezuela to Argentina, oil’s steepest plunge in three years is reverberating through a region that accounts for the world’s largest crude reserves outside of the Middle East. Venezuelan oil bond yields jumped, American depositary receipts of Petroleo Brasileiro SA (PBR), YPF SA and Ecopetrol SA (ECOPETL) plunged and the Colombian peso fell the most in five years after the 12-nation OPEC opted against measures to prop up crude prices yesterday. Oil is down 11 percent this week.
Crude’s accelerating rout, as the U.S. shale boom coincides with slowing demand, is putting pressure on producers to cut spending. Latin America’s largest independent producer Pacific Rubiales Energy Corp. (PRE) said today that it’s battening down for at least a year of lower prices. Some project development and drilling in the region is poised to decelerate, Patricia Mohr, a commodity specialist at Scotiabank Group in Toronto, said.