This OPEC member is the next big wild card for oil

Oil production outages have been piling up.

The two biggest headline-grabbing events have been the Canadian wildfires and the various attacks on energy infrastructure by the Niger Delta Avengers.

But there have also been production shut-outs in Colombia and Libya in recent weeks.

And now, RBC Capital Markets commodity strategist Michael Tran argues that we may soon see the next key production outage in a country on the brink of a political and economic meltdown: Venezuela.

"Lengthy outages in places such as Nigeria are just the start. Venezuela remains a key fixture atop our OPEC Watch List and could potentially be the next shoe to drop in a world ripe with distressed producing nations," he wrote in a recent note to clients.

"The primary threat to Venezuelan production stems from striking PDVSA workers walking off the job. And that threat grows by the day as Venezuela's fiscal situation continues to deteriorate," he added.

Venezuela has been teetering on the edge of disaster for some time now as political challenges, security issues, and mounting debt continue to stress an already tense situation.

The country has also been struggling with water and electricity cuts, vigilante violence, and a huge public-health emergency.

The situation hit a critical point Wednesday as Venezuela's political opposition called for massive protests on the heels of President Nicolas Maduro's declaration of a 60-day state of emergency. He cited "plots from Venezuela and the United States to subvert him," according to Reuters.

Should Venezuela's production get hit, there would be several consequences. For starters, this would likely be a boon for oil prices - similar to what we saw in recent days after the attacks by Nigerian militants and the Canadian wildfires.

Interestingly, a Morgan Stanley team led by Adam Longson recently adopted the opposite position, arguing that the threat from Venezuela is way overblown.

"Extrapolating Venezuela's fiscal and social challenges to material oil production risk fails to appreciate the conditions on the ground and various stakeholder incentives," the team argued.

"Key risks to production would come from declines at conventional lighter crude fields, limitations on export infrastructure, and/or an inability to import diluent - not civil unrest or fiscal distress - and even here the numbers are not large."

Venezuela is certainly the big oil producer to keep a close eye on as the country barrels toward to a political and economic meltdown.

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