President Nicolás Maduro’s desperate effort to sustain the socialist framework he inherited from the late Hugo Chávez in 2013 is careening toward failure. A steep fall in global prices for oil, the main source of the government’s income, has exposed fully the systemic weaknesses caused by years of economic mismanagement.

Conditions have worsened markedly since the violent protests of 2013 that resulted in 40 deaths and the jailing of opposition leader Leopoldo López on charges of inciting the demonstrations against Maduro’s government. With no sign of an imminent rebound in oil prices, the government is edging ever-closer to a debt default that could spell the rapid end of chávismo in Venezuela.

Since June 2014, the price of a barrel of Venezuelan heavy crude has fallen from just below $100 to less than $40. Making matters worse, Venezuela’s oil exports decreased by 4.1 percent in 2014.

And with social tensions rising, President Maduro has taken no steps to tinker with a policy under which one-third of the oil Venezuela produces is sold domestically at prices far below the market value, even as another 200,000 barrels is sold daily to more than a dozen Latin American and Caribbean countries on concessional terms under the Petrocaribe initiative.

In order to balance its budget, the government requires a minimum oil price of $117.50 per barrel, one of the highest “break-even” prices in the world. Maduro has lobbied within OPEC for production cutbacks aimed at pushing the market price higher, but his pleas have fallen on deaf ears, as Saudi Arabia has opted for a strategy of maintaining a high level of output in order to retain market share.

Venezuela is scheduled to make $11 billion in debt payments in 2015, but the real crunch will come in October, when a payment of $5 billion falls due. At that point, Maduro may be forced to choose between approaching multilateral lenders for help, unilaterally cutting back on generous subsidies and other social spending programs, or defaulting on the sovereign debt.

None of those options is politically palatable; whichever path he chooses, the president will face a high risk of the splintering of his legislative support, dangerous social unrest, or possibly even both.

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