Venezuela's economic situation is so dire experts fear the South American country might default on its $120 billion foreign debt, even though President Nicolás Maduro insisted this week his government would honor all financial obligations.

Experts are less worried about Venezuela's willingness to pay bondholders than about the country's ability to do so, Anders Faergemann, who manages $20 billion of emerging-market fixed-income debt at Pinebridge Investments in London, told The Wall Street Journal.

In particular, the analyst pointed to the continued slump in oil prices affecting Venezuela's petroleum-based economy.

"Venezuela is in an economic hole," Faergemann said. "(And) the oil prices are just aggravating the mess."

Venezuela Depends on Oil Exports

Oil accounts for 96 percent of Venezuela's export earnings. And based on oil futures -- an investment instrument used to speculate on whether the price of oil will rise or fall -- experts predict the value will remain at about $32 a barrel for the foreseeable future. That is far below the $100-plus levels the country enjoyed for years that helped prop up the socialist policies of Maduro and his late predecessor Hugo Chávez.

Maduro himself admitted this week the low oil price is an issue of concern to his government, but at the same time he tried to calm investors.

"How many countries of the world can sustain oil production at $22 a barrel? Few, or almost none," the president said in a national address on Jan. 19. "(But) Venezuela has ethics, morals and commitments, first with the people and the fatherland, but also has the commitments that the republic has honored and will continue honoring."

Forbes Says Default Is 'Imminent'

Nevertheless, Forbes reported on Jan. 20 a Venezuelan default was "imminent," and the country has been on "default watch" for months.

Peter Kohli, head of DMS Funds in Leesport, Pennsylvania, said most investors had already lost hope things were going to change for the better anytime soon.

"I wouldn't be surprised if in a year or two, most U.S. and multinational companies have packed up and left Venezuela," Kohli said. "How can anyone make any money there?"