Moody's Investors Service on Tuesday downgraded its debt rating for Venezuela , citing an increased likelihood of a default due to lower oil prices.

Moody's cut the country's rating to Caa3 from Caa1, with the outlook stable.

"In the event of a default, Moody's believes that the loss given default (LGD) is likely to be greater than 50 percent," the agency said in a statement.

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The ratings agency said it believes Venezuela is unlikely to implement forceful policy changes needed to curb macroeconomic distortions in the market.

Venezuela faces key deadlines for billions of dollars in foreign debt in 2015 and is considered among one of the most vulnerable oil producers in the 12-member OPEC cartel. Most analysts estimate a fiscal break-even price of some $110 a barrel. U.S. oil and Brent futures were trading in the mid-$40s a barrel in early trading Tuesday.



-CNBC's Yousef Gamal El-Din contributed to this report.

