By Hugh Bronstein and Juliana Castilla

BUENOS AIRES (Reuters) - Venezuela has badly mismanaged its vast oil resources, a senior U.S. diplomat told Reuters in an interview on Tuesday in which he said a change in government could quickly turn the OPEC member's fortunes around.

Tensions have been high between Washington and Venezuela, where the president is facing a possible recall referendum amid rioting and looting prompted by food shortages.

Output from Venezuela, which sits atop the world's biggest oil reserves, was 2.37 million barrels per day (bpd) in May, down 5 percent from April and 11 percent from last year's average, according to OPEC data.

"Venezuela has committed malpractice when it comes to management of their resource," U.S. International Energy Envoy Amos Hochstein said. As a consequence, he added, the country is getting below-market prices for lower amounts of crude.

"Venezuela has easy oil to produce," Hochstein said. "So the fact that output is declining shows you how bad the situation is. But it also shows you that if there is a change in government, a change in attitude, it could see an increase in production relatively quickly."

A top U.S. diplomat will meet with Venezuelan government and opposition officials in Caracas on Tuesday, a week after Secretary of State John Kerry announced he wanted to ease tensions between the two countries.

A slump in world oil prices has helped devastate President Nicolas Maduro's socialist economic model, leading to snaking grocery lines and empty supermarket shelves. Elected in 2013 after the death of his mentor Hugo Chavez, Maduro says he is the victim of an "economic war" led by big business and Washington.

Much of the financing of Venezuela's debt is done in the form of crude for cash. While this allows the government to pay its debt, it takes away precious cash flow, Hochstein said.

"The only place where they are selling their oil at reasonable prices is to the United States, to Citgo Petroleum, which Venezuela owns. So essentially the only place where they are selling oil at market price is to themselves," said Hochstein, who spoke with Reuters during a trip to Argentina to visit the country's Vaca Muerta shale formation in Patagonia.

Venezuelan state oil company PDVSA often blames power outages or equipment malfunctions on saboteurs seeking to subvert the government. The company's president Eulogio Del Pino said this month that Venezuela's output was rising again.

(Reporting by Hugh Bronstein; Editing by Andrew Hay)