Venezuela weighs leaving OPEC as US influence over oil sector grows

Venezuela is closely examining plans to withdraw from OPEC, according to people familiar with the matter, potentially dealing another blow to the oil cartel that Caracas helped establish more than six decades ago.

The possibility of an exit has been discussed with US officials, although no final decision has been made, the people said, asking not to be identified because the talks are private, according to Bloomberg. 

A Venezuelan withdrawal would underscore the sweeping political realignment in Caracas since US President Donald Trump ousted long-time leader Nicolás Maduro and assumed control over the country’s oil sales.

Washington’s expanding influence is also reflected in negotiations over a proposal that would give the US a major stake in Venezuela’s oil fields. People familiar with the talks said one arrangement under discussion involves a 100-year lease covering several fields. The negotiations were reported earlier by Axios.

Such a deal would represent an almost unprecedented US intervention in another country’s economy and fit with Trump’s so-called Monroe Doctrine of expanding American influence across the Western Hemisphere. Trump has described Venezuela as the “51st state” and said the US controls its oil.

The administration has also taken stakes in companies including Intel Corp., MP Materials Corp. and Lithium Americas Corp., while last year establishing a joint investment fund with Ukraine backed by revenues from its minerals, oil and gas projects.

Venezuela’s oil industry has been devastated by US sanctions and years of domestic turmoil. It produced 1.16 million barrels a day in July, according to a Bloomberg survey, less than half its output a decade ago, although production has risen this year.

Because of its diminished output, an OPEC exit would likely have little immediate impact on global oil markets, currently dominated by the shockwaves from the US war with Iran. However, it could further undermine the cartel’s cohesion. Iraq and other members have expressed frustration with membership obligations, while the United Arab Emirates announced its departure four months ago.

Some US officials envision an oil powerhouse built around a US-Venezuela alliance that could significantly weaken OPEC’s influence. Venezuela is not currently subject to OPEC production limits because of its steep output decline. Removing potential quotas could allow it to maximise production over the longer term and put downward pressure on prices, according to one person familiar with the discussions.

Venezuela was one of OPEC’s five founding members in 1960 and played a key role in creating OPEC+. But US shale production and major discoveries in Guyana and Brazil have eroded the cartel’s influence. Caracas’s potential departure could accelerate that decline while opening the way for greater US and international investment in Venezuela’s oil industry.

By Tamilla Hasanova