The Trump administration's plan to gain comprehensive control over Venezuela's oil supply, coupled with the United States' own massive production, has the potential to reshape the global oil market landscape, playing a disruptive role in an already oversupplied market. According to sources, former President Trump, a long-time advocate for increased oil production with a target price of $50 per barrel, is planning to push an initiative for a comprehensive overhaul of Venezuela's oil fields and the marketing of its output. This would grant the US control over the production of a founding OPEC member and could exert a potentially destabilizing influence in the global oil market. Analysts predict that although reviving Venezuela's dilapidated oil industry requires massive investment and significant time, even a modest production increase in the short term—and larger gains over the long term—could exacerbate global supply-demand imbalances, further depressing oil prices. Estimates from J.P. Morgan analysts suggest that the combined oil reserves of producers in Guyana, Venezuela, and the US could potentially place about 30% of global total reserves under American influence. OPEC members now face a difficult choice: either cut supply to prop up prices, or risk damaging revenues and market share—along with potentially straining relations with the unpredictable former US President. Prospects for restoring Venezuela's production capacity are causing divisions. Some OPEC members believe that if the Venezuelan government amends regulations to attract US investors, the country could increase production by 2 million barrels per day within one to three years, up from the current level of less than 1 million barrels. This expectation was revealed by Gulf-based OPEC representatives. According to informed sources, Saudi Arabia is currently adopting a wait-and-see approach. The Saudi assessment is that restoring Venezuela's production will take years, and US companies would require a legal framework and potential US government guarantees that bind future administrations before committing the billions of dollars needed to repair Venezuela's crumbling infrastructure. Although Venezuela possesses vast oil reserves, its crude is of the heavy, high-sulfur variety, considered low quality and lacking in commercial appeal. Other Gulf OPEC members, however, view Trump's plan as potentially offering a glimmer of hope. Even so, the US strategy regarding Venezuela will complicate OPEC's efforts to manage the market, as vast reserves would fall under American control and operate outside the OPEC framework, representatives stated. J.P. Morgan noted in a recent report, "This shift could grant the US greater influence over the oil market, potentially keeping prices in a historically lower range, enhancing energy security, and reshaping the balance of power in international energy markets." OPEC and its allies, including Russia, are already struggling to formulate strategies to counter Trump's push for lower oil prices. Despite his repeated calls for the group to increase production, member nations fear prices are already too low. In a meeting on Sunday, OPEC, Russia, and other producers agreed to pause any plans for output increases during the first quarter of this year. Persistently low oil prices continue to exert pressure on all parties. Due to increased global production and concerns about the world's economic health, crude oil prices fell sharply last year. The global benchmark Brent crude is currently trading around $63 per barrel, while the US benchmark hovers near $59, both down approximately one-fifth from a year ago. Analysts have been downgrading their oil price forecasts in recent weeks, with J.P. Morgan projecting an average of $58 for Brent and $54 for the US benchmark this year. The bank anticipates even lower prices next year. Saudi Arabia, for the third consecutive month this week, reduced the official selling price for its crude to Asian buyers. Regardless of changes in Venezuela's output, analysts widely agree that low oil prices are here to stay, putting pressure on the profits and budgets of producers worldwide. A sustained drop below $50 per barrel—the profitability threshold for many companies—could severely impact the US shale industry, which strongly supports Trump. Many US drillers are already ignoring the former president's calls for increased production, instead adhering to Wall Street's demands for strict capital discipline. Analysts estimate that Saudi Arabia's cost to extract crude is below $10 per barrel. However, according to Capital Economics, the kingdom needs oil prices above $100 to reduce its fiscal deficit to zero. Riyadh faces substantial domestic spending commitments, which are contributing to widening budget deficits and increasing borrowing needs for the world's largest oil exporter. The country's "Vision 2030" plan aims to diversify the economy by stimulating growth in sectors like tourism, entertainment, and sports.
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