Amid persistently falling oil prices, members of the Organization of the Petroleum Exporting Countries (OPEC) are struggling to protect their market share. Now, they must also contend with an unexpected new variable: President Trump's attempts to seize control of Venezuela's oil supply and steer the market in a direction favorable to American consumers. Insiders reveal that Trump, a long-time advocate for increased oil production who has targeted $50 per barrel as an ideal price, is planning a comprehensive initiative to repair Venezuela's oil fields and bring its output to market. This move would reshape the global oil landscape—granting the U.S. control over the production of an OPEC founding member. Combined with America's own substantial output, this could position the U.S. to play a potentially disruptive role in an international market already grappling with a deep supply glut. Although analysts believe revitalizing Venezuela's dilapidated oil industry would require massive investment and considerable time, they note that even a modest short-term production increase, coupled with potential long-term growth, could exacerbate the global supply-demand imbalance. This, in turn, could push oil prices even lower. OPEC members now face a difficult choice: should they cut production to support prices? However, such a move could not only harm their own fiscal revenues and market share but also potentially strain their relationship with the unpredictable American president. David Oxley, Chief Climate and Commodities Economist at Capital Economics, stated, "Everyone has a responsibility to protect their own interests, but at the same time, they must avoid 'poking the bear.' This inherent contradiction continues to pressure global markets." OPEC representatives from the Gulf region indicated that some member states believe Venezuela's oil output could increase by an additional 2 million barrels per day within 1 to 3 years, up from the current level of under 1 million barrels, provided the Venezuelan government adjusts regulations to attract U.S. investors to its oil sector. According to informed sources, Saudi Arabia is currently choosing to wait and see. Its calculation is that restoring Venezuela's oil production capacity will take years—U.S. companies would require a solid legal framework and likely guarantees from the U.S. government to bind future Venezuelan administrations before investing billions to fix the country's crumbling infrastructure. Despite Venezuela's vast oil reserves, the crude it extracts is heavy and sour. This lower-quality crude is less commercially attractive. Other OPEC members in the Gulf region speculate that Trump's plans might also contain a potential silver lining. These representatives suggest that if Trump's actions succeed in diverting Venezuelan crude supplies away from China, the major crude consumer would be forced to seek more oil from Gulf nations. Nevertheless, the representatives point out that as Venezuela's enormous oil reserves potentially fall under U.S. control and outside OPEC's sphere of influence, the U.S. maneuver to secure these resources will complicate OPEC's efforts to manage the market. Analysts at J.P. Morgan suggest that combined oil reserves from Guyana (where U.S. majors dominate the oil industry), Venezuela, and U.S. domestic producers could potentially give the U.S. control over about 30% of global oil reserves, thereby granting it significant market influence. The bank noted in a recent report, "This shift could endow the U.S. with greater influence over the oil market, potentially keeping prices historically low, enhancing energy security, and reshaping the balance of power in international energy markets." OPEC and its allies, including Russia, already find it challenging to devise effective strategies to counter the Trump administration's push for lower oil prices. While the U.S. president repeatedly urges OPEC to increase production, member states fear current prices are already too low. In a meeting on Sunday, OPEC, Russia, and other producers agreed to halt any plans for output increases in the first quarter of this year. International crude prices fell sharply last year due to increased global production and concerns about the global economic outlook. Brent crude, the global benchmark, currently trades around $63 per barrel; the U.S. benchmark hovers near $59, both down approximately one-fifth from a year ago. In recent weeks, analysts have been downgrading their oil price forecasts for the year. J.P. Morgan expects Brent to average $58 per barrel and the U.S. benchmark $54 this year, predicting prices could fall further next year. This week, Saudi Arabia cut its crude prices for Asian buyers for the third consecutive month. Analysts widely agree that regardless of Venezuela's eventual oil output, the era of low prices is likely to persist, putting pressure on profits and government budgets for oil producers worldwide. If prices consistently fall below $50 per barrel—the profitability threshold for many oil companies—the U.S. shale industry, a staunch supporter of Trump, could be severely impacted. Many U.S. drillers are already ignoring the president's calls for increased output, instead choosing to adhere to Wall Street's demands for strict capital discipline. Analysts estimate Saudi Arabia's cost to extract a barrel of oil is under $10. However, according to Capital Economics, the kingdom needs oil prices above $100 per barrel to reduce its fiscal deficit to zero. As the world's largest oil exporter, Saudi Arabia faces immense domestic spending pressures, leading to a widening budget deficit and increasing borrowing needs. Its "Vision 2030" plan aims to diversify the economy away from oil by developing sectors like tourism, entertainment, and sports. Steffen Hertog, a professor at the London School of Economics who specializes in Saudi politics, said, "Low oil prices undoubtedly create greater pressure for Saudi Arabia and also limit its ability to deploy strategic capital overseas. The importance of this capital deployment capability is evident as Gulf states attempt to build ties with the Trump administration by making large investment promises." An increase in oil supply from Venezuela would further compound challenges for Russia's oil industry, which is already suffering from sanctions, attacks in Ukraine, and a long-term structural decline due to aging fields and insufficient resources to develop complex reserves. OPEC's influence has already been diminishing as oil production surges in the United States, Brazil, and Guyana. Oxley stated, "OPEC is watching its market share being eroded by other producers around the world. With ample global oil supplies, OPEC no longer wields the influence it once did."
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