Venezuela will likely retain its seat in OPEC, even if U.S. president Donald Trump succeeds in forcing a change in government in the oil rich country. The U.S. wants to strengthen its alliance with the cartel while expanding its own sphere?of?influence. The U.S. is increasing its pressure on Venezuelan president Nicolas Maduro, urging him to step down. They have also increased their military presence in Caribbean and launched strikes against suspected 'drug-smuggling ships. Trump's national security strategy is open about the White House's intentions. Washington wants to "restore American dominance" in the Western Hemisphere, according to its new national security strategy. This almost certainly means that the United States will push for a Venezuelan government that allows U.S. oil refiners to access Venezuela's huge oil and gas reserves. The 21st century Monroe Doctrine could suggest that the White House would seek to remove Caracas's grip on the Organization of the Petroleum Exporting Countries (OPEC), given America’s longstanding animosity towards the cartel. Congress has introduced several bipartisan versions in the past decades of the NOPEC bill (No Oil Producing and Exporting Cartels), which would allow antitrust suits against state-owned companies. However, the initiatives never became law. In 2018, Trump said to the UN General Assembly, OPEC "ripped off the rest" of the world. But this is not the case today. Trump has cultivated a close military and economic partnership with Saudi Crown prince Mohammed bin Salman as well as neighbouring United Arab Emirates. The U.S. President would not likely pressure a new Caracas Government to stop being an OPEC'member - particularly if the U.S. could exert significant influence over it.

RESTORING OLD GLORY Venezuela, one of the founding members of OPEC back in 1960, was a member. Venezuela's role in OPEC has diminished over the past few decades because of declining oil production, political instability and U.S. sanctions. Venezuela's oil production has declined from a high of 3.7 millions barrels per day in 1970 to a minimum of 665,000 bpd by 2021, before recovering slightly to reach below 1 million bpd by 2024. This is due to years of neglect and lack of investments made by the state-owned energy 'company Petroleos de Venezuela.

According to the U.S. Energy Information Administration, Venezuela's proven crude oil reserves will reach 303 billion barrels by 2023. This is roughly 17% global reserves. The majority of the reserves are in the Orinoco Belt. Since Venezuela's first oil discoveries in 1920, the U.S. and Venezuela have been "closely intertwined". Venezuela's oil industry continued to grow as the country became the second largest oil producer in the world by the 1930s. The vast resources of the country attracted top Western oil companies such as Chevron Exxon Mobil, and Shell. Venezuela's energy industry was nationalised in the 1970s, and then again in the 2000s under Hugo Chavez. Chevron, the only U.S. company that operates in the heavily-sanctioned country today, is a result of a waiver granted by the United States in 2019.

It is likely that the removal of U.S. Sanctions on Venezuela will lead to an immediate return of U.S. companies and European firms. According to Washington-based Rapidan Energy's estimates, the country would be able to increase its production by 1 million barrels per day over a period of 10 years if it had a stable, U.S. aligned government. Although it might seem like the logical next step to pull Venezuela out of OPEC, this does not align with Trump's broader geopolitical and economic interests.

FRIENDS WITH BENEFITS Trump already has closer ties to OPEC – and its de-facto leader Saudi Arabia - than most of his predecessors. OPEC was a great asset to the first Trump Administration during the COVID-19 Pandemic. A drop in demand caused crude prices to plummet, putting small U.S. shale drilling companies on the brink of bankruptcy. OPEC stabilized the market with record supply cuts, stabilizing prices. In January, when Trump returned to the White House, he urged Saudi Arabia and OPEC, among other things, to increase production in order to lower energy prices for U.S. customers. Riyadh seemed to acquiesce in April when OPEC, its allies, including Russia, and collectively called OPEC+ moved to undo years of 'production cuts. OPEC will want to keep Venezuela in its orbit, due to the large potential of Venezuela's production and the apparent divisions that are already?growing within the cartel.

"President Trump places a high priority on good relations with Riyadh, Abu Dhabi and other Gulf countries." "For those two cofounders of OPEC it's more important to keep Venezuela in OPEC than for Trump", said Rapidan Energy president Bob McNally. There is still a lot of uncertainty. Trump's high-stakes pressure campaign against Venezuela's leaders is not certain to be successful. Even if the campaign is successful, its form matters. A military invasion followed by an unorganized transition could slow down the revival of Venezuela's production and lead to a backlash among the populace. One thing is certain: Trump will not turn Venezuela's 65 year-old OPEC member into a battlefield.

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(source: Reuters)