Venezuela will likely retain its seat within OPEC, even if U.S. president Donald Trump succeeds in forcing a government change in the oil-rich nation. The U.S. wants to bolster their alliance with the cartel while they?expand their own sphere of influences. The U.S. is increasing its pressure on Venezuelan president Nicolas Maduro, reportedly by building a large military base in the Caribbean and carrying out attacks against suspected drug-smuggling vessels. Trump's national security strategy is open about the White House's intentions. Washington wants to "restore American pre-eminence in the Western Hemisphere", according to this document. This almost certainly means that the U.S. 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 long-standing hostility toward the oil cartel. In recent decades, Congress has introduced several bipartisan versions (NOPEC) of the NOPEC bill 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 unlikely to be 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, especially if the U.S. could exert significant influence over it.

Venezuela was one of the founding members of OPEC, which was formed in 1960. The importance of Venezuela within the group has diminished over recent decades because of declining oil production, political instability, and U.S. sanction. 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 below 1,000,000 bpd by 2024. This is due to years of neglect and lack of investment on the part of state-owned 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. Most of the reserves are in the Orinoco Belt. The U.S. Since the first major oil discovery in Venezuela's 1920s, the oil industry has been tightly intertwined. Venezuela's oil industry continued to grow as the world's number two oil producer in the 1930s. The country's resources attracted top Western oil companies such as Exxon Mobil, Shell, and Chevron. 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 consultancy Rapidan Energy's estimates, the country would be able to increase its production by 1 million bpd in 10 years under a stable government that is aligned with the United States. Although it might seem logical 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 epidemic. OPEC stabilized the market after a collapse in demand caused crude prices to plummet, putting small U.S. shale drilling companies on the brink of bankruptcy. In January 2017, when Trump returned to his White House, he was one of the first to urge Saudi Arabia and OPEC, to increase production in order to lower energy prices. Riyadh seemed to acquiesce in April when OPEC, its allies, including Russia, and collectively known under the name OPEC+ began to reverse 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?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 much uncertainty. Trump's high-stakes campaign of pressure on Venezuela's leaders is not certain to be successful. Even if the pressure 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)