How the US deal with Venezuela will hit OPEC

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented on the US–Venezuela oil deal for the online portal “VFocus Mail.ru”.

Alexey Gromov called the agreement between the US and Venezuela “neocolonialism of the 21st century”.

The level of revenues that Venezuela will receive is incomparable to the usual practice used in other countries with the foreign companies’ participation. This deal was made entirely under the terms dictated by the United States. The Venezuelan authorities are acting as mere figuresheads, essentially receiving crumbs from the pie that American oil and gas companies are planning to exploit, the expert explained.

Speaking about the possible Venezuela’s exit from OPEC, Gromov noted that such a prospect is quite real. The United States is effectively dictating the parameters of foreign policy to Caracas, forcing it to abandon cooperation with Russia and China, since OPEC membership is “yet another thorn in the side” for the American establishment.

“Most likely, the decision to expel Venezuela from OPEC and, as a result, from the OPEC+ alliance will be made. It may happen before the end of this year or at the beginning of the next. Another thing is that Venezuela has not been participating in joint market regulation efforts for a long time — since 2018, it has been officially exempted from complying with any restrictions due to its chronic economic crisis and sanctions imposed by Western countries,” he noted.

The expert also drew attention to the fact that Venezuela is betting on a significant increase in production. According to the United States, by 2030, production in the country could double — from just over 1 million barrels per day to 2 million. This contradicts the logic of OPEC+, which presume restraining production to maintain prices. In a situation where Caracas needs to quickly replenish its budget and attract investment, increasing volumes becomes a priority, even if it runs counter to the interests of other alliance members. Therefore, leaving the organization looks not just like a political move for Venezuela, but an economically justified one.

“From a technical standpoint, Venezuela’s exit changes little, since it was already not participating in market regulation. But it is a blow to the organization’s prestige, as Venezuela was one of the five founding states of OPEC. Its exit will be another step towards the gradual weakening of the cartel’s market power, and possibly even its dissolution. This trend is already underway,” Gromov concluded.

According to the expert, if OPEC begins to lose its key members, its ability to influence global prices will decline, and the cartel will gradually be replaced by bilateral agreements between major producers and consumers, which will change the entire architecture of the global energy market.