Over the past few years, member countries of the Organization of the Petroleum Exporting Countries (OPEC) have been striving to maintain their market share amid falling oil prices. Now, they have to deal with an unexpected new variable: U.S. President Trump is taking actions to dominate Venezuela's oil supply and push the energy market in a direction that benefits U.S. consumers.

Industry insiders revealed that Trump, who has long advocated increasing global oil production with a target price of $50 per barrel, is currently planning to implement a comprehensive initiative aimed at repairing Venezuela's oil fields and boosting its production. This move may reshape the global oil landscape.

— enabling the United States to control the output of this OPEC founding member. Coupled with the United States' own huge output, this puts it in a potentially disruptive role in a market already plagued by oversupply.

While many analysts predict that revitalizing Venezuela's declining oil industry will require "huge investments and a long time", some also point out that even a small short-term rebound in the country's output (followed by significant long-term growth) could exacerbate the global supply-demand imbalance and further push down oil prices.

OPEC wants oil prices to rise VS the United States wants oil prices to fall

This situation has actually posed a "dilemma" for many OPEC member states: should they cut supply to prop up oil prices at the risk of harming their own revenues and market shares, or avoid angering the unpredictable Trump?

David Oxley, Chief Climate and Commodities Economist at Capital Economics, pointed out, "The inherent contradiction where countries need to safeguard their own interests while not angering the United States is suppressing the global crude oil market.

According to OPEC representatives from the Gulf region, some member states of the organization currently believe that if the Venezuelan government adjusts its regulations to attract U.S. investors, the country's daily oil production is expected to increase from the current less than 1 million barrels to 3 million barrels per day (an additional 2 million barrels) within 1 to 3 years.

Industry insiders revealed that Saudi Arabia, the "leader" of OPEC, is currently adopting a wait-and-see attitude. The logic behind its relative "calmness" is that it will take Venezuela several years to resume oil production, and American companies will need to invest billions of dollars in repairing the country's aging infrastructure. Before that, they will require the establishment of a legal framework and obtain guarantees from the U.S. government to restrain the future Venezuelan government.

In addition, although Venezuela has huge oil reserves, its crude oil is of the heavy and high-sulfur variety, which is considered to be of relatively poor quality and often lacks commercial appeal.

However, some OPEC representatives also pointed out that even so, the United States' layout in Venezuela will complicate the organization's efforts to manage the market - because huge reserves are falling under U.S. control, outside the traditional sphere of influence of OPEC.

According to estimates by JPMorgan analysts, the total oil reserves of producers in Guyana, Venezuela, and the United States, which are dominated by large American corporations, may enable the United States to control approximately 30% of the world's oil resources.

The bank wrote in a recent report, "This move may enhance the United States' influence over the oil market, keep oil prices within a historically low range, improve energy security, and reshape the balance of power in the international energy market.

OPEC's influence continues to weaken

Currently, major OPEC member countries and their oil-producing allies, including Russia, are striving to formulate strategies to respond to the Trump administration's demands to lower oil prices.

Despite Trump's repeated demands for the organization to increase production, many OPEC member states are concerned that oil prices are already at an excessively low level. At the OPEC meeting held earlier this year, the OPEC+ group reached a consensus and agreed to suspend any production increase plans in the first three months of this year.

Last year, international oil prices actually fell sharply due to the increase in global production and concerns about the state of the world economy. Brent crude, the global oil price benchmark, is currently trading at around $63 per barrel, while U.S. benchmark WTI crude is hovering around $59 per barrel, both down about 20% from the same period last year.

Many Wall Street analysts have also recently lowered their forecasts for oil prices this year. JPMorgan predicts that the average price of Brent crude oil will reach $58, and the average price of U.S. WTI crude oil will be $54, and it is expected that oil prices will fall further next year. Saudi Arabia has cut crude oil prices for Asian buyers for the third consecutive month this week.

But regardless of changes in Venezuela's oil production, most analysts currently agree that the situation of low oil prices is expected to persist, which will put pressure on the profits and budgets of oil-producing countries worldwide.

As the world's largest oil exporter, the Saudi government is facing huge domestic spending commitments, which have led to a continuing expansion of the budget deficit and increased borrowing needs. According to Capital Economics, although Saudi Arabia's crude oil production cost is less than $10 per barrel, the country needs oil prices to exceed $100 per barrel to achieve a fiscal surplus.

Steffen Hertog, a professor at the London School of Economics and Political Science who has written extensively on Saudi politics, said, "Low oil prices will definitely put more pressure on Saudi Arabia and limit its ability to deploy strategic capital overseas.

This is of great significance as Gulf countries seek access to the Trump administration by promising huge investments.

The increase in Venezuela's crude oil output will also exacerbate the difficulties faced by Russia's oil industry.

— The industry is facing a triple blow from Western sanctions, Ukrainian attacks, and a long-term structural decline, the latter stemming from aging oil fields and insufficient exploration of complex reserve resources.

Analysts point out that it is not difficult to notice a trend that with the surge in crude oil production in the United States, Brazil, and Guyana, the influence of OPEC is continuing to weaken.

They (OPEC) are watching other oil-producing countries around the world eat into their market share," Oxley noted. "With a large amount of crude oil flooding the market, OPEC's influence is not what it used to be.

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