Venezuela considers OPEC exit after decades of membership

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Venezuela considers OPEC exit

Highlights

Venezuela is considering an exit from OPEC.
No final decision on membership has been made.
July oil output reached 1.16 million barrels a day.
An exit could give Caracas more production freedom.

The possible withdrawal has emerged during discussions between Caracas and Washington, while no final decision has been made, Bloomberg reported. The talks come as the United States expands its influence over Venezuela's energy sector and discusses taking a substantial interest in oil fields, including a potential arrangement involving 100-year leases on several assets.

From OPEC founder to possible exit

Venezuela's departure would carry considerable historical weight. The country was one of five producers that established OPEC in 1960, with Venezuelan oil minister Juan Pablo Perez Alfonzo playing a central role in building the organization. Caracas later helped shape OPEC+, the broader alliance formed in 2016 with producers including Russia.

Its economic importance within the group has since diminished. Venezuela produced about 1.16 million barrels a day in July, less than half its output a decade ago, following years of sanctions, underinvestment, and domestic turmoil.

The country is currently exempt from OPEC production restrictions because of that decline. Leaving the organization could nevertheless give Caracas greater flexibility if it succeeds in rebuilding capacity with foreign investment.

Washington moves deeper into Venezuelan oil

The debate comes amid a rapid realignment between Venezuela and the United States. Since the removal of Nicolás Maduro in January and the installation of acting President Delcy Rodríguez, Washington and Caracas have restored diplomatic relations and expanded cooperation around energy.

Chevron agreed to an asset swap in April that will substantially increase its Venezuelan operations. Discussions about direct U.S. participation in oil fields would go further, potentially giving Washington an unusually large role in developing the country's resources.

For Venezuela, leaving OPEC could remove the risk of future production quotas just as the government seeks outside capital to restore output. That would align its oil policy more closely with expansion than with collective supply management.

A test of OPEC cohesion

A Venezuelan withdrawal would probably have a modest near-term effect on physical oil supply because production remains well below historical levels. Its larger significance would be institutional.

The United Arab Emirates announced its own departure four months ago, while frustration over membership obligations has surfaced elsewhere. Losing Venezuela, one of OPEC's architects, would deepen concerns about the durability of the Saudi-led organization.

The longer-term market effect could be greater if foreign investment lifts Venezuelan production. More barrels from a country operating outside OPEC restrictions could intensify competition for market share and reduce the group's ability to coordinate supply, particularly as growing production from the Americas already challenges its influence.

For Caracas, the choice therefore reaches beyond symbolism. Remaining would preserve a relationship dating back 66 years. Leaving could give Venezuela greater freedom to rebuild an oil industry increasingly connected to U.S. capital and policy.

We also reported Iran sets new conditions for full Hormuz reopening.

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