A Complicated History

The Organization of Petroleum Exporting Countries (OPEC) has a checkered relationship with Western oil companies. In the 1970s, OPEC member states pushed the likes of Exxon, Chevron, Shell, and BP out of much of the developing world. Their assets were seized and handed over to national oil companies. In the decades since, OPEC has used its market power to keep prices high, which made it profitable for North American and European companies to exploit oil in the US and parts of Europe that was often comparatively expensive to produce, such as crudes lifted by deepwater rigs in the North Sea, fracked from shale in the US’s Permian Basin, or melted from solid bitumen in Canada’s prairies.

The US capture of Venezuelan leader Nicolas Maduro, and its apparent future control of the oil sector of an OPEC founding member, may be interpreted as a bid to reclaim Washington’s lost influence over the global oil supply. While closer alignment between US and Venezuelan production may eventually undercut OPEC’s market power, Trump’s rollback of climate policies may ultimately reinforce global demand for oil in ways that the cartel is well placed to exploit.

Foreign Investors and Energy Nationalists

President Donald Trump has said that he aims to “take back” control of natural resources that US firms lost to Venezuela in past decades. In 1976, the Venezuelan government cancelled the concessions of Exxon, Gulf, Mobil, Texaco, Chevron, and Arco seven years early, albeit with compensation. The 1976 nationalization was the culmination of taxation changes that started in 1958 (by some accounts earlier) and that saw the Venezuelan state tilt the terms ever more deeply in its favor. In further nationalizations between 2005 and 2007, ConocoPhillips and Exxon pulled out rather than acquiesce to the Venezuelan government’s punitive changes in terms. Outstanding claims against Venezuela exceed $10 billion for ConocoPhillips and $1.5 billion for ExxonMobil. Other companies, notably Chevron, accepted the new terms and stayed, which is why Chevron is now in pole position to lead any recovery in Venezuela. These past bouts of energy nationalism are partly behind the reluctance of Exxon and other foreign investors to get back into the country.

Venezuela’s Oil Production Capacity

Today, Venezuela is still considered one of the riskiest countries for investors. In 2021, the most recent year for which the Fraser Institute -a prominent Canadian thinktank- polled mining firms to rank the country’s investment attractiveness, Venezuela came in 76^th out of 84 nations. According to JPMorgan analysts, supply from Venezuela could to rise by roughly 500,000 barrels/day over the next year or two, likely through companies like Chevron, Spain’s Repsol, Italy’s ENI, and France’s Maurel & Prom, which have all applied for US authorization to export oil from the country. For context, that amount is about as much as is produced per day in the North Sea oilfields. Further gains would require wider participation from foreign investors and cooperation from the host government.

More US-Driven Production?

If Trump’s policy succeeds in coaxing substantial Venezuelan oil to market, it could set the scene for a US-OPEC clash similar to the cartel’s consternation with fracking in 2015. It took years for the cartel to comprehend the scale of the shale oil increase. At prices under $60 or so per barrel, US shale production can hold steady, but probably will not grow much. The top tier 1 geology that sustains shale oil production is being depleted, which means higher oil prices will be needed to maintain constant output. Although fracking turned the United States into the world’s largest oil producer, that position could be temporary. However, adding Venezuela to the mix of US-controlled production resulted in another unpleasant surprise for OPEC. Some Venezuelan production is profitable at $25-$30 per barrel. Even if the government’s claims of 300 billion barrels of oil reserves may be exaggerated, there is extraordinary room to grow and put pressure on OPEC’s revenues.

The Competitiveness of Oil vis-a-vis Renewables

For OPEC, another aspect of the Trump administration’s energy policy looks more upbeat. A strategy is taking shape that does not just bolster the supply of oil, but also aims to boost oil demand by kneecapping oil’s emerging competitors. The administration is undermining climate action policy and some of its proposed energy solutions – wind and solar power, batteries, and electric vehicles (EVs) – while boosting such other solutions as nuclear and geothermal power. The Trump administration has used protectionist rationales for its approach, in light of the Chinese and European prominence in those industries. The overall thrust of Trump’s policy makes EVs and renewables less competitive in the US market. Automakers have responded by cutting EV production and by reprioritizing petrol-powered vehicles.

How Might OPEC React?

Venezuela is still an OPEC member but has been sidelined by the falloff in its oil production. It has not been an active player in the cartel’s decision-making since 2001-2003, when successive Venezuelan officials led the organization.

The revival of production by another OPEC founder, Iraq, offers hints as to how a Venezuelan resurgence would be treated. Iraq’s production peaked in the 1970s, hit lows under 1 million barrels per day under US sanctions in the 1990s, and has steadily climbed after the US and some of its allies invaded the country in 2003. OPEC has only recently begun punishing Iraq for exceeding its quota. OPEC might accommodate a Venezuela revival in a similar fashion, in other words standing aside until Venezuela reaches its previous peak.

Perhaps more significant for OPEC is President Trump’s positioning of the United States to be able to exert influence over the oil market by undermining other nations’ sovereignty over their natural resources. The so-called rules-based international order that was largely established by the United States after World War II provided the legal rationale that enshrined oil as a sovereign national resource.. The need to follow those rules caused American and European companies to lose their grip on global oil reserves by setting in motion states’ expropriation (nationalization) of foreign oil concessions across the developing world. In 1970, Western oil companies  controlled 85 percent of global oil reserves. Already by 1980, the total had fallen to 12 percent. As of 2026, the question whether Washington and US firms can regain dominance in the global oil business by overturning the post-World War II rules already generates much discussion in the capitals of OPEC member states.