Trump’s Venezuelan move ‘poses a challenge for Opec’

US President Donald Trump’s actions to take control over Venezuelan oil resources may pose the biggest challenge to the grip the Organisation of Petroleum Exporting Countries (Opec) currently has on the global oil market, says Nigel Green, CEO of the deVere Group, an international financial advisory firm.

Green expects Opec to remain a significant player, but says US access to Venezuelan oil may bring “a profound shift in where pricing power sits”.

Read:
Trump’s Venezuela oil revival plan is a $100bn gamble
US tells Venezuela to cut ties with China, Russia, ABC says
Trump opens new front against China with brazen arrest of Maduro

“We laugh all the way,” says Professor Theo Venter of the North-West University Business School. Trump is determined to drive oil prices lower in his quest to fulfil an election promise of lower cost of living in the run-up to the US mid-term elections in November – and the benefit will also reach South African consumers.

Following the US action in Venezuela on 3 January when it removed then President Nicolás Maduro and took him and his wife Cilia Flores to stand trial in the US, Trump has made it clear that his country will take control of Venezuela’s oil reserves.

Listen: What Trump’s Venezuela takeover means for the world

Reuters quotes Trump as saying: “Only time will tell” when it comes to how long the US will oversee Venezuela.

When asked by the New York Times if it would be three months, six months, a year or longer, Trump replied: “I would say much longer.”

“We will rebuild it in a very profitable way,” Trump added. “We’re going to be using oil, and we’re going to be taking oil. We’re getting oil prices down, and we’re going to be giving money to Venezuela, which they desperately need.”

US refiners position for market advantage

Green says American refiners are seen to be positioning themselves to become the new power brokers in a market long dominated by producer alliances.

Oil traders and US refiners are scrambling to secure Venezuelan supply after reports that the American multinational energy company Chevron is seeking a wider operating licence and Citgo Petroleum, also a US company, could resume purchases of crude.

Read: Oil gains as traders weigh the next steps in Russia-Ukraine war

“US firms are demanding explicit guarantees from Washington before committing fresh capital, while Chinese oil companies are asking Beijing how to protect their interests,” says Green.

“The message is unmistakable. Control of Venezuelan oil is shifting rapidly from boardrooms to governments.”

If the Trump administration expands permissions, the impact will be immediate and structural. US Gulf Coast refineries are among the few in the world designed to process Venezuela’s heavy, sour crude efficiently, says Green.

Years of sanctions have kept those barrels sidelined, forcing refiners to rely on alternative heavy grades that are now increasingly scarce.

Geopolitical stakes

Sanctions on Iran and Russia have tightened the market further, leaving refiners competing for a shrinking pool of suitable feedstock.

“Guaranteed access to Venezuelan crude would change that overnight,” says Green.

“For US refiners, it would mean lower input costs, stronger margins, and a strategic advantage competitors cannot easily replicate. For the global market, it would mean a profound shift in where pricing power sits.”

He says Opec has for decades shaped oil markets through coordinated production decisions.

“This influence remains significant, but it weakens the moment access to supply becomes governed less by cartel policy and more by political authorisation.

“Opec controls barrels. Washington controls licences. When those two forces collide, the balance of power is bound to start to tilt,” he adds.

“Venezuelan oil now sits at the centre of that collision.”

The country holds the world’s largest proven crude reserves, yet its output remains constrained by sanctions, infrastructure decay, and diplomatic isolation.

“Any move by the US to loosen restrictions would instantly elevate Venezuelan barrels from distressed supply to strategic commodity. Companies allowed to lift that oil gain more than commercial and geopolitical advantage.”

He says this is why Chinese oil firms are seeking guidance from Beijing. “Their concern is not theoretical. It reflects a recognition that access to Venezuelan energy is becoming a political contest rather than a market transaction.

“If Washington determines who can buy, ship, and refine Venezuelan crude, then global energy flows begin to follow diplomatic lines,” says Green.

“This doesn’t mean Opec becomes irrelevant. It means its dominance faces a rival force it cannot control.”

Energy power politics

For markets, this marks the return of energy power politics in its most modern form.

Green says if US companies like Chevron secures broader permissions and Citgo Petroleum resumes purchases, the shift will be unmistakable.

“US refiners will move from being price-takers in a cartel-driven system to gatekeepers in a politically governed one.

“Opec will still matter, but it will no longer stand alone at the centre of oil market power. This matters for investors globally.”

Venter says Trump’s “drill baby, drill” approach has turned the international oil market on its head.

Nevertheless, the US operation in Venezuela and subsequent move to “run the country,” as Trump put it, is not only about oil as such.

Read: US to ‘run Venezuela’ in interim after Maduro capture, says Trump

“Trump wants a tighter grip on the oil market to neutralise Russia and China. China does not have its own oil resources.”

Venter says Russia filled the gap when Venezuela’s contribution to global production dwindled due to political mismanagement and gaining control over the Venezuelan reserves, can dilute the role of the Russians again.

“Access to the Venezuelan reserves gives the US an unbelievable grip on the global oil market.”

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.