Venezuela is actively considering withdrawing from the Organization of the Petroleum Exporting Countries (OPEC), a decision that has been discussed with US officials. This potential exit, dubbed "Vexit," is seen as a blow to the oil cartel, which Venezuela helped establish over 60 years ago. While the immediate impact on global oil supply is expected to be minimal due to Venezuela already operating outside OPEC's production quotas, the move carries significant reputational risk for the Saudi-led group and could raise structural questions about its unity and ability to manage global oil prices effectively.
Historically, Venezuela was a pivotal member of OPEC, with its oil production peaking at approximately 3.2 million barrels per day in the late 1990s. However, due to underinvestment, mismanagement, and US sanctions, production collapsed to just 400,000 barrels per day by 2020. Current production stands at around 900,000 barrels per day, a recovery from its low but still far below its peak despite holding the world's largest proven oil reserves at 304 billion barrels.
The potential departure is linked to a deepening energy partnership between the US and Venezuela, which could lead to an expansion of Venezuelan oil output over time. This would add new supply to a market already facing forecasts of a widening surplus, with the International Energy Agency projecting a surplus of 1.5-2 million barrels per day for 2027. US energy companies like Chevron and Schlumberger, which have maintained limited operations in Venezuela, stand to benefit from expanded activities. However, significant obstacles remain, as the country's oil industry requires an estimated $200 billion in investment to restore production to 2 million barrels per day, coupled with political instability and infrastructure decay.
The move comes after the United Arab Emirates announced its withdrawal from OPEC just four months prior, further highlighting concerns about the group's cohesion. While Venezuela's exit would primarily affect market psychology rather than immediate physical supply, it could reinforce bearish positions among traders who anticipate reduced OPEC unity and increased future supply competition. Long-term price pressure could emerge if US collaboration successfully boosts Venezuelan output, adding barrels to an already well-supplied market, fulfilling a goal of the Trump administration, which has been critical of OPEC's influence on oil prices.
