The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+ , face new challenges as the rise of Venezuelan oil production may significantly impact global oil prices, said Robin Mills, CEO of Qamar Energy, a consultancy company on energy value, on Saturday.
As U.S. President Donald Trump urged American oil companies on Friday to re-enter Venezuela to enhance oil output, OPEC+ has decided to maintain steady production levels through early 2026.
In an interview with China Global Television Network (CGTN) in Dubai, Mills emphasized that a rapid increase in Venezuelan production will influence global oil prices and challenge OPEC+'s traditional pricing role.
"Well, the politics of Venezuela are very tricky, so we'll have to see how quickly are U.S. companies actually active there, how quickly does Venezuelan production rise, sanctions are eased, withdrawn or whatever. I think there will be, in that case, an immediate boost to Venezuelan production, but not a large one, perhaps a few hundred thousand barrels per day. The question really is, over the longer term, three to four years, is there sustained investment into Venezuela, so production could rise by perhaps two million barrels per day. That would really be the challenge for OPEC. Venezuela, of course, is an OPEC country, but it's not bound by production limits right now. If Venezuelan production is rising, at some point OPEC will have to have a tough conversation about how far that goes," he said.
Mills highlighted that if Venezuelan oil output rises to over a million barrels per day in the long term, it could lead to lower global oil prices.
"Venezuelan oil, the heavy oil was particularly supplying the US. That, of course, has gone away in the spirit of sanctions. Middle eastern countries, and particularly Iraq and Saudi Arabia, have been sending their heavier oils to the U.S. instead. If Venezuelan oil comes back in a big way, then that will displace the Middle Eastern oil and that will have to go somewhere else. So there's a kind of shuffling around of barrel. That is perhaps a secondary thing. You know, the more important thing is what pressure does it put on the overall oil price? I don't think a few hundred thousand barrels per day of Venezuelan oil make much difference. But if you talk about one or two million over a period of time, then yes, definitely means a period of lower oil prices for longer," he said.
When asked about the sustainability of OPEC+'s role in stabilizing oil prices amid potential increases in Venezuela oil production and evolving demand in Asia, Mills reiterated the necessity for the organization to rethink its strategies.
"I think there always was a process of rethinking, which was coming this year and next year, which is really to say, okay, we will increase production first, then we'll have a big rethink about everybody's production targets and reset them. Some people will go up, some will come down, but there'll be a more logical set of targets for everybody. Now Venezuela somehow will have to be fitted into that depending where it's going. So OPEC's role of price management and supply management continues very much. But yes, this is an additional complication for them to think about," he said.
OPEC faces new challenges if Venezuelan oil production rises: analyst
OPEC faces new challenges if Venezuelan oil production rises: analyst
