Political Crisis In Venezuela To Reshape OPEC

28 Jan, 2019

The political power struggle in Venezuela is heating up. The outcome of this power struggle is far from clear, as long as the Venezuelan army is supporting the Maduro government. International support for Guaido is, however, growing.

Still, whatever the outcome will be, Venezuela’s future is in shambles. As one of OPEC’s founding members, Venezuela’s oil and gas sector has imploded, with oil production levels down to a meagre 1.2 million bpd. Possible U.S. sanctions on the country’s crude exports could further lower this number.

Oil analysts are keeping a close eye on the developments, due to Venezuela’s importance within OPEC. Since the start of 2019, Venezuela is officially chairing OPEC, with former general and current minister of oil, Manuel Quevedo, at its helm. The appointment of Quevedo was met by criticism and opposition last year, but OPEC members didn’t have a choice, Venezuela needed to be kept in the Saudi-led cartel. The current political crisis in the country however has put all in doubt.

The current political crisis in the country however has put all in doubt, as the U.S. already has openly acknowledged that Guaido is the new president. With two presidents in one country, OPEC’s leadership could be in doubt. The oil cartel will have to deal with a major internal crisis in one of its key members, while trying to counter a still existing imbalance in the oil markets.

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