Century-long contracts with the U.S. and withdrawal from OPEC: Is this scenario beneficial for Venezuela?

The project—dubbed “the largest oil deal in history”—between the U.S. and Venezuela calls for Washington to gain access to Venezuelan oil under special terms, while Caracas receives capital to restore production. In connection with this deal, one of the scenarios being discussed is Venezuela’s possible withdrawal from OPEC. Would it be beneficial for Venezuela to leave the organization? Alexey Golubovich, an analyst at Arbat Capital Advisory Services Limited (UK), weighs in.

On August 28, 2026, U.S. President Donald Trump announced “the largest oil deal in world history”—between the United States and Venezuela. The deal could include 17 fields with undeveloped areas of extra-heavy oil in the Orinoco Belt and mature light-oil fields around Lake Maracaibo, with proven reserves of about 65 billion barrels.

In connection with this historic deal, discussions are underway regarding, among other things, the possibility of Venezuela leaving OPEC. Venezuela is one of the founding members of the oil cartel. Withdrawing from the organization would be a logical step toward greater integration of Venezuela’s oil reserves into the U.S. oil industry. This is apparently what the United States is seeking to achieve.

If Venezuela submits a notice of withdrawal from OPEC by the end of this year, that decision will take effect on January 1, 2027.

What will this mean for OPEC? The organization is weakening. The UAE (which accounts for 14% of its production capacity) left the group on May 1, 2026; Angola, Ecuador, and Qatar had done so several years earlier. Iraq, the cartel’s second-largest producer, also threatened to leave in June if its production quota was not increased (though it later officially announced that it had no intention of leaving).

But if the downward trend continues, the question will no longer be limited to whether OPEC is capable of controlling market prices, but will also extend to whether anyone is capable of becoming the new market coordinator.

The group of major non-OPEC producers—the U.S. (and potentially Venezuela), the UAE, Brazil, Guyana, and Canada—has the potential to reshape the institutional landscape of the oil market. But Venezuela, with its extra-heavy crude, high production costs, vast reserves, and no financial cushion, is less prepared than other major oil producers to weather an uncoordinated market.

The U.S. expects Caracas to be ready to quickly dismantle the legacy national oil infrastructure. Its OPEC membership is the last major surviving element of that infrastructure. In addition, U.S. officials likely see the prospect of creating an “oil superpower” based on an alliance with Venezuela, which would diminish OPEC’s influence.

There are several benefits for the U.S. if Venezuela leaves OPEC.

— Tighter control over reserves. The 65 billion barrels reported in the joint project would immediately place it in second place behind Saudi Aramco in terms of reserves. For the United States, energy independence is a matter of national security.

— Ensuring alignment between production and refining. Venezuelan extra-heavy crude is the feedstock for refineries in the Gulf of Mexico. Since May 2026, Venezuela has been the second-largest supplier of oil to the United States.

— China’s Displacement. In 2025, Venezuelan shipments to China exceeded 400,000 barrels per day, including shipments via the shadow fleet and ship-to-ship transfers. Given the $10–15 billion (according to various estimates) in Chinese oil-backed loans and the five CNPC projects, it stands to reason that the U.S. does not want China and other adversaries to control this sector. Venezuela’s withdrawal from OPEC eliminates the last forum where Caracas could coordinate with other producers (including Iran).

But there is a potential contradiction inherent in Washington’s strategy: a U.S.-Venezuelan oil alliance, capable of eventually adding large volumes of production to the market, will strengthen U.S. energy security, but, on the other hand, could lead to a drop in oil prices. And that poses a problem for American shale oil producers. With the help of Venezuelan oil, U.S. companies will begin to take market share away from other major producers as well. And it is unlikely that Saudi Arabia will “capitulate” without a fight: if necessary, it is prepared to defend its market share even at the cost of lower prices.

Venezuela is currently producing 1.1–1.2 million barrels per day and plans to increase production to 1.5 million barrels during 2027 (this is the government’s goal; according to analysts’ forecasts, it will not be achieved until the end of 2028).

The argument that unlimited oil production is the strongest driver of Venezuela’s economic growth is true, but analytically incomplete. As an OPEC member, Venezuela is exempt from production quotas; these restrictions are not currently a limiting factor and will not become one for several more years.

Capital and the condition of the oil infrastructure are key to restoring oil production in Venezuela.

At its peak in the 1990s, the country produced 3.3 million barrels per day (in the 1970s, production reached 3.7 million). To return to that level, it will require more than $183 billion in investment over 15 years. At the same time, a significant portion of production projects will be economically viable only if the price of oil exceeds $80 per barrel. Therefore, if the U.S. Energy Information Administration’s forecast of an average Brent price of $69 per barrel in 2027 proves accurate, it is the low economic viability of some projects—rather than OPEC quotas—that will determine the strategy of oil companies in Venezuela.

Of the estimated $183 billion in investments in the oil and gas sector through 2040, approximately $102 billion will go directly to production, and $81 billion will be allocated to the construction of pipelines and other infrastructure.

Approximately $156 billion will be spent on oilfield services; this amount is partially included in the $183 billion mentioned above and covers, in particular, expenses for construction and installation work, drilling, and engineering.

All of this must be done before production can increase significantly. Therefore, the increase will be gradual—in 2027, the country could reach a level of 1.5 million barrels per day, provided the necessary reforms are implemented, by 2032—to 2 million, and only by 2040—to 3 million barrels per day.

All of these projects require high oil prices—above $80 per barrel. And OPEC exists to support those prices. But the organization’s members could also maximize production, which would work against Venezuela.

It is also important to note that the country’s current exemption from quotas is not a permanent privilege. These exemptions were granted as a result of force majeure. And OPEC did not guarantee that Venezuela would be able to take advantage of them while producing 2 million barrels per day.

The organization may reassess the production capacities of participating countries, and these assessments will form the basis for the 2027 agreements. Jorge Leon of the analytical firm Rystad puts the next step in plain terms: the goal is to “manage the surplus that may arise as export flows normalize.” A group operating under a surplus management regime will certainly want the barrels produced by new participants to be included in the count rather than excluded from it.

As a result, the option to withdraw without serious future consequences may disappear: Venezuela, forced to comply with the quota system, will find that leaving OPEC comes at a higher cost. And if Caracas or Washington is thinking several years ahead, the argument in favor of an early exit proves stronger than the argument for waiting.

The very fact that the issue of OPEC membership is being discussed publicly may indicate whether oil is becoming a political problem for the Venezuelan government and elite: these deals could come under fire from both the country’s future government and the next U.S. administration.

These concerns are the main reason why Caracas will proceed slowly on the issue of withdrawing from OPEC.

On the U.S. side, the agreement was signed by Secretary of State Mark Rubio and Defense Secretary Pete Hegset; on the Venezuelan side, it was signed by Acting President Delcy Rodríguez, who assumed the post following the ouster of President Nicolás Maduro.

The country’s constitution defines hydrocarbon resources as an inalienable public asset. This means that the constitution would have to be amended for such a deal to take place. Harvard professor Ricardo Hausmann, for example, believes that the interim government lacks the legitimacy to approve such a scheme. Economist Francisco Rodríguez of the University of Denver published a list of questions for Delcy Rodríguez and demanded disclosure of the terms of the deal, calling it unconstitutional.

However, the members of the National Assembly ignored the criticism and have already approved the draft agreement by a majority vote.

The Venezuelan elite are being asked to make century-long commitments to a counterpart whose planning horizon is much shorter. According to the opposition, Caracas’s rational strategy should be consistent: first, secure the lifting of U.S. sanctions; then, carry out the necessary legal reforms; and finally, formalize commitments regarding capital. Withdrawal from OPEC, meanwhile, should be postponed until the concession system has weathered the current political cycle in the U.S. and been given a solid legal framework.

Furthermore, Caracas does not currently have full control over its own oil revenues—by the end of July, the United States had received more than $13 billion from the sale of Venezuelan oil, but those funds are held in U.S. accounts, and their distribution is completely opaque.

This means that the Venezuelan government has reasons both to maintain any remaining external ties—including its status in OPEC—and to trade that status for the potential to secure a larger cash flow for itself. It is precisely which way this balance will tip that is worth watching.

In the U.S., midterm congressional elections will be held in November 2026, and the presidential election will take place in 2028. Since the war in Iran began, the average price of gasoline in the U.S. has risen by about 90 cents. Republican-controlled districts are more vulnerable than Democratic ones: their residents drive about 26% more miles. That is why Trump announced the Venezuela deal, which is intended to help lower prices at the pump.

Washington needs Venezuelan oil exports to grow, especially during the election season. But if prices continue to fall, they could drop below the break-even point for U.S. oil companies’ shale projects.

The average price required to drill a profitable new well is $66 per barrel, while U.S. oil producers currently expect the price of a barrel of WTI to be around $74 by the end of 2026. There is no talk of a catastrophic drop in margins, but if Venezuelan oil enters the market and "Strait of Hormuz" barrels return at the same time, a significant portion of U.S. shale projects will become unprofitable.

It turns out that it would be more advantageous for the U.S. if Venezuela were to leave OPEC this year, while the Strait of Hormuz is effectively blocked. Only in this case would this decision be “politically cost-free” for the U.S. administration.

It is quite likely that Venezuela will leave OPEC—in 2027–2028. This will happen because it is an “inexpensive concession” that Caracas can make to a counterpart seeking OPEC’s downfall—the United States. Most likely, it is in the country’s best interest today to “easily” leave OPEC while maintaining the most functional working relationship possible with the cartel for the future.

What would make leaving OPEC necessary and feasible for Venezuela?

First and foremost, this is a formal legal document granting a 100-year concession, not merely a statement by the authorities. Without it, withdrawing from the oil cartel would amount to a concession in exchange for something that is not legally binding.

Another important point is the first tranche of international capital. Rystad estimates this at $30–35 billion over two to three years. Any announced investment plans should be compared to this figure.

Another important issue is the financing of the new project. There is no official information yet regarding the developers of the fields. It is believed that the U.S.-based Chevron, as well as the European companies Repsol and Shell (which have historically operated in Venezuela), and smaller U.S. companies (Lionheart Capital and Pacific Coast Energy) are interested in getting started. ExxonMobil and ConocoPhillips may not have made a decision yet, given the history of expropriations. The participation of small independent companies in the project does not solve the financing problem, as they will not be able to attract the necessary investment. If major international players stay on the sidelines, the increase in production—which gives leaving OPEC economic justification—may not materialize.

New agreements will be evaluated primarily in terms of whether they will survive a change in government in Caracas. A 100-year concession granted by a government whose legitimacy is contested by the opposition could give rise to new arbitration claims.

It is important to understand that OPEC membership is crucial for the Venezuelan government because it provides a forum where the country can participate in negotiations not merely as an ally of Washington, but on an equal footing with Saudi Arabia and Iraq.

In Venezuela, oil nationalism has been the guiding political principle since the 1970s—this is a real cost for the government that is difficult to bear.

In principle, Caracas could withdraw from OPEC while remaining in OPEC+. A partial withdrawal is a way to engage with Washington while maintaining a channel of communication with Riyadh. This is worth keeping an eye on, as it would indicate that Caracas is hedging its risks.

First: a device

He suggests that if Venezuela announces its withdrawal from OPEC, Saudi Arabia, as the organization’s informal leader, will view this as an insignificant loss (a country producing 1.2 million barrels per day, now free from the need to comply with quotas, is leaving the group) and will focus on keeping Iraq in the cartel. This is the more likely short-term reaction, consistent with the organization’s secretariat’s conspicuous silence.

Scenario Two: Containment

He suggests that Saudi Arabia may decide that Venezuela’s withdrawal from OPEC—backed by the U.S.—poses an existential risk to both the oil market and the organization itself. Therefore, Riyadh may seek to have Caracas postpone its withdrawal until 2029–2030—when production in the Persian Gulf returns to normal.

At that point, Venezuela's recovery will become apparent and will be highly sensitive to oil prices. A potential drop in oil prices would be more devastating for Venezuela than for any other market participant.

Leaving OPEC would exclude Venezuela from “the room where decisions are made” regarding the response to its own expansion. Membership in the organization, on the other hand, ensures access to information and a seat at the negotiating table. Neither will be worth much in 2027. But it could prove costly in the 2030s.

This article was AI-translated and verified by a human editor