There once was a time when OPEC did not need to rely on outside producers to achieve its policy goals. That time has passed. The old OPEC is dead, and OPEC+ now stands in its place. What will its reign bring?
Given the group’s discord, it’s unclear if OPEC+ will sufficiently handle the current complex market situation, which is experiencing a number of fast-moving events, such as lost supply in Venezuela, Libya, and other producer nations.
Populist candidates in Colombia, Brazil, and Mexico have campaigned on dramatic new reforms for state-run oil industries and are now gaining momentum in polls.
Oil prices are currently underpinned by unplanned supply outages, OPEC manipulation, geopolitical uncertainty, limited spare capacity, rising demand, and speculative buying.
The crisis in Venezuela's energy sector is accelerating as creditors are laying claim to the few remaining productive energy assets in the country.
Venezuelan intelligence arrested two employees of Chevron who balked at signing contracts with PDVSA. The move has broad implications and will likely lead to even more production losses.
More sanctions against Venezuela could be looming, which would further undermine the country’s production at a time the global market is tightening.
PDVSA is engaging in all kinds of no cash deal making to bypass oil cargo seizures. But the company could face even more difficulty this year as Venezuela’s financial woes have bitten into its capacity to keep its oil fields running.
Smaller producers are eager to work with OPEC or join the cartel in an effort to boost their reputation, amplify their market clout, and gather research, information, and resources to attract investment.
Upcoming presidential elections in Latin America could be decisive in advancing policies to maintain oil revenues. However, in the current climate of growing polarization and deeply unpopular incumbents, the elections are generating tremendous political uncertainty.