OPEC+ is holding back on oil production amid Venezuela shock: Why?

Dubai: OPEC+ has decided not to increase oil production for now, opting to keep output unchanged through the first three months of the year. The group is taking a cautious approach as it watches political developments in Venezuela, even though global oil supplies are already more than sufficient to meet demand.

The group, led by Saudi Arabia and Russia, agreed on Sunday to extend a pause in output increases until at least the end of March. The move confirms a decision taken in November to stop raising production after a series of rapid increases last year.

Delegates said the decision was made during a short video meeting and that the alliance did not hold detailed discussions on Venezuela, where the United States has moved against President Nicolas Maduro. Officials said it was too early to judge whether the situation would disrupt oil supplies from the OPEC member.

The choice to hold output steady comes as crude prices hover near their lowest levels in almost four years and analysts warn of a growing supply surplus.

Political upheaval in Venezuela, a member of the OPEC+ alliance, has become the latest source of uncertainty for oil markets.

US President Donald Trump said American oil companies would invest billions of dollars to rebuild Venezuela’s oil industry following Washington’s operation targeting Maduro. Trump also said US sanctions on Venezuelan crude would remain in place, limiting the chances of a near-term recovery in exports.

Energy analysts say Venezuela is unlikely to raise output quickly, regardless of political changes. Years of underinvestment, poor maintenance and international sanctions have left its oil industry operating far below capacity.

Venezuela currently produces about 800,000 barrels per day, down from more than 2 million barrels per day a decade ago and representing less than 1% of global oil supply.

Recent US actions, including the seizure and pursuit of tankers linked to Venezuelan exports, have further reduced output. Production in the Orinoco Belt, the country’s main oil-producing region, has fallen by about 25%, according to industry estimates.

Consultants at Kpler estimate Venezuela could increase production by around 150,000 barrels per day within a few months if sanctions were eased. Larger gains would take much longer.

Returning output to levels above 2 million barrels per day would require major policy reforms and large-scale investment by international oil companies. Analysts say that process would likely take years.

For OPEC+, Venezuela’s problems are not seen as a near-term threat to global supply. Officials say the country’s production is too low to significantly tighten markets, especially at a time when oil is abundant.

“In an environment this fragile, OPEC+ is choosing caution,” said Jorge Leon, an analyst at Rystad Energy. “The situation in Venezuela adds uncertainty, but it does not yet change the supply picture.”

Concerns about oversupply remain central to OPEC+’s strategy. The International Energy Agency has warned that global oil markets could face a record surplus in 2026 as production rises faster than demand.

Supply continues to grow in the United States, Brazil, Guyana and Canada. At the same time, demand growth has slowed in major consuming regions.

China, the world’s largest crude importer, has reported weaker demand growth amid slower economic activity. High interest rates and weaker industrial output have also reduced oil consumption in Europe and parts of Asia.

Trading house Trafigura Group has warned the market could enter a “super glut” if current trends persist.

Brent crude futures settled just under $61 a barrel on Friday, after falling 18% last year in their largest annual decline since 2020.

Earlier this year, OPEC+ surprised markets by restarting production that had been shut in since 2023, even as inventories remained comfortable.

Several delegates said that move was aimed at regaining market share lost to competitors, particularly US shale producers. US oil output has continued to rise, limiting OPEC+’s ability to support prices without losing sales.

Under existing agreements, OPEC+ had planned to restore about two-thirds of the 3.85 million barrels per day it cut since 2023. Around 1.2 million barrels per day remains to be brought back.

In practice, actual increases have been smaller than planned. Some producers have struggled to raise output, while others have been required to compensate for earlier overproduction.

The eight OPEC+ members responsible for managing the return of these supplies are due to hold their next monthly meeting on Feb. 1. They are expected to reassess market conditions, including developments in Venezuela, before deciding whether to change course.

For now, the group appears willing to wait, viewing restraint as the safest option in a market shaped by weak demand growth, ample supply and unresolved political risks.