Venezuela assumes presidency in OPEC: What does this position mean?

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The presidency of the OPEC Conference is rotating, with Venezuela in the lead they will try to recover the price of crude oil and stabilize its behavior.

Last week the president of Venezuelan state oil company PDVSA, Manuel Quevedo, revealed that Venezuela will take the reins of the Conference of the Organization of Petroleum Exporting Countries (OPEC) in the position of president.

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The 176th edition of the conference will be held in Vienna, Austria, headquarters of the organization, in April 2019.

The office of president of the conference has a rotating nature: every year a president and an alternate president are appointed to replace the principal when he is not in office. The main task of the president of the conference is to preside over the discussions and the development of the agenda during the conference; however, the position has no power beyond events of this type.

The appointment of Venezuela means that the leaders of the oil industry in this country will be able to choose the individual who will occupy the position. In this case, this will be the same PDVSA president and Venezuela's oil minister, Manuel Quevedo.

The alternative presidency will be occupied by Algeria, Energy Minister Mustapha Guitouni will be the representative of the African nation.

A weak Venezuela leads the 'oil cartel'

At this precise moment, OPEC is fully focused on raising oil prices as they should. In the conference just ended, chaired by the United Arab Emirates, the member countries of the organization committed to cut the production of crude oil by 800,000 barrels per day.

However, for Venezuela to reduce production should not be a challenge, because the economic crisis alone has been in charge of Venezuela's oil production has fallen in recent years, something that concerned the OPEC authorities but that has not prevented the presidency from being granted to the Latin country.

Also read: Why does OPEC lose one of its oldest members?

The production of Venezuela closed this year in 2.2 million barrels per day according to the Europapress portal, but everything indicates that it would fall to 1.5 million barrels per day by 2025.

In the context of OPEC, even at a time when cutting production is beneficial to meet price targets per barrel, Venezuela's deficient production level is worrisome. This mainly because it takes away from the organization that its members do not contribute significantly to the global production of crude oil, OPEC needs the contributions of its member countries to be sufficient for the decisions of the organization to affect the global market as a whole.

But, in a second place, Venezuela is one of the few member countries with proven oil reserves that compete with those of Saudi Arabia. Because of its incredible production, Saudi Arabia is often considered a de facto leader of OPEC, because regardless of whether or not it abides by the organization's decisions, the actions it takes with respect to oil production at the domestic level are sufficient to determine the behavior of complete international markets.

If Venezuela is not in shape and producing good to make a counterweight, the comparative power of Saudi Arabia increases, something that can damage the stability of the oil markets.

The goal of Venezuela

Venezuela's agenda may be different from that of many other member countries of the organization. While the majority are concerned solely with the price of crude oil and this limits their participation in OPEC, countries such as Venezuela and Iran now have concerns regarding the economic sanctions imposed by the United States.

For Venezuela, the OPEC presidency is presented as an opportunity to fight, from the power and international markets, the economic sanctions imposed on it. The president of PDVSA, Manuel Quevedo, has already pronounced on the matter.

"We reject the sanctions against our country. The attack on the economy of an oil-producing nation tends to destabilize the world oil market, "said Quevedo.

It is perhaps here where the main objective of Venezuela falls while occupying the presidential office in OPEC: in getting the necessary influence to counter the sanctions imposed by the United States.

LatinAmerican Post | Pedro Bernal

Translated from "Venezuela asume presidencia en la OPEP: ¿Qué significa este cargo?"