Trump's 'American Opec' Challenges Traditional Oil Cartel

US President Donald Trump's deal with Venezuela has sparked concerns among Gulf producers that he may be building an American version of Opec, challenging the traditional dominance of the Middle Eastern oil cartel.

The agreement gives a US-led venture majority control over 65 billion barrels of Venezuelan oil reserves, spread across 17 fields, under concessions lasting 100 years. The US will have a 55% effective share of output, including the right to buy oil at cost.

This is not Trump's first foray into energy policy. He has long advocated for 'energy dominance', and his administration has used sanctions to exert influence over global oil markets. The US already controls the Development Fund for Iraq, which holds Iraqi oil revenues in accounts subject to US oversight and authorisation.

For Gulf producers, this poses a strategic challenge. Opec's power to balance the market is weakening as the US brings more competing barrels into production. Trump wants maximum production, plentiful supply, and lower prices, a far cry from the traditional logic of oil markets, where spare capacity was used to control prices.

While rebuilding Venezuela's decrepit oil industry will take years and tens of billions of dollars, the threat to Opec is not immediate but strategic. If Washington can simultaneously increase American production, rehabilitate Venezuela, and determine which sanctioned producers can sell their oil, the balance of power shifts further away from Opec and towards a US-dominated bloc.