Trump's Military Actions Weaken OPEC, Potentially Harming Markets
US President Donald Trump's military actions in Venezuela and Iran have significantly weakened the Organization of Petroleum Exporting Countries (OPEC), potentially harming both the US and energy markets, according to an expert. The group's influence has been waning for decades as non-OPEC members like the US gain prominence. OPEC's market share fell from 50% in the 1970s to around 26% in March after the closure of the Strait of Hormuz.
The UAE, one of the cartel's largest producers, left OPEC last week after 60 years, citing a desire for energy strategy independence. Trump celebrated the move as 'great' and beneficial to lowering oil prices. However, a weaker OPEC may result in higher market volatility and less effective price management.
The US has been a long-time critic of OPEC's alleged monopolistic practices. This year, the country took control of Venezuela's oil sector, redirecting exports to the US and opening the country's vast reserves to Western companies. The Iran war further weakened OPEC by crippling its traditional pillars, Saudi Arabia, the UAE, Kuwait, and Iraq.
Without a strong OPEC, Trump may find it challenging to manage the new environment, which could lead to more frequent boom-and-bust cycles in oil prices and higher operating costs for oil companies.