Markets remain calm despite geopolitical shock
Oil prices held steady on Friday despite dramatic developments in Venezuela, where the US announced it had successfully struck the country and captured President Nicolas Maduro. Brent crude traded at $60.76 per barrel while WTI hovered around $57.26, both showing minimal reaction to the news.
The muted market response reflects Venezuela's diminished role in global oil supply and the broader bearish sentiment weighing on crude prices heading into 2026.
Venezuela's oil production in perspective
Venezuela currently produces approximately 1.1 million barrels per day, representing roughly 1% of global oil trade flows. The country's output had already declined significantly due to years of underinvestment, sanctions, and the Trump administration's existing blockade, which had reduced production by approximately 25%.
Over two-thirds of Venezuelan crude is heavy oil, which requires specialized refining capacity. Most exports are destined for China and India, limiting direct impact on Western markets.
Analysts see minimal disruption
Energy market analysts were quick to downplay concerns about supply disruptions.
Vandana Hari of Vanda Insights noted that the immediate implications for the oil market are minimal. Similarly, Amrita Sen of Energy Aspects pointed out that the impact on oil prices would not be severe given the large expected stockbuilds in 2026.
Amena Bakr of Kpler added that the impact on markets is muted for the time being, reflecting the consensus view among industry watchers.
Oversupply concerns dominate sentiment
The limited market reaction also highlights the broader supply surplus expected in 2026. The International Energy Agency forecasts that global supply will exceed demand by approximately 3.85 million barrels per day this year, equivalent to around 4% of global consumption.
This surplus outlook has kept prices under pressure, with crude posting its worst annual performance in six years in 2025.
What to watch
Traders will be monitoring:
- Whether Venezuelan production faces further disruptions
- China's response and potential changes to its import strategy
- The OPEC+ virtual meeting scheduled for January 4
- Any spillover effects to neighboring oil producers
For now, the market appears to have priced in the Venezuela developments, with attention turning to broader supply and demand fundamentals that continue to favor lower prices.