Brent crude fell as much as 1.2 percent in early trading on Monday (Jan. 5), falling to around $60 a barrel before recovering modestly to trade just above $61.
Since the the removal of Venezuelan President Nicolás Maduro US President Donald Trump has said Washington will take control of the country’s oil sector and invite American companies to invest in its reconstruction.
Venezuela has about 303 billion barrels of proven crude oil reserves – roughly 17 percent of the global total. according to data published by the US Energy Information Administration – but currently produces only about 1 million barrels per day, less than 1 percent of global supply.
This gap between geological potential and actual production explains why traders have thus far resisted pricing in the event of a short-term supply shock or surge. Venezuelan exports are already limited by U.S. sanctions and a naval blockade, and analysts say it would take years and tens of billions of dollars to restore production to historic levels.
“People assume there will be a lot more oil in the medium term,” said Amrita Sen, founder of consultancy Energy Aspects. told the Financial Times. Sen also noted that the prevailing market instinct is to ultimately view US involvement as bearish for prices, but added that nothing substantive has changed in the short term.
The broader oil market is already plagued by concerns about oversupply. Brent prices fell by roughly 20 percent in 2025, falling from over $70 to just over $60, as rising production collided with softer demand growth.
Non-OPEC producers, led by record US production, have added barrels, while OPEC+ has struggled to balance defensive prices with regaining market share. During a planned meeting on Sunday (January 4), eight OPEC+ members gave their signal no immediate change in strategy and agreed to pause production increases until at least April.
The decision reinforced the view that the cartel is cautious about adding more supply to an already tough market.
In the short term, Venezuela’s own production could even decline. The blockade has restricted imports of diluents needed to blend the country’s heavy crude for export, tightening operational restrictions. Reuters reported this that state oil company Petróleos de Venezuela has asked a number of joint venture partners to scale back production.
Oil stocks react to news from Venezuela
Despite the muted reaction from oil prices, US energy stocks rose on Monday.
Shares of major oil producers and service companies rose during the trading session, lifting the energy sector to the top of the S&P 500 (INDEXSP:.INX) despite Brent changing hands at nearly $61.
Chevron (NYSE:CVX) stood out, with shares rising more than 5 percent in extended trading after earlier gains of up to 8 percent, reflecting its status as the last major U.S. oil company still operating under special licenses in Venezuela.
Oilfield service companies SLB (NYSE:SLB) and Halliburton (NYSE:HAL) rose more than 9 percent at their peak, while refiners and producers like Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) added more than 2 percent each. Collectively, U.S. energy and refining stocks added more than $100 billion in combined market value within hours.
In addition to these stock price reactions, U.S. oil companies are now facing long-simmering questions related to Venezuela’s nationalization of foreign oil assets in the 2000s.
The White House has indicated that affected companies will need to release significant capital to rebuild Venezuela’s degraded oil infrastructure if they hope to do so. recover arbitration awards resulting from Chávez-era expropriations.
According to published arbitration figures, ConocoPhillips is seeking to recover nearly $12 billion in claims, while Exxon Mobil is pursuing about $1.65 billion.
The oil market enters 2026 with supply fears
The political drama in Caracas has arrived at a difficult time for the oil markets heading into 2026.
Market volatility has been a defining feature of 2025. Brent crude traded between a high of US$81.86 and a low of almost US$59.41, while West Texas Intermediate ranged from US$78.99 per barrel to around US$55.56.
“Throughout the year, prices have continued the downward trend they started in April (2024), as OPEC+ continued to increase production and the Chinese economy continued to struggle,” Matthew Cunningham, economist and editor at FocusEconomics, explained to the Investing News Network (INN) in late 2025.
Cunningham also pointed to Trump’s changing tariff policies as a source of uncertainty.
“We can see that Trump’s ‘Liberation Day’ tariffs have pushed prices to levels they have not yet recovered from,” he said, apart from a brief spike during the Iran-Israel conflict last year.
However, not all analysts share these bearish views.
Josef Schachter, president and author of the Schachter Energy Report, argues that the perception of abundant supply obscures the tighter underlying fundamentals. Global floating inventories are hovering around a billion barrels, much of which is stuck in “shadow fleets” off the coasts of Iran, Russia and Venezuela, awaiting demand.
“Even though people talk about high supply, demand is still growing,” he told INN. He estimated that global oil demand rose by about 1.3 million barrels per day in 2025 and could increase by about 1.2 million barrels per day in 2026.
For oil markets, however, Venezuela remains more of a symbol than a direct supply lever. For now, the muted response seems to point to a consensus that even dramatic political changes will not change the equilibrium in the short term.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to conduct their own due diligence.
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