Supply exceeds demand
Crude oil prices were under pressure in 2025 due to a combination of supply-side and structural factors. OPEC+ began unwinding earlier production cuts, adding barrels to the already soft macroeconomic environment, while robust non-OPEC growth – led by US production at record levels – further diluted any geopolitical risk premium. Tariff and sanctions adjustments by the US on Russia, Iran and Venezuela have shifted trade flows but have not led to lasting shortages, allowing inventories to increase. Meanwhile, China’s strong import activity largely fueled strategic reserves rather than direct consumption. This dampened demand signals and mitigated sharper price declines. Adding to the imbalance, inventories of refined products rose faster than those of crude oil in several regions, compressing margins and weakening the appeal to upstream demand.
Possible impact of Maduro’s arrest
On January 3, 2026, US forces captured Venezuelan President Nicolas Maduro and brought him and his wife to New York to face charges of narco-terrorism and drug trafficking, both of whom pleaded not guilty. The episode shocked global oil politics as Venezuela – a founding member of OPEC with the world’s largest proven reserves – is constrained by sanctions, underinvestment and operational decline.
While the arrest may bring political uncertainty, the immediate impact on global crude oil supplies remains limited. Venezuela currently produces just under 1 million barrels per day (less than 1% of global production) and ongoing US sanctions and tanker blockades have already severely limited exports. There may be modest supply disruption in the short term, but global inventories remain ample, projecting a surplus of 3.8 million barrels per day well into 2026. Brent crude is largely unchanged, stabilizing around $60-61, reflecting skepticism that political unrest will translate into supply. shock. In fact, the arrest could open doors for possible American and European investments. Maduro’s removal could cause short-term volatility, but structural oversupply and limited Venezuelan capacity are likely to neutralize any significant price spike. As political stabilization and investments unfold, Venezuela’s crude production could gradually increase, which could put pressure on oil prices in the medium term, but the path remains slow and uncertain.
Supply-demand dynamics
Forecasts vary, but most agree on surpluses by 2026. The EIA expects production to exceed consumption, with global inventory builds averaging more than 2 million barrels per day. OPEC+ is forecast to keep production steady in Q1 26, which will help limit volatility but not eliminate the glut. Meanwhile, the IEA has warned of a possible “super glut,” a surplus of 3 to 4 million barrels per day, if OPEC+ and competitors continue to add more supply than demand can absorb.
Continued oversupply is expected to be the dominant theme, driven by strong production from OPEC+ and non-OPEC producers such as the US, Brazil and Guyana. The inventory build-up predicted by the EIA and the IEA reinforces the view that the market will struggle to absorb additional barrels even if OPEC+ keeps production stable in early 2026. Unless the group makes deeper cuts, the surpluses are likely to stifle any sustained price rise.
On the demand side, growth remains modest, with the IEA predicting an increase of around 1.2 million barrels per day, concentrated in Asia. However, global economic uncertainty, the slower-than-expected recovery in China and cautious monetary policies in major economies are tempering bullish sentiment. These factors, combined with high inventories, suggest that demand alone will not be enough to significantly tighten balance sheets. As a result, price movements will depend more on supply discipline than on consumption trends.
Price outlook
Oil prices are expected to remain under pressure in 2026, with most forecasts placing Brent in the $54-62 range and WTI around $48-62 per barrel. Geopolitical risks – such as tensions in the Middle East, developments between Russia and Ukraine, and policy changes following the political unrest in Venezuela – could cause volatility in the short term; However, the structural oversupply limits the chance of long-term price peaks. Investor sentiment remains bearish, with most expecting trading within a range unless OPEC+ intervenes aggressively or there is a major disruption. In summary, 2026 will be a supply-driven year, with prices likely to fluctuate within a narrow range unless unexpected shocks or coordinated production cuts change the current trajectory.
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