The oil market can absorb the Maduro shock as global supply increases

While the arrest of Venezuelan President Nicolas Maduro following US airstrikes marks a seismic geopolitical development, early signals suggest the global oil market will largely adopt the move.Venezuela’s oil infrastructure was not affected after a series of US attacks in Caracas and other states, according to people with knowledge of the matter. Key facilities such as the port of Jose, the Amuay refinery and oil areas in the Orinoco belt are still operational, said the people, who asked not to be named because the matter is confidential.

While Venezuela was once an oil-producing power, its production has fallen dramatically over the past two decades and now represents less than 1% of global supplies. Recent US pressure on the Maduro regime, including the seizure of tankers carrying Venezuelan crude, forced the country to close some oil wells.President Donald Trump said at a news conference on Saturday that sanctions on Venezuela’s oil industry will remain in place and that US oil companies will help rebuild infrastructure and revive production. Such a reconstruction would be highly ambitious and most likely a distant prospect. Meanwhile, global oil supplies are expected to exceed demand by 3.8 million barrels per day in 2026, which would mark a record surplus, according to the International Energy Agency.

Crude oil prices have fallen to around $60 per barrel in recent weeks. A weekend retail product from IG Group showed the U.S. crude oil price at one point rising nearly $2 from Friday’s close.

“I estimate that Brent crude prices will rise only marginally, by $1-2 or even less, at the open on Sunday evening,” said Arne Lohman Rasmussen, chief analyst at A/S Global Risk Management. “Even under normal conditions, a disruption of this magnitude is manageable for the market. In particular, all forecasts point to significant oversupply in the first quarter, driven by seasonally weak demand and OPEC+ production increases.”

Venezuela is a member of OPEC, which will meet on Sunday along with allies including Russia. The group is expected to stick to a planned pause in production increases during their planned video conference, three delegates said earlier this week. Tanker seizures in the Caribbean in recent weeks have spooked operators of sanctioned vessels. At least seven ships changed course or stopped at sea, according to ship movements tracked by Bloomberg on Friday. That’s in addition to four others who turned away in the immediate aftermath of U.S. troops boarding the Skipper ship in mid-December.

Despite the volatility of the past month, US oil producer Chevron Corp. continue to operate in the country under a waiver from the Trump administration’s sanctions.

“Chevron remains focused on the safety and well-being of our employees, as well as the integrity of our assets,” the company said in a statement Saturday. “We continue to operate in full compliance with all relevant laws and regulations.”

Maduro’s capture raises speculation about the longer-term fate of Venezuela’s oil industry. The country is estimated to have more oil reserves in the ground than Saudi Arabia, and over the past century it has attracted some of the biggest international players.

But two waves of nationalization left a bad taste in the mouths of companies like Shell PLC, Exxon Mobil Corp and ConocoPhillips. Exxon and Conoco later sued for damages after their assets were seized by late President Hugo Chavez.

In addition to Chevron, Spain’s Repsol, Italy’s Eni SpA and France’s Maurel et Prom SA are still present in Venezuela and collaborate in oil and gas projects with the state-owned Petroleos de Venezuela SA.

Trump said on Saturday that US companies would rebuild Venezuela’s oil sector and sell a “large amount” of oil to global buyers, including current and new customers. It was not immediately clear which oil companies he was referring to and he did not specify how soon they might start production.

“History shows that forced regime change rarely stabilizes oil supplies quickly, with Libya and Iraq providing clear and sobering precedents,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.