Oil prices moved uneasily at the start of the week as market participants digested the implications of a sudden US intervention in Venezuela over the weekend.
Brent crude slipped as much as 1.2 percent in early trading on Monday (January 5), falling to around US$60 per barrel before recovering modestly to trade just above US$61.
Since the removal of Venezuelan President Nicolás Maduro from power, US President Donald Trump has said Washington will assume control over the country’s oil sector and invite US companies to invest in rebuilding it.
Venezuela holds about 303 billion barrels of proven crude reserves — roughly 17 percent of the global total, as per 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.
That gap between geological potential and actual output explains why traders have so far resisted pricing in a near-term supply shock or surge. Venezuela’s exports are already constrained by US sanctions and a naval blockade, and analysts say it would take years and tens of billions of dollars to restore production to anything close to historical levels.
“People are going to assume there’s going to be a lot more oil in the medium term,” Amrita Sen, founder of consultancy Energy Aspects, told the Financial Times. Sen also noted that the prevailing market instinct is to treat US involvement as eventually bearish for prices, but added that nothing has materially changed in the short term.
Indeed, the broader oil market is already weighed down by oversupply concerns. Brent prices fell roughly 20 percent in 2025, sliding from above US$70 to just over US$60 as rising production collided with softer demand growth.
Non-OPEC producers, led by record US output, have added barrels, while OPEC+ has struggled to balance defending prices with regaining market share. At a scheduled meeting on Sunday (January 4), eight OPEC+ members signaled no immediate change in strategy and agreed to maintain a pause on production increases until at least April.
The decision reinforced the view that the cartel is cautious about adding more supply into an already heavy market.
In the near term, Venezuela’s own output could even decline. The blockade has restricted imports of diluents needed to blend the country’s heavy crude for export, tightening operational constraints. Reuters reported that state-owned oil company Petróleos de Venezuela has asked some joint venture partners to scale back production.
Oil stocks react to Venezuela news
Despite the muted response in oil prices, US energy stocks rallied on Monday.
Shares of major oil producers and service companies surged during the trading session, lifting the energy sector to the top of the S&P 500 (INDEXSP:.INX), despite Brent changing hands near US$61.
Chevron (NYSE:CVX) stood out, with shares rising over 5 percent in extended trading after earlier gains of up to 8 percent, reflecting its status as the last major US oil company still operating in Venezuela under special licences.
Oilfield services firms SLB (NYSE:SLB) and Halliburton (NYSE:HAL) were up more than 9 percent at their highs, while refiners and producers such as Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) adding more than 2 percent each. Collectively, US energy and refining stocks added over US$100 billion in combined market value within hours.
Beyond these share price reactions, American oil companies are now facing long-dormant questions tied to Venezuela’s nationalization of foreign oil assets in the 2000s.
The White House has signaled that affected companies will need to front significant capital to rebuild Venezuela’s degraded oil infrastructure if they hope to recover arbitration awards stemming from the Chávez-era expropriations.
ConocoPhillips is seeking to recover nearly US$12 billion in claims, while Exxon Mobil is pursuing roughly US$1.65 billion, according to published arbitration figures.
Oil market enters 2026 with supply fears
The political drama in Caracas has landed at an awkward moment for oil markets heading into 2026.
Market volatility was a defining feature of 2025. Brent crude traded between a high of US$81.86 and a low near US$59.41, while West Texas Intermediate ranged from US$78.99 per barrel to about US$55.56.
Cunningham also pointed to Trump’s shifting tariff policies as a source of uncertainty.
“We can see that Trump’s ‘Liberation Day’ tariffs pushed prices down to a level from which they’ve not recovered from,” he said, aside from a brief spike during last year’s Iran-Israel conflict.
However, not all analysts share these bearish views.
Josef Schachter, president and author at the Schachter Energy Report, argues that perceptions of abundant supply obscure tighter underlying fundamentals. Global floating inventories hover near a billion barrels, much of it tied up in “shadow fleets” off Iran, Russia and Venezuela, awaiting demand.
For oil markets, however, Venezuela remains more a symbol than an immediate supply lever. For now, the muted reaction appears to signal a consensus that even dramatic political change does not alter the near-term balance.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.