Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The crisis in Venezuela is unlikely to have a material impact on crude oil prices in the near term, with analysts pointing to the country’s limited share of global supply and an already well-supplied market as factors capping any sustained price reaction.
In a commodities update, Emirates NBD Research said it does not expect recent events in Venezuela to materially affect oil market balances over the short term, including the first quarter of 2026, although some pockets of volatility could emerge.
“We do not expect events in Venezuela to materially impact oil market balances in the short term (i.e. over Q1 26) though they may create some volatility in some corners of the market,” Edward Bell, Acting Chief Economist and Group Head of Research at Emirates NBD, said in the report.
Bell noted that benchmark oil futures had shown only a muted response to developments in Venezuela. Brent futures opened on January 5 marginally lower at $60.60 a barrel, while West Texas Intermediate was trading around $57.10 a barrel.
Analysts cited by Bloomberg and Reuters echoed this assessment, highlighting Venezuela’s diminished role in the global oil market. Once a major producer, the country’s output has declined sharply over the past two decades and now accounts for less than 1% of global supply, with most exports directed to China. The broader oil market is also facing a surplus this year as OPEC+ and other producers add barrels against a backdrop of subdued demand growth.
Venezuelan oil exports fell to a 17-month low in December amid a US naval blockade, with restrictions still in place and vessels carrying about 7.33 million barrels reportedly unable to depart for China. Despite these disruptions, analysts said the global supply overhang limits the potential for a sustained price rally.
“The events have turned up the heat on geopolitical risk,” Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said. “Crude is reacting less to potential short-term supply loss from Venezuela and more to potential knock-on effects that may come from Russia, China and Iran in response to US actions.”
Neil Shearing, Group Chief Economist at Capital Economics, said any near-term disruption could be easily absorbed by the market. “Any short-term disruption to Venezuelan output can easily be offset by increased production elsewhere,” he said in a note quoted by Bloomberg. “We expect global supply growth over the next year or so to push oil prices down towards $50.”
Oil prices were volatile on Monday as traders assessed possible changes to Venezuelan crude flows. Brent crude futures were up 87 cents, or 1.43%, at $61.62 a barrel, while US WTI gained 90 cents, or 1.57%, to $58.22, after earlier declines in choppy trading. Reuters quoted Aegis Hedging analysts as saying that uncertainty over how Venezuelan oil flows might change was the key unknown, but added that in a market with plentiful supply, further disruptions would have limited immediate impact.
Emirates NBD Research maintained its outlook for oil prices, forecasting Brent to average $60 a barrel in 2026 and WTI at $55, underscoring the view that Venezuela-related developments are unlikely to alter the broader trajectory of the market in the near term.
