Oil prices experienced declines following an OPEC+ decision to maintain current production levels, while market participants also evaluated geopolitical factors related to recent events in Venezuela. Reports indicated slight decreases in both U.S. crude and Brent crude futures, alongside discussions regarding potential impacts on Venezuela's oil sector and global supply.
Global Oil Market Trends
On Sunday, crude oil prices registered declines, with U.S. West Texas Intermediate (WTI) crude futures settling between $57.01 and $57.32 per barrel, reflecting a decrease of 0.17% to 0.54%. Brent crude futures closed between $60.53 and $60.75 per barrel, marking a reduction of 0.16% to 0.36%. This period followed what some market analyses described as the largest annual loss for the commodity since 2020, with market participants considering concerns related to oversupply.
OPEC+ Alliance Decision
The OPEC+ alliance, comprising countries responsible for approximately half of global oil production, convened on Sunday. The alliance decided to maintain its existing oil production levels. This decision was made after oil prices had recorded a decline exceeding 18% in the preceding period.
Developments in Venezuela
On Saturday, U.S. forces apprehended Venezuelan President Nicolas Maduro. Following this event, U.S. President Donald Trump announced that Washington intended to assume control of Venezuela until a transition to a new administration could be established. No specific details regarding the methods for implementing this intention were publicly provided.
President Trump also indicated that U.S. investment in Venezuela's oil sector was a key objective following these political changes. He stated a goal for large U.S. oil companies to invest billions of dollars to restore Venezuela's oil infrastructure. The U.S. embargo on Venezuelan oil remains active.
Venezuela's Oil Sector Profile
Venezuela, a founding member of OPEC, possesses the world's largest proven crude oil reserves, estimated at 303 billion barrels, which represents approximately 17% of the global total, according to the U.S. Energy Information Administration.
Historically, Venezuela's oil production peaked at about 3.5 million barrels per day (bpd) in the late 1990s. However, current production is estimated at approximately 800,000 bpd, as reported by energy consulting firm Kpler. Chevron is currently identified as the sole U.S. oil major operating in Venezuela, with exports around 140,000 bpd, according to Kpler data.
Analyst Perspectives on Venezuelan Oil Outlook
Analysts have offered varied perspectives on the potential impact of Venezuela's political situation on oil prices and production.
Daan Struyven, head of oil research at Goldman Sachs, noted the immediate impact on oil prices as ambiguous. He suggested that production could increase if a U.S.-supported government is established and sanctions are lifted. Conversely, Struyven also warned of potential short-term supply disruptions. In the long term, he anticipates that U.S. investment aimed at boosting Venezuelan production would likely exert downward pressure on global oil prices, though any recovery in production is expected to be gradual and partial.
Helima Croft, head of global commodity strategy at RBC Capital Markets, estimated that an annual investment of $10 billion would be necessary to revitalize Venezuela's oil production. She emphasized that a stable security environment is crucial for output to return to historical levels. Croft stated that full sanctions relief could lead to several hundred thousand barrels of additional production over a 12-month period, provided there is an orderly transition of power. She cautioned that a chaotic transfer of power, similar to events in Libya or Iraq, would make such a recovery uncertain.