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Traders are bracing themselves for turmoil when oil markets reopen on Sunday evening after a US operation to oust Venezuelan strongman Nicolas Maduro created huge uncertainty over the future of the world’s largest crude oil reserves.
Venezuela produces less than 1 percent of global oil production, with exports hampered by US sanctions and a naval blockade. But the country has about 17 percent of the world’s proven crude oil reserves, according to the U.S. Energy Information Administration, leaving the potential for a significant increase in supply.
Traders now have to assess what impact the US intervention will have on the oil market, at a time when analysts are warning of an overbought crude oil price. Oil futures trading resumed at 6 pm New York time on Sunday.
Amrita Sen, founder of consultancy Energy Aspects, said the prevailing sentiment was that US intervention would impact prices as markets expected excess Venezuelan barrels would eventually be returned.
“People are assuming there’s going to be a lot of oil in the medium term,” he said.
Saul Kavonik, an analyst at MST Financial, said he expects prices to move higher in the short term due to the possibility of short-term disruption in the market.
But he said the risk premium would be limited because of ample oil supplies expected in the first half of 2026, and because traders are “tired of geopolitical risk considerations that don’t translate into actual supply disruptions”.
Most analysts expect oil prices to bottom out early this year, after a 20 percent decline in 2025, with Brent crude at current levels just above $60 a barrel. “The market is as bearish as it has been for at least a decade,” Sen said, citing record short positions in Brent crude and historically low long positions in the US benchmark WTI.
He said that although more oil could be obtained from Venezuela in the medium term, significant growth is unlikely in the short term. “Exports have already halved and the blockade and sanctions are still in place, so you have a situation where nothing has changed, there is no extra oil.”
Despite the turmoil in Venezuela, OPEC+ signaled no immediate change in strategy in an update scheduled for Sunday. Eight members of the producer group, including Saudi Arabia, Russia and the United Arab Emirates, met briefly and agreed to maintain a freeze on output growth until at least April.
In the short term, Venezuelan oil production could fall further. The blockade has sharply restricted imports of feedstock needed to blend the country’s heavy crude for export, tightening operational constraints. Reuters reported on Sunday that state-owned oil company Petroleos de Venezuela (PDVSA) had asked some joint venture partners to reduce production.
“We have identified at least 200,000 to 300,000 barrels per day that have already been shut down, and it could be more,” Sen said. “In the very short term, the risk is that we will lose even more production.”
