Oil prices opened lower at the start of 2026 despite escalating geopolitical tensions surrounding Venezuela, as ample global supply and OPEC+ output discipline outweighed concerns about potential disruptions.
In early Asian trading, Brent crude fell 0.81% to $60.26 per barrel, while U.S. West Texas Intermediate (WTI) declined 0.87% to $56.82 per barrel. The drop followed losses recorded on the first trading day of the year, extending pressure after both benchmarks closed 2025 with their steepest annual declines since 2020.
The price movement came even as the United States intensified actions against Venezuela’s oil sector. U.S. President Donald Trump said Washington would take control of the oil-producing nation, while confirming that the oil embargo on Venezuelan exports remains fully in effect.
Although the developments heightened political risk, analysts said the global oil market remains well supplied, limiting the immediate price impact.
Venezuelan Exports Halted as Storage Fills
The U.S. embargo has effectively paralysed Venezuelan oil exports since January 1, leaving millions of barrels stranded on tankers and pushing additional volumes into onshore storage.
Venezuela’s crude exports fell to around 500,000 barrels per day (bpd) in December, roughly half of November’s levels. Most of those shipments occurred before the embargo took effect. Since then, only exports of about 100,000 bpd operated by Chevron have continued, backed by U.S. authorisation.
Sources familiar with operations at state oil firm PDVSA said the U.S. action caused no damage to oil production or refining infrastructure. However, storage constraints have forced PDVSA to begin cutting output.
According to sources close to the decision, PDVSA has asked several joint ventures to scale back production, with some oilfields or well clusters expected to shut temporarily as storage capacity tightens.
OPEC+ Holds Output Steady Amid Uncertainty
On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to maintain current oil output levels in the first quarter of 2026.
The group paused further increases after raising production targets by about 2.9 million bpd between April and December 2025, equivalent to nearly 3% of global oil demand.
Analysts said the decision reflects caution as geopolitical risks rise, even though Venezuela and Iran—both OPEC members—face separate political and economic pressures.
Capital Economics noted that any short-term disruption to Venezuelan output could be offset by increased production elsewhere, while medium-term supply changes would likely be driven by major producers rather than Venezuela alone.
Geopolitical Risk Meets Ample Supply
Tensions also increased after Trump warned of possible action against Iran, another OPEC producer, amid protests linked to rising inflation. However, analysts said geopolitical risks remain secondary to supply fundamentals.
Saxo Bank’s Ole Hansen said prices could see modest upside from heightened geopolitical tensions tied to Venezuela and Iran, but added that abundant global supply should continue to cap gains.
Rystad Energy’s Jorge Leon described Venezuela’s political transition as an added layer of uncertainty, but said OPEC+ appears focused on preserving flexibility rather than introducing new volatility.
For now, market participants appear to be prioritising supply availability and output policy over political shocks, keeping oil prices under pressure despite rising geopolitical risk.
