Oil Swings As Traders Weigh Venezuela Future After Maduro Ouster
Brent fell as much as 1.2% at the open before clawing back losses to trade near $61 a barrel. West Texas Intermediate was near $57.
Oil fluctuated as traders weighed the fallout from the US capture of Venezuelan President Nicolás Maduro on global crude supply and its wider impact on the nation’s energy sector.
Brent fell as much as 1.2% at the open before clawing back losses to trade near $61 a barrel. West Texas Intermediate was above $57. Despite the upheaval over the weekend in Venezuela, the OPEC producer accounts for a small fraction of global supply and the market is already grappling with a swelling glut.
“Any short-term disruption to Venezuelan output can easily be offset by increased production elsewhere,” Neil Shearing, group chief economist for Capital Economics Ltd., wrote in a note. “We expect global supply growth over the next year or so to push oil prices down towards $50.
Venezuela was once an oil-producing powerhouse but the country’s output has tumbled over the past two decades and now represents less than 1% of global supplies, which is mostly exported to China. The market is facing a big surplus this year as OPEC+ and others add more barrels as demand softens.
On Sunday, OPEC+ stuck with plans to pause supply hikes in the first quarter. The group, led by Saudi Arabia and Russia, didn’t discuss Venezuela during the 10-minute video conference, according to delegates, who added it’s premature to gauge how to respond to the unfolding situation.
Despite the US attacks on Saturday, Venezuela’s oil infrastructure including Jose port and Amuay refinery and main producing areas in the Orinoco Belt wasn’t affected, according to people familiar with the matter. Still, recent American pressure on Maduro’s regime, including the seizure of tankers, have forced the country to start shutting some oil wells.
President Donald Trump said on Saturday that sanctions on the nation’s industry will remain in place, but added US companies will help rebuild the sector and revive output, in what is likely to be a lengthy process. He told reporters on Monday that companies wanted to go into Venezuela “badly.”
“US investment and any real sanctions relief take time, and barrels don’t come back overnight,” said Haris Khurshid, chief investment officer at Karobaar Capital LP in Chicago. “For now it still feels like the surplus is doing most of the talking and outweighing geopolitics, which keeps a lid on prices.”
On Sunday, US Secretary of State Marco Rubio said the US will use leverage over oil to force further change in the Latin American country. Delcy Rodríguez, the acting president of Venezuela, asked the US to work with her country, striking a more conciliatory tone after her initial outrage at the capture of Maduro.
Prices
Brent for March settlement was steady at $60.72 a barrel as of 11:10 a.m. in Singapore.
WTI for February delivery was little changed at $57.21 a barrel after dropping as much as 1.3% earlier.
Chinese bitumen futures jumped as much as 6.3% in Shanghai, the biggest advance since October 2024
NOTE: China often uses Venezuelan crude to make bitumen
