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Informist, Monday, Jan. 5, 2026

 

MUMBAI – The fall in the global prices of crude oil following developments relating to Venezuela over the weekend shows that the market is more concerned with the long-term implications rather than worried over short-term disruptions, according to ING Economics.

 

In the short term, the market will look at the nature of transition of power in the South American nation, it said.

 

"The reaction in oil prices following the US arrest of Venezuelan President Nicolas Maduro suggests the market is more focused on the potential for supply increases in the longer term than any short-term disruptions from a power transition. Our 2026 oil outlook remains intact, though the short-term implications for the market depend on what kind of transition in power we see in Venezuela," it said in a note Monday.

 

The global research body pointed out that US president Donald Trump's administration has been taking a more hawkish stance against Venezuela in recent months but developments over the weekend led to shockwaves around the globe, with the US arresting Venezuelan president Maduro and flying him to the US to face criminal charges related to drug trafficking. These developments have potentially significant implications for the oil market.

 

While Venezuela sits on significant oil reserves, its production is fairly small, with output averaging a little over 900,000 barrels a day in 2025. This is less than 1% of global consumption.

 

Nevertheless, the weekend developments leave supply uncertainty for the oil market, something the market has faced plenty of over the last year. The short-term implication for the market really depends on what kind of transition in power happens in Venezuela.

 

"Clearly, a prolonged and messy transition increases the risk for supply disruptions in the short term. However, for now, Vice President Delcy Rodrguez has taken over. While her rhetoric was initially defiant, it appears to be shifting already, with statements that Venezuela and the US should work together. A smooth transition, with a government which is also more willing to cooperate with the US, likely leaves more downside for the market," it said.

 

It increases the likelihood that the US will lift its blockade on sanctioned oil tankers entering and leaving Venezuela, offering the potential for downside in prices in the short term, while also potentially leaving room for an easing in sanctions down the road.

 

"For now, developments over the weekend have not led us to change our view on the oil market for 2026. We still expect a well-supplied market to weigh on prices and continue to forecast Brent to average $57 per barrel over 2026. Meanwhile, for 2027, there are downside risks to our $62 barrel forecast if we start to see meaningful supply increases from Venezuela, although much will also depend on how OPEC+ (Organization of the Petroleum Exporting Countries and its allies) responds," it said.

 

At 1418 IST, crude oil on NYMEX traded 1.4% down at $56.52 a barrel.  End

 

US$1 = INR 90.28

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

 

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