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Informist, Tuesday, Jan. 6, 2026

 

MUMBAI – Crude oil prices are likely to be supported in the near term by reduced supplies from Venezuela amid US sanctions and blockade of exports by the South American country, Commerzbank said in a report. Brent crude prices fell below $60 a barrel after US forces captured Venezuela's President Nicolas Maduro over the weekend, but then recovered and rose to over $62 per barrel.

 

The blockade on Venezuelan oil exports, which has been in place since December, has not yet been lifted by the US even after Maduro's ouster. Preliminary data based on tanker movements suggest that Venezuela's oil exports almost halved to 500,000 barrels per day in December. Moreover, Venezuelan state-owned oil company PDVSA has asked some joint ventures operating in the country to reduce crude oil production, Reuters reported, quoting sources. The development came as storage capacities in the country are almost full. According to the report, PDVSA is also running out of substances needed to dilute Venezuela's heavy and viscous crude oil before it can be transported and exported.

 

Meanwhile, the emerging regime change in Venezuela has different implications for oil supplies from the country, which has the world's largest proven oil reserves. "It remains to be seen whether the Maduro regime's power complex will accept its own removal from power or resist it," Commerzbank said. 

 

However, in the coming months, if US President Donald Trump lifts the US blockade on oil exports from Venezuela and eases sanctions on the country, there is a prospect of a slight increase in its oil production, according to the report. For that to happen, interim President Delcy Rodriguez, who is also Venezuela's oil minister, and the country's government would have to cooperate with the Trump administration.

 

Even then, a significant expansion of Venezuela's oil production is unlikely to happen. According to the International Energy Agency, Venezuela's production capacity stands at 1 million barrels per day, only slightly above the current production level. A rapid return to the decade-ago production level of 2.5 million barrels per day is unrealistic, according to the report.

 

"For production capacities to expand again, Western oil companies would need to invest in Venezuela's ailing oil infrastructure," Commerzbank said in its report. "To do so, they require sufficient investment security. Only when they can be sure that the country is politically stable and that their investments will pay off in the long term will they invest in exploiting the world's largest oil reserves."  End

 

Reported by Taniva Singha Roy

Edited by Rajeev Pai

 

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