Oil Slips as Market Weighs Venezuela, Russia Supply Risks

After gaining over 2 percent in the previous session, crude prices opened slightly lower this morning. Brent fell 6 cents, or 0.1%, to $62.01, while U.S. West Texas Intermediate (WTI) slipped 9 cents, or 0.16%, to $57.92. The declines were weighed down by concerns over a potential sale of confiscated Venezuelan crude oil by the U.S., even as markets assessed developments following Ukraine’s missile strikes on Russian maritime assets in the Black Sea.

The drop in price today is primarily driven by concerns about global oversupply forecasts of crude oil. However, the question is: what are the key factors that influence the balance between these geopolitical factors and the anticipated inability of the market to handle excess inventory?

How Did Geopolitical Tensions Escalate?

U.S. President Donald Trump has put more pressure on the Venezuelan government concerning the oil embargo. The United States has seized oil from some Venezuelan oil tankers that were attempting to evade sanctions.

According to President Trump, the United States may choose to sell the oil or to keep it for future use. In a statement made to reporters, President Trump stated, "Maybe we will use the oil, maybe we will keep it for the strategic petroleum reserve." He also urged Venezuelan President Nicolás Maduro to step down.

Barclays issued a summary stating that if zero Venezuelan crude oil were to be exported, it would not have a substantial impact on global crude oil supply in the first half of 2026.

Black Sea Conflicts Impact Exports

Ukraine has targeted Russian-operated shadow fleet oil tankers, which continue to transport oil despite the Russian embargo. Two Russian-operated oil tankers and piers located in Krasnodar were damaged in drone attacks carried out by Ukraine.

Following those attacks, Russia retaliated with a combined total of two missile attacks against oil and grain receiving facilities located at the port of Odessa. Despite the threat of continued maritime attacks by either side, the Black Sea region remains a great source of energy exports for both countries.

The complexities of the current situation related to oil shipments from the Black Sea region are compounded by a wide variety of market risks associated with both countries.

Despite extensive market-level risk associated with energy supply chains, there has been a strong upward movement in the Brent and WTI crude oil markets in the past few days, reflecting initial risk aversion, though the current upward movement appears to have been heavily influenced by supply-side fundamentals as well as by risk associated with market preparedness.

Supply Surplus vs Disruption Risks

According to Barclays, analysts expect the global oil supply surplus in Q4 2026 to shrink to about 700,000 barrels per day (bpd), largely due to continued supply constraints affecting Russia and Venezuela.

However, it is predicted that if Venezuela stops producing, the overall global oil supply will remain adequate through early 2026. Regarding current market conditions, the current supply surplus versus possible future curtailment continues to create market volatility.

Traders also continue to monitor US policy on property seizures from Venezuela, as well as the current effectiveness of the Ukrainian "Shadow Fleet".

With the price of oil declining to $62.01 per barrel on Brent Crude Oil, especially with continued uncertainty around tanker seizures involving crude in Venezuela and continued clashes in the Black Sea, the main question arises: What will be the potential effects on the current oil supply surplus through the end of 2026 due to continued supply disruptions?

References:

Reuters
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