Oil prices try to stay firm on supply concerns, but fundamentals remain unfavourable

Written by Nikos Tzabouras, 12 January 2026

USOIL Analysis

After the US military operation in Venezuela that led to Maduro's arrest, President Trump promised to run the country and rebuild its oil industry, reinforcing prospects of oversupply. Venezuela held "the world's largest proven crude oil reserves" in 2023, according to the US Energy Information Administration (EIA), accounting for 17% of global reserves. 1

However, its current production is relatively small in global terms (0.86 million barrels per day in November, according to the IEA 2), and restoring its capacity will likely be a difficult and lengthy task. ExxonMobil CEO Woods underscored these challenges during a Trump meeting with the heads of major oil companies, succinctly stating that Venezuela today is "uninvestable" under current legal and commercial frameworks. 3

Moreover, supply risks are rising due to escalating protests in oil-rich Iran and the US President hinting at potential intervention, which could include a military strike, adding to ongoing flow concerns, as a Ukraine peace remains elusive. Over the weekend, the US President said that "the military is looking at it" and that the administration is weighing some "very strong options". 4

The heightened geopolitical risk premium helps USOil stay firm after last week's rebound. The near-term downward pressure eases as prices move above the EMA200, offering a chance to challenge last month's peak (60.516). However, any meaningful recovery looks difficult under current supply–demand dynamics, and USOil remains vulnerable to a sub-EMA200 return that would expose it to the 2025 low (54.964).

An ongoing diplomatic push to end the war in Ukraine could unlock Russian crude, while the United States has already started marketing Venezuelan oil and is "selectively rolling back" sanctions 5, which could add more barrels to an already well-supplied market. Furthermore, global economic risks from tariffs weigh on oil consumption. The International Energy Agency (IEA), in its latest monthly oil report, expects supply to increase by 3 million barrels/day this year and demand to grow by just 830 thousand barrels/day, underscoring glut prospects. 2

Disclosure

  1. Retrieved 12 Jan 2026 https://www.eia.gov/international/analysis/country/VEN

  2. Retrieved 12 Jan 2026 https://www.iea.org/reports/oil-market-report-december-2025

  3. Retrieved 12 Jan 2026 https://www.youtube.com/live/iaE8lw8_x30

  4. Retrieved 12 Jan 2026 https://www.youtube.com/watch?v=RfIaJSdDnN0

  5. Retrieved 12 Jan 2026 https://www.energy.gov/articles/fact-sheet-president-trump-restoring-prosperity-safety-and-security-united-states-and

Order Execution Only

Order Execution Only

Regulatory Documents:
CIRO: Avoiding Fraud and Protecting Your Investments, How CIRO Protects Investors, CIRO Complaints Brochure, CIPF Brochure, CIPF Coverage Policy, CIRO Order Execution Only Bulletin, Conflict Disclosure Statement, Covid-19 and Cyber Security - Tips for Investors, Relationship Disclosure Information Document, Notice of Acknowledgment, Before You Begin Trading

The relationship between Friedberg Direct and FXCM was formed with the purpose to allow Canadian residents access to FXCM's suite of products, while maintaining their accounts with a regulated Canadian firm. All accounts are opened by and held with Friedberg Direct, a division of Friedberg Mercantile Group Ltd., a member of the Canadian Investment Regulatory Organization (CIRO). Friedberg customer accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca.

* The percentage of our retail client accounts that were profitable in each of the previous most recent quarters was: Quarter 4, 2025: 41% | Quarter 3, 2025: 41% | Quarter 2, 2025: 34%. These figures are provided for transparency purposes only and do not constitute an indication of future performance or results.