Oil prices try to stay firm on supply concerns, but fundamentals remain unfavourable
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]
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 12 Jan 2026 https://www.eia.gov/international/analysis/country/VEN | |
| Retrieved 12 Jan 2026 https://www.iea.org/reports/oil-market-report-december-2025 | |
| Retrieved 12 Jan 2026 https://www.youtube.com/live/iaE8lw8_x30 | |
| Retrieved 12 Jan 2026 https://www.youtube.com/watch | |
| Retrieved 07 May 2026 https://www.energy.gov/articles/fact-sheet-president-trump-restoring-prosperity-safety-and-security-united-states-and |
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