Oil prices go down amid forecasts for production in Venezuela
6 January 13:11
On Tuesday, January 6, oil prices declined due to expectations of significant global supply amid weak demand, as well as due to the market’s assessment of a possible increase in Venezuelan oil production.
This was reported by Reuters, according to "Komersant Ukrainian".
Brent crude oil futures fell by 0.2%, or 14 cents, to $61.62 per barrel. West Texas Intermediate was trading at $58.13 per barrel, down 0.3%, or 19 cents.
Priyanka Sachdeva, a senior market analyst at Phillip Nova brokerage, noted that the reaction of oil prices to geopolitical events – US military actions in Venezuela and strikes on Russian energy infrastructure – was unexpectedly restrained. This suggests that fundamental supply and demand factors remain the key concern.
“On the supply side, the oil market is oversupplied. According to the latest data from the International Energy Agency (IEA) and the US Energy Information Administration (EIA), global crude oil supply continues to outpace consumption growth, leading to a build-up of inventories and maintaining pressure on prices,” she said.
Market participants said in December that they expected pressure on oil prices in 2026 due to rising supply and weak demand.
The pressure may be exacerbated by the US seizure of Venezuelan leader Nicolas Maduro, which increases the likelihood of lifting the US embargo on Venezuelan oil and could lead to an increase in production.
According to Reuters, the US presidential administration is planning to meet this week with the heads of US oil companies to discuss increasing oil production in Venezuela.
“I believe that if Trump’s plan is at least partially implemented, Venezuelan oil production should increase. If this happens, the pressure on the already oversupplied market will only increase,” said Marex analyst Ed Mair.
Venezuela is a founding member of the Organization of the Petroleum Exporting Countries (OPEC) and has the world’s largest oil reserves – about 303 billion barrels. At the same time, its oil sector has been in decline for a long time, in part due to a lack of investment and US sanctions. The average production volume last year was 1.1 million barrels per day.
According to analysts, with political stability and US investment, Venezuela’s production could rise to half a million barrels per day over the next two years.
At the same time, ANZ Research notes that a high level of political instability is more likely to persist, and significant financial injections will be needed to increase production beyond Venezuela’s current capacity.
