Oil Slips as Markets Downplay Venezuela Shock Amid Global Oversupply

Oil prices edged lower in early Asian trading despite political turmoil in Venezuela, as ample global supply limited market reaction. Brent crude fell 34 cents to $60.41 a barrel, while U.S. WTI dropped 41 cents to $56.91 a barrel. Over the weekend, the United States seized Venezuelan President Nicolas Maduro from Caracas, with President Donald Trump saying Washington would take control of the oil-producing nation. However, sources said the U.S. action caused no damage to Venezuela’s oil production or refining operations at state company PDVSA. Analysts noted that with OPEC+ holding output steady and global supply plentiful, any disruption to Venezuelan exports would have limited immediate impact on prices.

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Venezuela Cuts Oil Output as US Embargo Chokes Exports and Storage Fills

Venezuela’s state oil company PDVSA has begun cutting crude production as a U.S. oil embargo and tanker blockade have slashed exports to zero, leaving the company short of storage and diluents needed to blend its heavy crude. The move follows the capture of President Nicolás Maduro and the installation of an interim government, with U.S. President Donald Trump declaring an “oil embargo” fully in force, halting even Chevron-linked cargoes that previously continued under a U.S. license. Venezuela produced about 1.1 million bpd in November and exported 950,000 bpd, but shipments fell to around 500,000 bpd in December, while onshore storage filled more than 45% of its 48 million-barrel capacity and over 17 million barrels accumulated in floating storage. PDVSA has asked joint ventures including Chevron, CNPC-linked Sinovensa, Petromonagas and Petroboscan to cut output, with workers already disconnecting well clusters and reducing production due to diluent shortages.

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OPEC+ Holds Output Steady as Venezuela Shock and Global Oversupply Weigh on Markets

OPEC+ agreed to keep oil production steady through the first quarter of 2026, reaffirming a decision made in November to pause supply increases as markets face a growing surplus. The decision comes amid uncertainty over whether the US capture of Venezuelan President Nicolás Maduro will affect oil supplies, though delegates said Venezuela was not discussed during the brief 10-minute meeting led by Saudi Arabia and Russia. Venezuela currently produces about 800,000 bpd, less than 1% of global supply, after output in the Orinoco Belt fell 25% due to US pressure and tanker seizures. Analysts say production could rise by around 150,000 bpd if sanctions are lifted, but returning to 2 million bpd or more would require major reforms and large foreign investment.

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Saudi Arabia Seen Cutting February Crude Prices to Asia Again Amid Oversupply

Saudi Arabia is expected to lower the February official selling price (OSP) of its flagship Arab Light crude to Asia for a third straight month, reflecting weaker spot market conditions driven by ample supply. Sources say Arab Light’s February OSP may fall by 10–30 cents per barrel to a premium of 30–50 cents above the Oman/Dubai average, extending declines from 60 cents in January, the lowest level in five years. Arab Extra Light prices may drop by 10–20 cents, while Arab Medium and Heavy may be unchanged or dip by 10 cents. Market pressure stems from increased output by OPEC+ and rising U.S. production, even though eight OPEC+ members paused hikes in Q1 2026 after adding about 2.9 million bpd since April 2025, with the IEA forecasting a 3.84 million bpd global supply surplus in 2026.

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India Seeks Weekly Data on Russian Oil Imports as US Trade Talks Intensify

India has asked its refiners to submit weekly data on Russian and U.S. oil imports, as New Delhi seeks to advance a trade deal with Washington, sources said. Officials expect Russian crude imports to fall below 1 million bpd, down from about 1.2 million bpd in December and a peak of nearly 2 million bpd in June, as tougher U.S. and EU sanctions disrupt flows. The request, made by the Petroleum Planning and Analysis Cell for the prime minister’s office, aims to provide “timely and accurate” verified figures to the U.S. rather than relying on secondary data. Russian oil remains a key sticking point in negotiations after the U.S. doubled tariffs on Indian goods to 50% last year over India’s heavy purchases of discounted Russian crude. In 2025, Russia supplied about 35% of India’s crude imports, while the U.S. accounted for 6.6%, with India looking to raise U.S. energy purchases as part of broader trade talks.

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Russian Urals Crude Still Reaches Reliance as Imports Plunge Sharply

Reliance Industries has reduced but not fully halted purchases of Russian Urals crude, with four tankers — three of them sanctioned — currently heading to its Jamnagar refinery in northwest India. Although Reliance said it has no committed Russian cargoes for January, it is estimated all four vessels will arrive next week carrying a combined December import volume of about 93,000 bpd. Russian crude imports by Reliance peaked at 783,000 bpd in March 2025 and were still 754,000 bpd in August before falling sharply. The arriving tankers include the 116,900-dwt Kartha and 159,200-dwt Cosmo Sail (both built in 2007), followed by the 108,800-dwt Vokki (built 2010) and 108,900-dwt Nevah (built 2008). The Cosmo Sail is the only non-sanctioned vessel, while the others face sanctions from multiple jurisdictions including the UK, EU, Canada and Switzerland.