Oil Jumps 3% to Two-Week High on Venezuela Developments and Global Supply Risks

Oil prices rose more than 3% to a two-week high as markets reacted to developments in Venezuela and mounting supply risks in Russia, Iraq and Iran. Brent settled up $2.03 (3.4%) at $61.99 per barrel, while WTI gained $1.77 (3.2%) to $57.76, the highest Brent close since December 24. Sentiment was supported by Washington’s $2 billion deal covering 30–50 million barrels of Venezuelan crude, the seizure of two Venezuela-linked tankers, and expectations that U.S. and European oil companies may re-engage, though analysts say meaningful supply could take years to materialize. Supply concerns intensified after a drone attack on a Russia-bound tanker, potential new U.S. sanctions on Russia.

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OPEC Output Steady as Venezuela Slumps to Two-Year Low

OPEC’s crude production stayed broadly flat in December at just over 29 million barrels per day, as a sharp drop in Venezuelan output was offset by gains from Iraq and a few other members, a Bloomberg survey showed. Venezuela’s production fell about 14% to 830,000 bpd, the lowest in two years, after the US blocked and seized tankers and forced shutdowns at the Orinoco Belt. Iraq recorded the largest increase, adding around 80,000 bpd to reach 4.37 million bpd, putting it above its agreed quota despite official compliance data. OPEC+, led by Saudi Arabia, plans to hold output steady through the end of March as oil prices hover near five-year lows of just over $60 a barrel amid fears of a global surplus. Before the pause, the group had agreed to restore roughly two-thirds of 3.85 million bpd shut since 2023, leaving about 1.2 million bpd still offline.

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Traders and Refiners Line Up for Venezuelan Crude as US Opens Limited Export Channel

Vitol and Trafigura are in talks with U.S. refiners after securing preliminary U.S. Treasury licenses to market Venezuelan crude, limited to an initial 30–50 million barrels tranche. The two trading giants, which handled about 7.2 million bpd (Vitol) and 6.6 million bpd (Trafigura) last year, expect sales to begin soon, with proceeds placed in U.S.-controlled accounts for the benefit of both countries. Spain’s Repsol plans to seek a U.S. license to resume exports halted by last year’s embargo, potentially shipping Venezuelan crude currently held in storage. In Asia, Reliance Industries, operator of 1.4 million bpd of refining capacity, said it would consider buying Venezuelan oil if sales to non-U.S. buyers are allowed, while Indian state refiners have expressed similar interest. Analysts say discounted Venezuelan barrels could provide India with a politically acceptable alternative to Russian crude, even if volumes remain limited.

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Chevron Accelerates Venezuelan Oil Shipments as US Moves to Control Exports

Chevron, the only Western oil major authorized to produce Venezuelan crude, loaded 1.68 million barrels onto tankers in the first week of the month, the fastest pace in seven months and nearly five times the volume seen in the same week of December. Most of the cargoes are destined for US refiners, including about 1 million barrels for Phillips 66’s Sweeny refinery in Texas and roughly 340,000 barrels each for Valero and Chevron’s Pascagoula plant. The surge comes as Venezuelan storage facilities near capacity following tighter US efforts last month to block oil sales under the former Maduro regime, which was ousted in a Jan. 3 US raid. Washington has since pledged to take control of Venezuelan oil exports, including an initial tranche of up to 50 million barrels, with proceeds held in US-controlled accounts.

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China Oil Majors Seek State Guidance as Venezuela Exposure Faces U.S. Pressure

China’s leading state oil firms, led by CNPC, have sought guidance from Beijing on how to protect their Venezuelan investments as U.S. pressure on Caracas intensifies. Beijing has lent over $60 billion to Venezuela since 2007 and Chinese firms hold major upstream and downstream stakes, but officials are now assessing risks, including scenarios where investments could fall to zero. China became Venezuela’s largest oil buyer under U.S. sanctions, yet crude imports from the country made up only 4% of China’s total imports in 2025. Decades of mismanagement have sharply reduced Venezuela’s oil output, raising concerns less about supply and more about recovering past spending. China has criticized U.S. calls for Venezuela to cut ties with Beijing, calling them a “bullying act.”

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U.S. Clampdown on Venezuela Pushes China Toward Costlier Canadian Crude

Chinese refiners are increasingly looking to Canadian heavy crude after U.S. pressure sharply disrupted Venezuelan oil flows, ending years of deeply discounted sanctioned supplies. About 22 million barrels of Venezuelan crude remain in floating storage near Asia, enough to meet China’s demand for roughly two months, after which buyers will need alternatives. Canada has emerged as a leading substitute, with China buying just under 40% of Canada’s seaborne crude exports in 2025, supported by the expanded Trans Mountain pipeline, though Canadian oil costs around $8–9 per barrel more than Venezuela’s Merey. Discounts for Western Canadian Select have widened to about $14.85 versus WTI in Alberta, the widest in nearly a year, reflecting shifting demand. While Canadian supply offers shorter shipping times and logistical flexibility, higher prices may deter some refiners.

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Equinor Signs $10 Billion Maintenance Deals to Support Norway Output

Equinor has awarded five-year contracts worth about 100 billion Norwegian crowns ($9.9–10 billion) to suppliers including Aker Solutions, Aibel and Wood Group to maintain and upgrade its offshore and onshore facilities. The agreements, replacing contracts signed in 2016, include options to extend by up to five additional years. Aibel estimates its share at around 20 billion crowns, while Aker Solutions said its portion qualifies as a major contract (8–12 billion crowns) to be booked in Q1 2026. The deals highlight Equinor’s focus on sustaining output from Norway’s mature continental shelf, where production could fall sharply after 2030 without continued investment.

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Frontline Sells Eight VLCCs as Sinokor’s Buying Spree Surpasses 30 Ships

Frontline is selling eight 2015–2016-built VLCCs to an unnamed buyer for $831.5m, generating about $486m in net cash proceeds and an expected gain of roughly $217m–$227m, while simultaneously ordering nine new scrubber-fitted VLCCs for $1.224bn. Market talk indicates the buyer is likely Sinokor Maritime, whose aggressive acquisitions are now believed to exceed 30 vintage VLCCs following additional reported purchases from owners including Dynacom and International Seaways. With more than 20 owned VLCCs and over 40 on time charter, Sinokor’s fleet is expected to grow to more than 100 VLCCs, underscoring its rapid and stealthy expansion.

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China Demand Key to Sustaining VLCC Strength in 2026

VLCC prospects look strong as 2026 begins, supported by elevated tonne-miles, tight vessel supply and long-haul crude movements, following what Tankers International called one of the best years on record in 2025. The main uncertainty is China, which boosted crude imports to about 12 million barrels per day in October from roughly 10 million bpd for much of 2024, driven partly by strategic stockpiling under a mandate running through March 2026. Analysts estimate around 1.2 million bpd of supply growth in 2026 will come from Atlantic basin producers, supporting long-distance VLCC demand, while OPEC policy remains uncertain. VLCC rates fell from six-figure levels to about $40,000 per day early in the year but rebounded to roughly $47,200 per day, with the forward market pointing to $80,000 per day in February. Newbuilding deliveries are not expected to disrupt the market significantly given the aging global fleet, with geopolitics and sanctions providing additional upside risk.

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Europe Still Reliant on Russian LNG Despite Planned Ban

Europe’s imports of Russian LNG declined in 2025 but still made up 14.3% of total EU LNG volumes, with Russia’s Yamal LNG project supplying roughly one in seven LNG shipments to the bloc. About 15 million tonnes of Yamal LNG reached EU terminals, earning Russia an estimated €7.2bn, with France and Belgium the biggest recipients, while more than three-quarters of Yamal exports went to the EU overall. Although imports were down from 2024 levels, researchers warned Europe remains critical infrastructure for Russia’s LNG exports even as Brussels prepares a phased ban, with short-term contracts barred from April 2026 and long-term LNG imports prohibited from January 2027.