Traders braced for oil market upheaval after Donald Trump’s Venezuela strikes

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Traders are bracing themselves for upheaval when the oil market reopens on Sunday evening, after the US operation to oust Venezuelan strongman Nicolás Maduro created huge uncertainty over the future of the world’s largest crude reserves. 

Venezuela produces less than 1 per cent of global oil output, with exports constrained by US sanctions and a naval blockade. But the country holds about 17 per cent of the world’s proven crude reserves, according to the US Energy Information Administration, giving it the potential to increase supply significantly.

Traders now have to assess what the impact of the US intervention will be on the oil market, at a time when analysts are warning of an approaching glut of crude. Oil futures resume trading at 6pm New York time on Sunday.

Amrita Sen, founder of consultancy Energy Aspects, said the prevailing assumption was that US intervention would weigh on prices as markets anticipated additional Venezuelan barrels eventually returning.

“People are going to assume there’s going to be a lot more oil in the medium term,” she said. 

Saul Kavonic, an analyst at MST Financial, said he expected that prices would move upwards in the short term because of the scope for short-term disruption to the market. 

But he added that the risk premium would be limited because of the ample supplies of oil that were expected in the first half of 2026, and because traders had grown tired of “geopolitical risk considerations that do not end up translating to real supply disruption”.

Most analysts expect oil prices to decline in the early part of this year, after a 20 per cent fall in 2025, to Brent crude’s current level just above $60 a barrel. “The market is as bearish as it has been for at least a decade,” Sen said, citing record short positions in Brent crude and historically low long positions in US benchmark WTI.

While there might be more oil from Venezuela in the medium term, there was unlikely to be a significant increase in the short term, she added. “Exports have already halved and the blockade and sanctions remain in place, so you’ve a situation where nothing has changed, there is no additional oil.”

Despite the upheaval in Venezuela, Opec+ signalled no immediate shift in strategy at a scheduled update on Sunday. Eight members of the producer group, including Saudi Arabia, Russia and the United Arab Emirates, met briefly and agreed to maintain their pause on production increases until at least April.

In the short term, Venezuela’s oil output could fall further. The blockade has sharply restricted imports of the feedstocks required to blend the country’s heavy crude for export, tightening operational constraints. Reuters reported on Sunday that state-owned oil company Petróleos de Venezuela (PDVSA) had asked some joint venture partners to scale back production.

“We have identified at least 200,000 to 300,000 barrels a day that have already been shut in, and it could be more,” Sen said. “In the very short term, the risk is that we lose even more production.”