Oil prices declined on Tuesday as traders assessed the potential for increased Venezuelan crude production following the U.S. capture of President Nicolas Maduro. This development contributed to expectations of sufficient global supply this year, coinciding with subdued demand. Brent crude futures experienced a decline of 0.2%, settling at $61.62 per barrel as of 0103, while U.S. West Texas Intermediate crude was recorded at $58.15 per barrel, reflecting a decrease of 0.3%. Should the Trump playbook materialize in any capacity, it is reasonable to anticipate an uptick in Venezuelan crude oil production… “Should it increase, there will be more pressure on an already over supplied market,” stated Ed Meir. Market participants anticipated that oil prices would face downward pressure in 2026, driven by increasing supply and subdued demand.

Price pressure is now likely to be exacerbated by the U.S. capture of Venezuela’s leader on Saturday, which increases the chance of an end to a U.S. embargo on Venezuelan oil and the likelihood of more output. The administration of U.S. President Donald Trump is scheduled to engage with U.S. oil executives this week to deliberate on enhancing Venezuelan oil production, according to a source. Oil benchmarks concluded the previous trading session with an increase exceeding 1%, as investors processed the implications of Maduro’s capture alongside U.S. statements regarding potential control over Venezuela. On Monday, Maduro entered a plea of not guilty regarding the narcotics charges against him.

Venezuela stands as a founding member of the Organization of the Petroleum Exporting Countries, possessing the largest oil reserves globally, estimated at approximately 303 billion barrels. Nonetheless, the oil sector has experienced a prolonged decline, attributed in part to insufficient investment and U.S. sanctions. The average output recorded last year stood at 1.1 million barrels per day. Oil analysts indicated that Venezuelan output might rise by as much as half a million barrels a day over the next two years, contingent upon political stability and U.S. investment. In the longer term, the U.S. administration’s expressed intention to increase Venezuelan oil supply is expected to exert a net bearish influence on the market,” Citi noted in a client communication.

It is crucial to note that our assessment remains that OPEC+, under the leadership of Saudi Arabia, is expected to react to any notable increase in inventories by reducing output. This strategy aims to safeguard the price range of $55-60 per barrel for Brent in the medium term, particularly in the event of an unexpected supply surge. During a brief meeting on Sunday, OPEC and its allies, collectively referred to as OPEC+, reached a consensus to sustain current output levels.