By Giulia Petroni
Crude prices slipped on Monday after the U.S. ousted Venezuelan leader Nicolas Maduro in a surprise military operation over the weekend and said it would take control of the oil-producing nation.
In midmorning European trading, Brent crude edged 0.2% lower to $60.64 a barrel, while West Texas Intermediate was down 0.1% at $57.24 a barrel. Both benchmarks fell more than 1% earlier in the session.
President Trump said U.S. oil companies will spend billions of dollars to fix the Latin American country's energy infrastructure, though the embargo on Venezuelan oil remains in effect. Markets are now awaiting clarity on how U.S. actions will affect global supplies, with some analysts saying the latest developments are unlikely to significantly alter global oil balances in the short run.
"The capture of Nicolas Maduro by U.S. special operations forces has plunged Venezuela's oil industry into greater uncertainty," said Richard Ro, senior market analyst at data provider Kpler.
Venezuela, a member of the Organization of the Petroleum Exporting Countries, holds the world's largest proven oil reserves but today pumps less than 1% of global crude supplies. Much of its production capacity and infrastructure has suffered from a lack of capital and regular maintenance for years, meaning any rebound in output would likely be slow and require significant investment.
"Any recovery in production would require substantial investment given the neglected infrastructure resulting from years of mismanagement and underinvestment," said Giovanni Staunovo, strategist at UBS. "It remains unclear which companies would be willing to invest in Venezuela at current oil prices, especially amid ongoing political, security and legal uncertainties."
Venezuela has produced roughly 900,000 barrels of oil a day in 2025, about a third of which is pumped by Chevron--the only major U.S. oil company there and the country's largest foreign investor. However, production has since likely fallen to around 800,000 barrels a day following reported production shut-ins linked to limited storage space.
Exports of Venezuela crude over the last six weeks have been roughly flat on year, while imports by other countries have declined by about 400,000 barrels a day, according to Goldman Sachs. The fall reflects an on-year increase in oil held on water of roughly 50 million barrels following U.S. orders blocking tankers and tighter sanctions on shippers.
"Production may edge up slightly in the short-run, including in a scenario with a U.S.-supported government and full sanctions relief," analysts at Goldman said. "Alternatively, disruptions to Venezuela oil deliveries could continue or intensify in the short-run, for instance because Maduro's cabinet has asserted its control."
In a scenario in which Venezuelan crude production gradually declines by 400,000 barrels a day by year-end because of storage constraints or a lack of blending components, the U.S. bank estimates Brent would average $58 a barrel--about $2 above its base case.
If production instead rises by 400,000 barrels a day through increased imports of diluent--light hydrocarbons blended with heavy crude oil to reduce its viscosity and density--well repairs and the eventual lifting of the U.S. embargo, Brent is projected at $54.
Much of Venezuela's output is a heavier grade of crude than most oil traded globally.
Any increase in Venezuelan supply would likely be welcomed by refiners seeking heavier grades of crude. At the same time, it would pose risks for other key suppliers of heavy crude to U.S. refiners, such as Canada.
Another obstacle to Trump's effort to bring more Venezuelan crude to the global market is weak demand. U.S. oil prices fell around 18% last year and continue to hover below $60 a barrel, a level that discourages investment, while global supplies are expected to keep growing this year.
The ultimate impact of U.S. actions in Venezuela on global oil markets largely depends on how the country's political transition unfolds, according to market watchers.
"A prolonged and messy transition increases the risk for supply disruptions in the short term," said Warren Patterson, head of commodities strategy at ING. A smoother transition, by contrast, raises the likelihood that the U.S. will lift its blockade on sanctioned oil tankers in and out of Venezuela, while also opening the door to an easing in sanctions later on.
"For now, developments over the weekend have not led us to change our view on the oil market for 2026," he said. "We still expect a well-supplied market to weigh on prices and continue to forecast Brent to average $57 a barrel over 2026."
According to JPMorgan, the political transition could instead potentially trigger a short shock.
"Historical precedent suggests that production could temporarily fall by as much as 50%, due to operational disruptions, workforce dislocation, or precautionary shutdowns across [state-run oil company] PDVSA facilities," analysts at the bank said.
"Beyond this initial dip, however, the recovery is expected to be swift." With a stable political environment, renewed licensing and unrestricted Chevron operations, supply could rebound to around 1.3 million to 1.4 million barrels a day within two years of a political transition. With new investments and major institutional reforms, output could potentially expand to 2.5 million barrels a day over the next decade, JPMorgan said.
Maduro's capture comes after months of escalating U.S. pressure, including the seizure of oil tankers off the coast of Venezuela. Trump also threatened to intervene if Iran violently suppresses protests in the country, putting more pressure on Tehran, another OPEC producer.
Meanwhile, OPEC+ members stuck to their plans to pause supply increases in the first quarter, reflecting caution in a market that remains well supplied.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
January 05, 2026 05:34 ET (10:34 GMT)
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