Venezuela a Moderate Risk for Oil Benchmarks: Traders


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Venezuela remains a moderate risk to oil futures as 
traders continue monitoring the country's limited crude production and exports 
following the weekend capture of Venezuelan president Nicolas Maduro by U.S. 
military forces.

   While the arrest of Maduro and his wife Cilia Flores on Saturday (1/3) to 
face narcoterrorism and other charges in the U.S. was a significant 
geopolitical event, crude prices were expected to trade in a narrow range, due 
to multiple uncertainties posed by the crisis. 

   NYMEX WTI for February delivery was up $0.55 at $57.87 bbl while February 
ICE Brent rose $0.53 to $61.28 bbl on Monday (1/5) morning after OPEC+ members 
on Sunday (1/4) reaffirmed their plan to pause production hikes in the first 
quarter of 2026. The group also acknowledged the Venezuela shock to the market 
and the need for output stability amid global oversupply concerns.

   "WTI could drop back to the low $50s bbl if U.S.-Venezuelan collaboration 
could expeditiously result in higher production," John Kilduff, partner at New 
York energy hedge fund Again Capital, told DTN. But political realities on the 
ground in Venezuela suggest the opposite, he said.

   Despite U.S. claims of her cooperation, acting Venezuelan president Delcy 
Rodrguez maintains the country will not become a colony of the United States, 
highlighting a friction point that may delay the return of foreign investment. 

   "In the immediate aftermath, we could have the market moving higher as it 
prices in the risk of Venezuelan production being suspended or lost as the 
nation reacts to the political impact of the whole development," Kilduff said. 
But that needs to be juxtaposed against Venezuela's position in the global oil 
market, where the risk will remain moderate for now, he added.

   According to OPEC's monthly report, Venezuela produces about 1.1 million 
bpd, of which some 900,000 bpd is exported, mostly to China.  That ranks the 
country 18th among global oil producers, according to OPEC.

   Phil Davis, founder of PSW Investments, also cited the psychological impact 
of the Venezuelan situation on Monday's crude prices, noting that short-term 
supply disruption sent WTI's front-month contract flying from $56.21 on Friday 
to $57.90.

   "The markets are waking up to a geopolitical risk premium that finally has 
some teeth," Davis added.

   The Trump administration has signaled a desire for U.S. oil companies to 
rebuild Venezuela's infrastructure, asserting that Washington will effectively 
run the nation during its transition.

   U.S. President Donald Trump emphasized that American corporations would 
invest billions to fix the badly broken sector, viewing the country's vast 
reserves as a strategic asset for the Western Hemisphere.  Venezuela is 
estimated to hold the world's largest proven crude oil reserves, at 
approximately 303 billion bbl, according to OPEC.

    




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