By: Economy Middle east

Oil prices edged lower on Tuesday, with WTI crude settling at $58.13 per barrel, down 0.33 percent from the prior session, as markets weighed prospects of increased Venezuelan production against a backdrop of abundant global supplies. Brent crude dipped 0.23 percent to $61.62, indicating similar downward pressure. This movement continues a yearly decline, with crude down over 22 percent from January 2025 levels. 

Over the past month, prices have fallen about 2.9 percent, driven by seasonal demand slowdowns and steady OPEC+ policies. 

U.S. inventories provided mixed signals, with a larger-than-expected draw of 1.93 million barrels the prior week, yet failing to lift prices amid surplus fears. Trading volumes remained subdued entering the new year, with futures reflecting caution ahead of OPEC+ reaffirmations to hold output steady through Q1. 

Venezuelan output prospects

Prospects of higher Venezuelan production weighed heavily on prices, following U.S. actions including the capture of President Nicolas Maduro and potential sanctions relief. Analysts at Kpler forecast output could rise by 100,000-150,000 barrels per day (bpd) short-term, reaching 1 million bpd soon, and up to 1.2 million bpd by year-end with upgrader restarts like Petrocedeno and Petropiar. Venezuela, holding the world’s largest proven reserves, currently produces under 1 million bpd, less than 1 percent of global supply, limiting immediate impacts. 

The White House urged U.S. firms to aid revival for asset compensation, potentially reshaping heavy crude flows to U.S. Gulf Coast refineries. However, Emirates NBD noted high uncertainty, predicting localized volatility rather than major market shifts in Q1.

Ample supply outlook

Global supply abundance dominated sentiment, with non-OPEC producers like the U.S. hitting near-record output at 13.83 million bpd recently. OPEC+, led by Saudi Arabia, reaffirmed steady Q1 production on January 4, pausing hikes amid a projected 3.8 million bpd surplus per IEA estimates. U.S. shale growth, Guyana expansions, and prior OPEC boosts in 2025 exacerbated the glut, outweighing demand recovery in China. 

Forecasts point to further easing, with ABN Amro and Capital Economics eyeing Brent at $55 per barrel in 2026. The EIA anticipates U.S. oil averaging $51 this year, down from $65 in 2025, signaling cheapest gas prices in years. 

U.S. intervention in Venezuela sparked initial stock gains for oil firms but failed to sustain price rallies, as supply fears prevailed. Tensions with Iran and Russia-Ukraine flare-ups lingered, yet markets dismissed disruptions given ample buffers. Maduro’s ouster briefly lifted futures—WTI to $57.43, Brent to $60.92 on January 4—but gains evaporated. 

Broader risks, including Black Sea strikes, added volatility, but surplus outlooks capped upside.