Oil Prices Fluctuate as Market Assesses Impact of Venezuela's President Arrest

SadaNews - Oil prices fluctuated as traders weighed the implications of the United States' arrest of Venezuelan President Nicolas Maduro on global crude supplies and the broader impact on the country's energy sector.

Brent crude fell by as much as 1.2% at the open, before trimming its losses and trading near $61 a barrel. Meanwhile, West Texas Intermediate crude was trading around $57.

Despite the turmoil in Venezuela over the weekend, the OPEC member represents only a small portion of global supplies, at a time when the market is already struggling with an increasing glut.

Neil Shearing, chief economist at Capital Economics, wrote in a note: "Any short-term disruption to Venezuelan production can easily be compensated by increased output elsewhere." He added: "We expect global supply growth over the next year to push oil prices down towards $50."

Long Decline in Venezuelan Production

Venezuela was once a major oil producer, but the country's production has sharply declined over the past two decades, now accounting for less than 1% of global supplies, most of which are exported to China. The market faces a potential surplus this year as OPEC+ and non-allied producers are adding more barrels while demand is declining.

On Sunday, OPEC+ maintained plans to freeze supply increases during the first quarter. The Saudi-Russian-led alliance did not discuss the Venezuelan situation during the 10-minute video conference, according to delegates who said it was too early to assess how to respond to the evolving situation.

Despite the U.S. attacks on Saturday, Venezuela's oil infrastructure, including the Jose port, Amuay refinery, and major production areas in the Orinoco belt, remained unaffected, according to sources familiar with the matter.

Sanctions and U.S. Pressures

Recent U.S. pressures on Maduro's regime, including the seizure of tankers carrying Venezuelan oil, have forced the country to begin shutting down some oil wells.

U.S. President Donald Trump said on Saturday that the sanctions imposed on the sector would remain in effect, but added that U.S. companies would help rebuild the infrastructure and revive production, a process likely to be long-term. He stated to reporters on Monday that companies are very eager to invest in Venezuela.

Harris Khurshid, chief investment officer at Karobar Capital in Chicago, considered that "U.S. investment and any real easing of sanctions take time, and barrels don't come back overnight." He added: "For now, surplus remains the most influential factor that outweighs geopolitics, placing a cap on prices."

On Sunday, U.S. Secretary of State Marco Rubio stated that the United States would use its oil leverage to impose further change in the Latin American country. In return, interim President Delcy Rodriguez of Venezuela called on the United States to cooperate with her country, adopting a more conciliatory tone after her initial anger over Maduro's arrest.