Oil Prices Stabilize After Recording Largest Weekly Gain

SadaNews - Oil stabilized after its largest weekly gain, as traders assessed expectations regarding Venezuela, while concerns over a global supply surplus continued.

Brent crude was near $62 a barrel, after closing up 1.7% in the previous session, where the U.S. seizure of the Venezuelan president over the weekend injected some geopolitical risk premium into prices. Shares of U.S. oil companies jumped based on the prospect of reviving the country's energy sector.

However, the broader market is expected to suffer from a significant surplus, with Venezuela accounting for only a small fraction of global output, meaning that any disruption to the country's exports is unlikely to have a lasting impact on prices. Saudi Arabia has reduced crude prices to Asia for the third consecutive month.

The surplus is expected to expand in the first half and peak mid-year, according to Morgan Stanley, which has lowered its price forecasts for the first three quarters of 2026.

Oil futures ended last year with their largest annual decline since 2020, as the "OPEC+" alliance and other producers outside it added more barrels to the market.

Prospects for Reviving the Energy Sector in Venezuela

Venezuela was once a major oil producer, but now it accounts for less than 1% of global supplies, after years of underinvestment left the country’s energy infrastructure in poor condition.

Chevron is the only major U.S. company operating in the country under a special U.S. license.

U.S. Energy Secretary Chris Wright plans to speak this week with executives in the oil industry about rejuvenating Venezuela's energy sector, according to sources familiar with the matter.

President Donald Trump told NBC News that the U.S. could support efforts to help rebuild it.

The blockade on tankers and the buildup of U.S. troops in the region have fueled speculation of rising tensions in the energy-rich country.

Hedge funds have ramped up bullish bets on crude to the maximum since November in the week before the U.S. captured Venezuelan President Nicolas Maduro.

Charu Chanana, senior investment strategist at Saxo Markets in Singapore, noted the price gain on Monday, stating: "The rebound seems more like a geopolitical risk premium added on top of positioning rather than a real shift in oil fundamentals." She added that futures are susceptible to a rapid decline.