Muted start to oil trading despite US hit on Venezuela

Happy New Year dear readers! As crude oil trading for the current year gets going, we're witnessing a fairly muted start to proceedings with benchmark futures having barely budged from last week's levels. 

That's despite US President Donald Trump sending in the elite Delta Force force to grab Venezuelan President Nicholas Maduro on Saturday. Trump's successful incursion, quips about Venezuela's oil industry and a new stable government / different regime has also brought the country's 'crude' potential into sharp focus. 

However, anyone hoping for short-term changes to the global supply dynamic is either kidding or exaggerating. Venezuela's crude production is on its knees thanks to Maduro and his predecessor Hugo Chavez's constant meddling into how its run. 

Venezuela once produced 3.5 million barrels per day before the turn of the millennium. But today it can barely muster 1 million bpd. Returning it to its former glory days would need stability, investment and time. In short, there wont be any instant gratification.

Much has also been made about the country's 'proven' oil reserves with a 300 billion+ barrel figure being brandished about. For starters, reserves alone do not equate to riches, and the figure itself dates back to the summer of 2006 when PDVSA - the country's state-owned oil company - published it. Back then oil prices ranged around $130 to $140 a barrel. Today's prices range well below half of that level. What was commercially viable to be tapped at $130 isn't quite so at $60! 

This brings us to the oil price itself, for which this development is largely a near-term non-event, and long-term bearish. Why? For now, nothing is happing bar a marginal uptick in Venezuelan exports, which currently account for less than 1% of the total global supply pool. And were that level to be doubled, say in 10 years time, more oil in the supply pool means lower prices. 

With lacklustre demand and falling oil prices - realising what Venezuela has in reserve is going to be a totally different ball game. Finally, despite the jump in US E&P and OFS stocks overnight, it is by no means certain they would play in Venezuela. 

Let's not forget the playing field itself is far from stable. For who knows what sort of mess the US incursion may create in a place that is already pretty messy! Well that's all for the moment folks. More musings to follow. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

To follow The Oilholic on Energy Connects click here.

To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2026. Photo: Oil pump jack building block model at the AVEVA World 2023 Conference, Moscone Center, San Francisco, US © Gaurav Sharma, October 2023.