Oil prices extended losses on Wednesday as investors absorbed comments from Donald Trump indicating that the United States had struck a deal to import up to $2 billion worth of Venezuelan crude, a move expected to increase supplies to the world’s largest oil consumer.
Brent crude futures fell 40 cents, or 0.7%, to $60.31 a barrel by late morning U.S. trading, after touching an intraday low of $59.88. U.S. West Texas Intermediate crude dropped 74 cents, or 1.3%, to $56.39 a barrel, after earlier sliding to $55.76.
Both benchmarks declined by more than $1 in the previous session, as traders continued to price in ample global supply for the year ahead.
Sources told Reuters that the agreement between Washington and Caracas could initially involve rerouting cargoes that were previously destined for China.
Venezuela has accumulated millions of barrels of crude on tankers and in storage after exports were blocked in mid-December under measures imposed by the Trump administration. The restrictions were part of a broader U.S. pressure campaign against President Nicolas Maduro’s government, which culminated in his capture by U.S. forces over the weekend.
Senior Venezuelan officials have described Maduro’s detention as a kidnapping and accused the United States of attempting to seize control of the country’s extensive oil resources.
In a social media post on Tuesday, Trump said Venezuela would transfer between 30 million and 50 million barrels of sanctioned oil to the United States.
SEB commodities analyst Ole Hvalbye noted that the volumes involved are relatively small in a broader context, pointing out that U.S. Strategic Petroleum Reserve holdings stand at more than 400 million barrels.
Geopolitical risks also rose after U.S. authorities sought to seize a Venezuela-linked oil tanker following a pursuit across the Atlantic that lasted more than two weeks, according to U.S. officials. The incident could heighten tensions with Russia after the vessel evaded a U.S. maritime blockade and resisted Coast Guard boarding attempts.
Providing some support to prices, U.S. crude inventories fell by 3.8 million barrels to 419.1 million barrels in the week ended January 2, according to data from the Energy Information Administration. Analysts had expected a modest increase. Gasoline inventories rose sharply, while distillate stockpiles—including diesel and heating oil—also increased more than forecast.
Analysts at Morgan Stanley estimate that the oil market could move into a surplus of up to 3 million barrels per day in the first half of 2026, citing weak demand growth and rising supply from both OPEC and non-OPEC producers.
Meanwhile, analysts at BMI said that increased flows of low-cost Venezuelan crude could slow investment in production capacity in the United States and elsewhere. Venezuela has been selling its flagship Merey crude at a steep discount of around $22 per barrel to Brent prices.
BMI added that such dynamics could support higher oil prices over the medium term, particularly if Venezuela’s current political regime remains in place.
