Oil prices climbed by more than 1% on Monday as traders evaluated how recent U.S. actions in Venezuela could affect crude supply from the country with the world’s largest proven oil reserves.
Brent crude futures rose 87 cents, or 1.43%, to $61.62 a barrel by late morning in New York, while U.S. West Texas Intermediate (WTI) crude gained 90 cents, or 1.57%, to $58.22.
Both benchmarks swung sharply during the session. Prices initially fell by more than $1 before reversing course and moving higher as markets reacted to news surrounding the capture of Nicolás Maduro and Washington’s announcement that it would assume control over Venezuela. The country’s crude exports, which remain subject to a U.S. embargo, are a key focus for traders.
Analysts at Aegis Hedging said uncertainty around future Venezuelan oil flows is now the primary unknown for the global oil market, as investors try to gauge how U.S. involvement could alter export patterns.
Despite the headlines, some analysts noted that the global market is currently well supplied. They argued that even if Venezuelan exports were disrupted further, the immediate impact on prices could be limited.
Venezuela’s oil production has declined sharply over the past two decades due to mismanagement, nationalization of the sector in the 2000s, and a prolonged lack of foreign investment. Output averaged roughly 1 million barrels per day last year, accounting for about 1% of global supply.
On Sunday, Venezuela’s acting president signaled a willingness to cooperate with the United States. Simon Wong, a portfolio manager at Gabelli Funds, said he expects naval restrictions and sanctions to eventually be lifted, which could allow oil currently held offshore or in bonded storage to reach the market. However, he cautioned that any meaningful increase in production would take time.
Others were more skeptical. Analysts at Bernstein said the oil market is already dealing with surplus supply unrelated to Venezuela and questioned whether additional Venezuelan barrels would materialize quickly enough to influence prices in the near term.
Meanwhile, U.S. President Donald Trump raised the possibility of further interventions, warning that Colombia and Mexico could face military action if drug trafficking is not curtailed.
Market participants are also watching closely for a response from Iran following Trump’s comments about potential involvement in addressing unrest in the OPEC producer. Simon Lack, portfolio manager at the Catalyst Energy Infrastructure Fund, said geopolitical risks are clearly rising, even if the probability of U.S.-backed regime change in countries such as Colombia or Iran remains low.
Separately, Organization of the Petroleum Exporting Countries and its allies agreed on Sunday to keep production levels unchanged, adding another layer to the market’s supply outlook.
