US Strike on Venezuela Unlikely to Cause Major Oil Price Shock, Analysts Say

Despite recent US military action in Venezuela, global oil prices are unlikely to experience a major disruption, as existing sanctions and surplus supply continue to stabilise the market, according to analysts.

The capture of Venezuela’s president following US strikes on Saturday (January 3) has drawn international attention, but experts believe the impact on energy markets will be limited. Analysts point out that Venezuela’s oil exports have already been significantly constrained by long-standing US sanctions, reducing the country’s influence on global supply.

According to the International Energy Agency (IEA), the global oil market is expected to see a substantial supply surplus of 3.85 million barrels per day in 2026, further cushioning prices against geopolitical shocks.

Market analysts note that Venezuela maintains close trading ties with allies such as Iran, but even during major Middle Eastern geopolitical crises, the average risk premium priced into oil markets has typically remained around $10 per barrel.

Short-term volatility may still occur, with analysts predicting a potential gap in early trading prices following the news. However, the direction of oil prices will largely depend on subsequent geopolitical developments and statements from US President Donald Trump, whose public remarks have historically influenced market sentiment.

Experts outline two possible market reactions: an initial price rally followed by a sharp sell-off due to oversupply pressures, or an immediate bearish response pushing prices to new lows.

At the same time, analysts caution that Venezuela cannot be viewed in isolation. Ongoing concerns include the escalation of the Russia–Ukraine conflict, particularly attacks on Russian oil infrastructure, as well as rising tensions in the Middle East between Israel and Iran.

The most severe risk scenario would involve a convergence of multiple supply shocks — disruptions in Russia, the Middle East, and Venezuela — potentially driving oil prices to levels not seen in years. However, analysts believe such a scenario is unlikely, noting that the US administration would seek to avoid sharp price spikes that could fuel global inflation.

Overall, market sentiment remains largely bearish, with speculative positioning indicating expectations of lower oil prices despite geopolitical uncertainties.