Crude oil began trade this year with a dip, despite the news about U.S. strikes on Venezuela and the taking of President Nicolas Maduro to the U.S. Normally, such events would have pushed oil higher, but not this year. This year, oil prices will need a much more major disruption to rebound – and so will gas prices.
Brent crude was trading at a little over $60 per barrel at the start of the first full trading week of 2026, after President Trump announced the capture of the Venezuelan president, accompanied by statements regarding the country’s oil industry.
“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure and start making money for the country,” the U.S. president said during the weekend.
Analyses of the situation followed immediately, pointing out the challenges of turning words into action. These include costs, with the Wall Street Journal citing estimates of $10 billion a year to turn Venezuela’s oil industry around, and political stability. “The potential to boost Venezuelan production hinges on capital, which in turn depends on political stability and likely requires guarantees from the U.S. government,” Jefferies analysts wrote on Sunday.
In other words, despite the initial shock of the U.S. incursion into the country with the largest oil reserves, no immediate change in the global oil supply situation is on the horizon, and if there is a change, it would bring more, rather than less oil to consumers, adding to the bearish sentiment among traders.
Related: The Oil Ultimatum That Led to Maduro’s Capture
OPEC+’s reiteration of the pause in production builds at the group’s latest meeting did nothing to change that sentiment, either. First of all, the affirmation was expected, and second, it is widely seen as the only path for OPEC+ after a year during which oil benchmarks shed close to 20% regardless of the group’s cuts. The producers’ group said the global market was well balanced going into 2026—making it one of the few entities that share this belief.
For most, it is going to be a very bearish year for oil. Per Kpler, oil on tankers has risen further from the record high reached last year and now stands at the highest since April 2020, Reuters’ Clyde Russell noted in a recent report. Of course, it bears noting that a lot of this oil is in transit to its buyers but the amount in its totality appears to be of concern to market observers.
The European Union is a case in point. Brussels last year signed a commitment to buy $750 billion worth of U.S. energy commodities over a period of three years. While the undertaking was quickly revealed to be physically impossible, expectations were for some increase in energy commodity purchases. Instead, the EU actually spent less on U.S. crude and liquefied gas—and not just because of lower prices.
Per Reuters’ Russell, the European Union bought an average 1.73 million barrels daily of U.S. crude oil in 2025. That was down from 1.91 million barrels daily a year earlier. LNG imports, to be fair, increased, and they increased strongly, going from 45.14 million tons in 2024 to as much as 72.24 million tons in 2025. Even with that surge, the EU’s total energy commodity imports from the United States were worth $82.3 billion last year, as opposed to commitments to spend $250 billion that year.
Leaving aside unrealistic import commitments, China is also signaling weakening demand for both crude oil and liquefied gas, which pressured prices last year and will likely continue pressuring them this year. China has been stocking up on crude oil, taking advantage of the price discount, especially for sanctioned crude from Russia, Iran, and Venezuela, and this has strengthened the impression that it is using less oil than it buys, even if the lead motive of the stockpiling push is to make the most of the price situation.
But LNG demand from China is weaker than many imagined, too, and it is buying from Russia. In the meantime, new U.S. export projects are expected to start operations this year, adding to supply—and to pressure on prices. This is making the situation complicated for the industry because weaker gas prices in Europe—the biggest importer of U.S. liquefied gas—are driving down profit margins for exporters. Analysts warn that if the price falls further, LNG exporters will lose their incentive to keep exporting so much LNG.
“U.S. LNG has made outstanding margins since late 2021, but those margins have come back to more normal levels now as the market has stabilised and new LNG capacity starts coming online,” MST Marquee’s head of energy research, Saul Kavonic, told Reuters in December. Now, the margins are slipping below normal, and if the spread between the U.S. gas benchmark and the European TTF narrows to below $4 per mmBtu, many exporters would have to start dialing back production.
The new year, then, is, for now at least, not serving any surprises in energy commodity fundamentals. Yet it could be the year when we see the start of a market correction prompted by the perception of weak demand and oversupply.
By Irina Slav for Oilprice.com
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