Pumping Venez-oil-a

Venezuelan crude exports have already been heavily disrupted by a US blockade, resulting in ship loadings reaching a 17-month low in December 2025. In a scenario where these sanctions were removed under US control, crude balances, particularly for heavier grades, would loosen materially, pressuring heavier refined fuels such as high-sulphur fuel oil, while simultaneously supporting naphtha demand, which Venezuela imports to dilute its heavy crude. For now, however, the blockade remains firmly in place.

These concerns initially buoyed prices, with M1 Brent futures gapping up to $61.10/bbl on 05 Jan, before momentum quickly faded and prices slipped back below the $60/bbl handle. While Brent has since clawed its way back above this level, the geopolitical chaos of the past weekend has been overshadowed by a much broader theme: the looming 2026 crude oil glut. The world is awash with oil, and we first highlighted the expected 2026 crude surplus in our May 2025 global oil balance. Now, the view of a crude glut is consensus amongst oil market participants; the only question is to what extent. The IEA is the most bearish, predicting a 3.8mb/d glut. Emerging supply additions are vastly outpacing demand growth, with oil-on-water levels steadily rising. However, geopolitical risk has limited the downside to prices, with Brent resilient around $60/bbl. However, given the increasing abundance of oil, our expectation is for flat price to trade lower over the year, with the 50s being the new normal for Brent.