Oil falls after Trump says Venezuela will supply to US

[LONDON] Oil prices fell on Wednesday (Jan 7) after President Donald Trump said the United States had reached a deal to import up to US$2 billion worth of Venezuelan crude, a move that is expected to increase supplies to the world’s largest oil consumer.

Brent crude futures fell US$0.11 to US$60.59 a barrel by 11.04 am GMT, while US West Texas Intermediate crude fell US$0.27 to US$56.86 a barrel.

Both benchmarks extended declines of more than US$1 from the previous trading session, as market participants expected ample global supply this year. The deal between Washington and Caracas could initially require cargoes that were bound for China to be rerouted, sources told Reuters.

Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship since mid-December due to a blockade on exports imposed by Trump. The blockade was part of a US pressure campaign against Venezuelan president Nicolas Maduro’s government that culminated in US forces capturing him over the weekend.

Top Venezuelan officials have called Maduro’s capture a kidnapping and accused the US of trying to steal the country’s vast oil reserves.

Venezuela will be “turning over” between 30 million and 50 million barrels of “sanctioned oil” to the US, Trump wrote in a social media post on Tuesday.

“The Trump post on Venezuelan oil imports put downward pressure on crude prices earlier today, but market participants seem to believe now that those volumes could be smaller, with oil prices paring earlier losses,” said UBS analyst Giovanni Staunovo.

Morgan Stanley analysts estimated the oil market could reach a surplus of as many as three million barrels per day in the first half of 2026, based on weak growth in demand last year and rising supply from Opec (Organization of the Petroleum Exporting Countries) and non-Opec producers.

However, the prospect of higher, cheaply extracted Venezuelan oil exports could pause expansion of productive capacity in the US and elsewhere, analysts at BMI, a unit of Fitch Solutions, said in a note on Wednesday.

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Venezuela has been selling its flagship crude grade, Merey, at around US$22 per barrel below Brent for delivery at its ports.

“That raises the expected price of oil over the medium term, especially if the Venezuelan regime survives,” the BMI analysts said. REUTERS