Oil prices drifted lower in early trading on Monday as ample global supplies continued to outweigh fears of supply disruptions linked to political upheaval in Venezuela.
Brent crude futures slipped 21 cents, or 0.4%, to $60.54 a barrel by 0452 GMT, while U.S. West Texas Intermediate fell 28 cents, or 0.5%, to $57.04 a barrel.
Price action was volatile during early Asian trading, with benchmarks opening lower, briefly rebounding, and then turning negative again as markets reassessed risk.
Investors focused on the implications of the United States detaining Venezuelan President Nicolas Maduro during a weekend operation and the potential impact on exports.
Sanctions and supply seen limiting price impact
President Donald Trump said Washington would take control of the oil-producing nation while confirming that the U.S. embargo on Venezuelan oil remained fully in place.
Despite the dramatic political development, analysts said the global oil market is currently well supplied, limiting the near-term impact on prices.
“We see ambiguous but modest risks to oil prices in the short-run from Venezuela depending on how U.S. sanctions policy evolves,” Goldman Sachs analysts led by Daan Struyven reported in a January 4 note.
The bank kept its oil price forecasts for 2026 unchanged, signaling confidence that supply disruptions would remain manageable.
Regime change could alter long-term outlook
Senior officials in Maduro’s government have denounced the detention as a kidnapping and pledged to remain unified, keeping the existing power structure intact for now.
Analysts said a sudden regime change could eventually pressure prices lower by unlocking new supply over the medium to long term.
“A regime change in Venezuela would immediately represent one of the largest upside risks to the global oil supply outlook for 2026–2027 and beyond,” JP Morgan analysts said on Monday.
The U.S. operation did not damage Venezuela’s oil production or refining infrastructure, leaving output capacity unchanged.
Helima Croft, head of commodities research at RBC Capital, said full sanctions relief could release several hundred thousand barrels per day of additional supply.
“All bets are off in a chaotic change of power scenario like what occurred in Libya or Iraq,” Croft added.
Broader geopolitical risks remain in focus
Trump also warned that the United States could launch further military action if remaining members of Venezuela’s administration refuse to cooperate.
OPEC and its allies, known collectively as OPEC+, agreed on Sunday to maintain existing production levels, offering little immediate support to prices.
Trump further raised the possibility of expanded U.S. intervention elsewhere in Latin America, including Colombia and Mexico, over drug trafficking concerns.
Markets are also monitoring tensions with Iran after Trump threatened intervention related to protests in the OPEC-producing nation, adding another layer of geopolitical uncertainty.