Name: What does the US attack on Venezuela mean for oil prices? | DW News
Uploaded: 2026-01-06T16:57:12.000Z
Duration: 9 min 19 s
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The insecurity that's being created by this is quite high.

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Even the American oil companies that have seen their share price increase today because of expectations of them re entering Venezuela, this will take some time.

They'll be reluctant to jump into Venezuela right now.

An attack on one of the world's most oil rich countries.

What could it mean for oil supply and what kind of signal could it send to the rest of the world?

Henning Gloucestein is an analyst with Eurasia Group in London and he joins me now for more.

We've seen that oil markets have been a little jumpy since this attack.

Do you believe that traders have settled on an interpretation for what this event really means for global oil?

So, I mean, I wouldn't say they've settled, no.

I mean it's, it's a very, it's a, it's an environment that's quite difficult to understand because, you know, the events that happened over the last couple of days have been so sudden.

However, there are a few things to keep in mind.

So globally, oil markets are oversupplied at the moment.

So that means that there's more oil being pumped into the market than is being consumed.

And that hasn't changed with the situation in Venezuela.

Now Venezuela does have the biggest oil reserves in the world, but

they're not actually a great exporter at this stage.

And virtually all of its exports have in the past been going to China.

So it's almost like a single market being affected by this.

Also, we have seen since this morning that some Venezuelan tankers have actually left Venezuela.

So the US embargo doesn't seem to be fully enforced at this stage.

And then lastly, probably it will take some time for American companies or other international companies to fully re engage in Venezuela.

So the short term impact to global markets is quite low.

However, the insecurity that's being created by this is quite high.

And that's why I wouldn't say markets have settled, but they're far from being in panic.

I want to touch on that insecurity in just a moment.

First, I want to ask most viewers would look at this and say Venezuela sits on this incredible wealth of oil.

Surely if that's the reason for this attack in the first place and there's going to be a lot more oil entering the global market, how can it be that we're not going to see a much greater effect and that that couldn't depress prices further?

For example, if there's already oversupply.

So we do actually think the prices because of the events will go down in the short term because what will probably happen is that the, the, the U.S.

embargo that was in place up until the U.S.

intervention over the last couple of days is already being lifted.

So more Venezuelan oil will be hitting the market than has been over the last couple of weeks, but

it won't be a lot more because to raise Venezuela's production and then its exports will, will require a lot of investment.

And even the American oil companies that have seen their today, because of expectations of them reentering Venezuela, this will take some time.

They'll be, they'll be reluctant to jump into Venezuela.

Right now, it's not even clear who leads the country, whether it's going to be, you know, run by the United States, as Donald Trump has been saying, or whether some interim government is being put in place.

This is what's, what's not really clear what will happen.

So that's why we think in the, in the short term, the impact on markets will be relatively muted because not that much will change.

What is it that's preventing more oil from coming into the system?

In other words, we hear that Venezuela has so much and yet that it takes so much money or so much time, so much investment to get it going again, as you've said as well.

Venezuela's oil industry has been very poorly invested.

So it's been struggling with underinvestment of the last few years because of Venezuela's relative isolation, in particular with regards to the United States.

And that will take some time to resolve before American or any international money comes back into Venezuela.

It'll be a matter of months, probably even years.

Do we have any idea who is most likely to benefit at this point?

I know this is a very early stage, but should Venezuela begin to produce more oil?

This has been a long standing debate who gets that money.

It will mostly go to American companies that become involved again with US Government support.

And if things go a little bit better than, than hope for, especially critics will hope that money will hopefully remain in Venezuela as well.

But my expectation is that most of the oil revenues, the future oil revenues have raised output and exports will go to U.S.

companies, and most of the oil will go to the United States as well.

Henning, you touched on this just a moment ago, but

perhaps oil prices could be driven just as much, if not more from the geopolitical consequences of these strikes.

Could you explain that a little bit more?

I mean, One of the insecurities that markets are taking away from this is that Venezuela, although it's not a large export and produce at this stage, it is another oil producer that is being impacted by geopolitics.

Iran is affected by sanctions and by the geopolitical crisis in the Middle East.

Russia, of course, is under sanctions as well because of its invasion of Ukraine.

So oil markets, although they're well supplied, are, are increasingly prone to risk from geopolitical disruption and activity that is very hard for traders and the markets to anticipate.

We've seen a lot of focus in particular on Iran, obviously a favorite target of the Trump administration.

How significant would any sort of disruption to that oil production be as opposed to Venezuela?

Well, we saw in mid-2025 when the, the military escalation between Israel and Iran and the United States and Iran reached new highs.

Oil prices were around $80 per barrel at that time.

It's less about Iran's oil production, exports, capabilities, but

more about the risk to the Strait of Hormuz, through which also Saudi Arabia's and Emirati and Kuwaiti oil is exported and which meets most of the demand in Asia Pacific.

So that's the main worry in the Middle east.

And that could flare up at any point in time because we do actually think Iran remains a hotspot for geopolitical risk with regards to its own activities, but

or how Israel and the United States act in the region.

How long do we expect this kind of oversupply phase to last?

I mean, where are we seeing oil in the long term?

Not that long ago, I remember it was said that peak demand perhaps had been reached around 2021, 22.

Now it seems like the calculus has changed.

Well, so demand isn't growing very fast in oil markets.

It is growing slightly and it's at record high.

So that's important to keep in mind, but it's not growing fast.

That's because of China's electrif electrification going ahead at a breakneck speed.

So on the consumption side, there's not much new demand coming.

However, on the supply side, OPEC has raised output.

Other producers like Guyana and Brazil are raising output.

So this is the reason for the oversupply as to how long it'll last, we reckon until 2027 or so, because what will definitely happen if prices go down much further with relation to where they are now.

So if we see Brent Prices in the middle mid low 50s, investment into production will start to slow down, and

that will then bring output down below demand again, because, like you say, we haven't seen peak demand.

But if investment in production slows, then at some point, that should bring prices back up again again.

For those of us who may be looking at this not know a whole lot about how global oil markets work, if the Trump administration wants to increase all of this production in Venezuela, where is it going to go then?

Is it just about getting it into the US Domestic market?

Is it more these businesses, these American businesses, benefiting them?

What's the strategic or tactical sense in doing this?

That's actually a very good point to make because over the last few years, almost all of Venezuela's crude oil has been going to China.

Historically, however, most of Venezuela's crude oil went across the Gulf and into the US Industry because the US refineries along the Gulf coast are geared towards processing what's called heavy crude oil, which Venezuela produces mostly.

So historically, this is where most of the oil has been going, and

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What does the US attack on Venezuela mean for oil prices? | DW News

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