In a stunning turn of events, the US attacked Venezuela over the weekend, captured its leader, Nicolas Maduro, and imposed a naval blockade. The chaos in the Latin American nation, once an oil-producing powerhouse, is being keenly eyed, as this event adds a “geopolitical risk premium” on energy markets.
Why is oil price falling amid US-Venezuela conflict?
Venezuela has the largest proven oil reserves with an estimated 303.8 billion barrels (as of 2020), trailed by 297.5 billion barrels from Saudi Arabia, showed data from Prabhudas Lilladher (PL) Capital. The next three largest reserves are way behind at 168.1 billion barrels, 157.8 billion barrels and 145 billion barrels with Canada, Iran and Iraq, respectively.
Prices are unlikely to rise significantly unless the situation escalates into broader instability or disruption of critical energy infrastructure, said Naveent Damani, Head of Research — Commodities, Motilal Oswal Financial Services. “The crisis does add a geopolitical risk premium, increasing short-term volatility, but with global inventories comfortable and supply uninterrupted, the impact remains modest.”
Crude oil prices: Key targets
In 2025, while gold glittered, ‘black gold’ was battered. Brent and WTI benchmarks each lost nearly 20%, recording their steepest fall since 2020, as per a Reuters report. It was also the third straight year of losses for Brent — the longest streak on record.
In the near term, a broad range between 5,000 level ($55 for WTI) or 5,500 ($65 for the WTI) could be seen, said Damani, adding that the weakness towards 4,600 or $47 can also be a short-term possibility, with the major trend change happening only above 5,500 or $63 levels.
