OPEC+ recently held an online meeting with key members including Saudi Arabia, Russia, and the UAE. They decided to keep oil production at current levels. This decision follows a pause in output during the first quarter due to lower demand over the winter. The meeting took place amid rising tensions between Saudi Arabia and the UAE, and after recent U.S. actions regarding Venezuelan President Nicolás Maduro. What OPEC+ decides about oil output affects global oil markets directly.

WTI Oil Benchmark

WTI Oil is a high-quality crude from the U.S. that acts as a market benchmark. Its price is influenced by supply and demand, as well as external political events and OPEC’s decisions. Reports on weekly inventory from the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact WTI pricing. Changes in inventory levels show shifts in supply and demand, which in turn affect prices. OPEC consists of 12 oil-producing countries that set production quotas, influencing WTI Oil prices. The expanded group, OPEC+, includes Russia and can also adjust market supply, which affects prices by tightening or loosening production. With OPEC+ expected to maintain its production levels, we see this as more of a stable factor rather than a new market driver. This stable supply outlook shifts our attention to geopolitical risks and actual demand signs. OPEC+ provides a baseline, but any price changes in the coming weeks will likely stem from other factors.

Venezuela’s Impact On Crude Output

Venezuela’s political situation brings a significant risk, as it may disrupt the country’s crude production, which has averaged around 850,000 barrels per day recently. This potential supply disruption, coupled with ongoing tensions between Saudi Arabia and the UAE, helps keep oil prices steady. Traders in derivatives should consider a higher risk premium since geopolitical events can escalate quickly and drive prices sharply higher. On the demand side, the situation is less clear, which creates mixed pressures on the market. The latest report from the International Energy Agency projected a slowdown in global demand growth for 2026 to 1.1 million barrels per day, mainly due to weak industrial activity in China. In contrast, U.S. economic data remains strong, including a jobs report for December 2025 that exceeded expectations, indicating strong demand in North America. We will closely watch the upcoming EIA inventory report on January 7th for insights on near-term market direction. The EIA’s final report for 2025 showed a surprising draw of over 4.7 million barrels, suggesting stronger-than-expected end-of-year demand. A significant draw in the next report could indicate that this positive demand trend continues into the new year, potentially outweighing concerns about slower global growth. Given this stable OPEC+ approach and high geopolitical uncertainty, we expect WTI options to see increased implied volatility. Back in early 2022, geopolitical events quickly influenced prices, making them swing dramatically. Traders might find strategies that benefit from this volatility, like long straddles or strangles, wise if they expect sharp price moves. We usually observe oil prices bottoming out in the winter months due to lower demand, as OPEC+ noted. This pattern appeared in the first quarter of 2025 when prices stabilized before rising ahead of the summer driving season. Thus, traders might consider taking long-term positions through call options if prices drop in the next few weeks due to weak demand data, anticipating a seasonal rally in the spring. Create your live VT Markets account and start trading now.

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