The arrest of Venezuelan President Nicolas Maduro by the US over drug trafficking charges has surprised the world. In his absence, Vice President Delcy Rodríguez has stepped in temporarily, showing signs of a willingness to work with the US. For now, the risk to the oil market is limited. Venezuela’s supply of 900,000 barrels per day mainly goes to China, while US refiners take in less than 150,000 barrels per day. Even though losing this supply could affect forecasts, the current abundance of oil is expected to keep prices stable.

Oil Market Forecasts

Despite Maduro’s arrest, ING’s predictions for 2026 remain the same, expecting a well-supplied market with Brent oil averaging $57 per barrel. If Venezuelan production improves significantly by 2027, the forecast could rise to $62 per barrel. OPEC+ will also be crucial in shaping future market trends. Maduro’s arrest has created a lot of uncertainty in the oil market, leading to a critical situation in the coming weeks. We need to closely monitor how the power transition unfolds, as this will influence the direction of oil prices. It’s essential to prepare for short-term volatility while considering the overall market. A prolonged power struggle in Venezuela threatens around 900,000 barrels per day of oil supply. The situation can change quickly, as seen in 2019 when US sanctions caused production to drop sharply. Traders anticipating a similar disruption might want to buy near-term call options on Brent crude to benefit from a possible price surge.

Potential Outcomes

On the other hand, Delcy Rodríguez’s cooperative approach indicates a smoother transition may happen, which could lead to lower oil prices. If a stable, US-friendly government can maintain and even increase exports later this year, the market would see more supply. This scenario might make buying put options an appealing strategy for profiting from a price drop. However, any potential price rise due to a supply disruption is likely limited because the market is currently well-supplied. By late 2025, OPEC+ held substantial spare production capacity, reportedly over 3 million barrels per day. Additionally, US crude inventories were above the five-year average, providing a strong buffer against potential shocks. Given the stark difference between the two possible outcomes, trading based on volatility could be the best move. The implied volatility on oil options has likely increased, and strategies like a long straddle—which involves buying both a call and a put option at the same strike price—could be profitable if oil prices make a significant move either way. This approach capitalizes on uncertainty rather than betting on political results. Looking ahead, a stable Venezuela could negatively affect our long-term forecasts. If the country attracts investment and rebuilds its oil sector, it could bring substantial supply back by 2026 and 2027. This situation strengthens our belief that the market will remain well-supplied, keeping prices from rising steadily. Create your live VT Markets account and start trading now.

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