Oil prices are under pressure following a statement from US President Trump about buying 30-50 million barrels of Venezuelan oil. The US plans to purchase this oil, which has been sitting in storage due to a blockade, at market rates. The oil will be delivered to US ports for processing on the Gulf Coast. A meeting at the White House will focus on utilizing Venezuela’s oil reserves, with major figures from the US oil industry in attendance. The US blockade has led to reduced oil purchases from China, who were previously the main buyers of Venezuelan oil, affecting their supply options.

US Oil Market Dynamics

The US oil market might see an oversupply of Venezuelan oil, which could increase US exports and lower WTI prices. China may struggle to find affordable oil suppliers like Iran and Russia due to sanctions, leading to potential conflicts with the US. New tensions with the US could appear, especially after the recent seizure of sanctioned oil tankers. However, the overall impact on the global oil market remains minimal, mainly causing shifts in shipping routes without affecting overall supply. Chinese buyers might turn to Canadian oil as a substitute for Venezuelan oil. We remember the pressure on oil prices in mid-2025 when the Trump administration announced its plan to purchase sanctioned Venezuelan oil. This move has since changed supply chains and has led to a steady flow of heavy crude into the US Gulf Coast. As we enter 2026, this shift continues to affect the market, with WTI currently priced around $78 per barrel.

Current Market Impacts

Recent data from the Energy Information Administration (EIA) shows an unexpected rise in US crude inventories of 2.1 million barrels, contrasting predictions of a decrease. Meanwhile, Venezuelan oil production has stabilized near 900,000 barrels per day, a significant rise from below 800,000 bpd before last year’s deal. The continual supply of heavy sour crude keeps US refineries well-supplied and limits price increases. With the US absorbing more Venezuelan oil, it has increased exports of its own light sweet crude. This has narrowed the WTI-Brent spread to just under $5 a barrel, down from over $6 in late 2025. Derivative traders should watch this spread closely, as any interruptions to US export terminals could widen the spread quickly, creating trading opportunities. As we expected, Chinese independent refiners are now seeking alternative discounted suppliers. Recent customs data indicates that China’s imports of Russian Urals crude have surged by nearly 12% in the last quarter. They are also buying more Canadian heavy oil, which has reduced the Western Canadian Select (WCS) price discount relative to WTI. In the upcoming weeks, it may be wise to view strength in WTI futures as a selling chance, especially when approaching the $80-$82 resistance zone. The steady supply from the Venezuelan deal makes significant price increases unlikely without a major geopolitical event. Therefore, options traders may find value in purchasing puts to protect against a potential decline toward the low $70s if US inventories keep rising unexpectedly. Create your live VT Markets account and start trading now.

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