WTI prices have dropped as Venezuela has restarted oil exports after cutting production due to a US embargo. Two supertankers left Venezuela, carrying about 1.8 million barrels each as part of a US supply agreement, signaling a return of oil to global markets. The American Petroleum Institute (API) noted that US crude oil inventories increased by 5.27 million barrels for the week ending January 9. The Energy Information Administration (EIA) will also release inventory data soon. A Reuters poll indicates that US crude stockpiles may decline, while gasoline and distillate inventories are expected to increase.

Oil Prices Near Three-Month High

Oil prices are hovering near a three-month high, partly due to supply risks from protests in Iran. The Indian Oil Corporation is diversifying its oil sources by buying Ecuador’s Oriente crude, as US and EU sanctions on Russian oil affect supplies. WTI oil is a high-quality crude from the US, known for its low sulfur content. Prices depend on supply-demand dynamics, political issues, and OPEC’s production decisions. Inventory reports from the API and EIA impact prices by signaling supply levels, with EIA reports considered more reliable because they come from the government. OPEC’s production quotas also significantly affect prices. We are seeing effects from events that started around this time last year. In January 2025, the market was responding to news of Venezuela resuming exports and an unexpected increase in US crude inventories. These early signs of more supply are now established trends affecting the market. The 5.27 million barrel inventory increase reported in early 2025 was significant, and the trend of ample supply has continued. The latest EIA report for the week ending January 9, 2026, showed an additional increase of 2.1 million barrels, reinforcing this trend. Venezuelan supply has become a consistent factor, with their output now stable at over 1.1 million barrels per day, a significant rise over the past year.

Changing Geopolitical Risks

The main difference between now and then is the decrease in geopolitical risk that was previously sustaining prices. Protests in Iran, which threatened oil production in early 2025, have calmed down and are no longer a major concern for the market. This has left crude prices more sensitive to the growing global supply. Given these supply pressures, prices are likely to trend downwards. It might be wise to consider short positions or buy put options targeting below $70 in the coming weeks. Bear put spreads could be a cost-effective way to prepare for a moderate decline while managing risks. Create your live VT Markets account and start trading now.

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