The US government has taken a stricter approach toward Venezuela, but this hasn’t visibly affected oil production yet. November oil exports stayed steady at 590,000 barrels per day, easing worries about US pressure on President Maduro. Despite the closure of Venezuelan airspace and increased US presence in the Caribbean, oil production remains strong. In October, Venezuela produced 950,000 barrels per day, only 50,000 barrels less than the high of the past 5½ years recorded in September. In fact, November exports were 160,000 barrels higher than those in October.

Market Observations

Market observations show that the ongoing tensions between the US and Venezuela haven’t had a noticeable impact on oil prices. The US’s efforts to combat drug trafficking haven’t significantly affected Venezuela’s oil exports. This indicates that Venezuela’s oil sector is resilient even in times of geopolitical tension. Currently, we see a familiar pattern of US-Venezuela tensions, but the market situation is different in late 2025. A few years ago, similar escalations didn’t disrupt Venezuela’s oil exports and, in fact, exports increased. This history suggests we should be cautious about reacting only to political statements. Today, Venezuela’s oil production is stronger than during its lowest points. Recent reports estimate November 2025 output to be around 870,000 barrels per day. The threat of renewed sanctions if the current administration’s political conditions aren’t met creates uncertainty. However, the spot price for WTI crude has remained stable at about $82 per barrel, showing that traders are waiting for solid actions instead of just talk.

Broader Market Context

The broader market is currently tighter than in the past, especially after the latest OPEC+ meeting confirmed production cuts will continue through the first quarter of 2026. This tight supply means any real disruption from Venezuela could impact prices significantly. A drop in Venezuelan exports could quickly add a $5-$7 risk premium to crude prices. For derivative traders, taking outright long positions in futures may be premature. A more cautious approach involves using options to prepare for potential upside while managing risk. Buying near-term call options on WTI or Brent allows us to benefit from a sharp price increase if sanctions are enforced while limiting losses to the premium paid. It’s also important to monitor implied volatility in the options market. Even if spot prices are stable, a rise in implied volatility could indicate that the market is anticipating a significant price change. This could serve as an early signal to set positions, possibly through strategies like call spreads to reduce entry costs before any official announcements are made. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now