Oil Price Forecast - Oil Prices Stabilize: WTI Around $57, Brent $61 Amid Venezuela Shock and Russian Squeeze

Oil Market Repricing: WTI (CL=F) Around $57, Brent (BZ=F) Near $61 in a New Political Regime

Spot Structure: Three Losing Years, Then a Volatile Floor for WTI (CL=F) and Brent (BZ=F)

Front-month WTI (CL=F) trades near $56.97, up about $0.98 on the day, a move of roughly +1.75%. Brent (BZ=F) sits around $61.09, gaining $1.13 or +1.88%. Other key benchmarks confirm a modest recovery: Murban is around $61.35 (+2.47%), Louisiana Light roughly $58.42, Bonny Light near $78.62 despite a -2.84% slip, the OPEC reference basket about $58.51 with a -1.85% move, and Mars US near $70.06 after a -1.30% decline. US gasoline futures around $1.739 per gallon are up roughly 2.61%, while US natural gas trades close to $3.414 per MMBtu, down more than 3%, highlighting a divergent gas story.
These levels come after an almost 20% slide in crude prices over 2025, the worst annual performance since the pandemic and the third straight yearly loss. That matters: when a market has already delivered three consecutive down years, the next phase is usually about building a floor, not chasing the old oversupply narrative indefinitely. The latest rebound, with WTI spiking toward $58.32 and Brent toward $61.76 before easing back to roughly $58.14 and $61.62, shows a market trying to stabilise in the high-$50s to low-$60s band rather than collapsing to new lows.

Venezuela Shock: 50 Million Barrels Seized and a $50 Target for WTI (CL=F)

The seizure of Venezuela’s leadership and crude barrels is the clearest hard-power intervention in this market in years. US forces captured the sitting president and laid claim to about 50 million barrels of stranded Venezuelan crude locked in tankers and storage. At current WTI (CL=F) and Brent (BZ=F) levels, that volume is worth up to $3 billion, and Washington is openly signalling that these barrels will be used to cut the domestic crude price from above $56 toward roughly $50 a barrel to relieve household energy bills.
The strategic concept is straightforward: Venezuela holds the largest crude reserves on the planet. If US-aligned capital can restore output and funnel those flows into the US-centric supply system, Washington gains leverage over a huge slice of Western Hemisphere barrels and can shape the price band for WTI (CL=F) for years. The plan is not just to free a one-off 50-million-barrel block; it is to turn a dysfunctional producer into a volume tool that caps rallies.

Venezuelan Production Reality: 1M bpd Today, 3M bpd Vision, $183B Capex Hole

On the ground, Venezuela currently produces around 1 million barrels per day, less than 1% of world demand and far from its historic peak near 3 million bpd. Getting back to that old level would add roughly 2 million bpd into the system and push total US-aligned output near 14 million bpd, around one-third of the ~40 million bpd produced by the OPEC+ bloc. That is the scale of the ambition behind the rhetoric about “controlling” Venezuelan crude.
The constraint is capital and infrastructure. Years of mismanagement and sanctions left refineries, pipelines, and upstream assets degraded. Estimates to fully revive the sector run into the hundreds of billions of dollars, with figures around $183 billion being discussed for a broad rehabilitation. US oil majors – including large integrated players – are being courted to spend “billions” on upgrading fields and facilities, under promises that they can be reimbursed either directly by the US state or via future revenues. But these firms are wary of a jurisdiction where a single political announcement can redraw the legal and commercial framework overnight.
For WTI (CL=F) and Brent (BZ=F), this means Venezuelan barrels are a medium-term bearish overhang, not an immediate flood. The 50-million-barrel seizure is meaningful, but spread over months it is a manageable increment. The real price impact comes if and when production is lifted by 1–2 million bpd and sanctions on exports are structurally relaxed. Until then, the bullish or bearish bias is still driven by inventories, Russia flows, and demand indicators rather than an instant Venezuelan wave.

US Oil Companies, Political Risk Premium, and the Timing of New Venezuelan Barrels

Executives are already signalling that without “serious guarantees” they will not commit tens of billions to long-cycle projects in Venezuela. The sector remembers prior nationalisations, contract changes, and unpaid debts. The US side is offering reimbursement mechanisms and the prospect of long-term access to heavy crude ideally suited for certain Gulf Coast refineries, but boards remain cautious.
In practical terms, that hesitation stretches the timeline before Venezuelan crude can materially change the global balance. Lifting output from 1 million bpd to 3 million bpd requires years of drilling, new equipment, and stable access to technology and financing. So while the political optics are immediate and powerful, the market impact on CL=F and BZ=F curves is more about shaping expectations for the 2027–2030 window than collapsing spot prices in Q1 2026.

Russian Oil and Sanctions: EU Tonnage Rebounds, Dark Fleet Expands, Price Cap Frays

December data on Russian flows show how quickly trade routes adapt to sanctions. European-owned tankers carried roughly 29% of all Russian oil shipments that month, up sharply from around 17% in November. In November, EU-owned ships moved only 9% of Russian crude exports and 17% of total oil volumes; by December they were back to handling a significant share of the trade even as political rhetoric hardened.
At the same time, sanctioned or shadow tonnage has become dominant. Around two-thirds of Russian crude was transported on sanctioned ships by December, and such vessels carried roughly 45% of combined crude, fuel oil, and refined products. The blacklist of “dark fleet” tankers has grown beyond 550 units, but the market continues to rely heavily on them.
The logistics are complex. After new sanctions against Russia’s two largest oil producers, more barrels were observed being transferred to other ships off Oman and Egypt. These “clean” or unsanctioned vessels then delivered cargoes to China and India, or left oil in floating storage. The current regime under the G7 price cap, designed three years ago, still technically allows Western shipowners, insurers, and banks to service Russian barrels sold under the cap. But there is a policy pivot under way: major governments are openly weighing a full maritime services ban, which would end the current price cap architecture and aim at directly restricting Russian exports.
For Brent (BZ=F), the risk is asymmetric. If a broad services ban is implemented and enforcement tightens, Russian exports could fall faster than shadow logistics can compensate, pushing seaborne supply lower and firming prices. For now, the data shows a hybrid world: EU owners are back, sanctioned ships are crucial, and compliance is inconsistent. That keeps a geopolitical risk premium embedded in BZ=F, even as spot prices sit near $61.

European Tanker Owners: Sanctions Risk vs Revenue in the Russian Trade

The rebound in EU participation from 17% to 29% of Russian oil shipments in one month underlines how financial incentives can override political messaging when enforcement is weak. Three-quarters of Urals crude carried on EU-owned ships in November was loaded in just the last ten days of the month, precisely when Russia was under fresh restrictions.
This behaviour increases the regulatory risk for European owners. A move from a price-cap model to a full services ban would hit these operators directly. That prospect is one reason why the share of sanctioned tonnage keeps climbing: owners willing to accept legal and financing risk absorb an ever-larger part of Russia’s flows.
From a price perspective, this fragmentation of the fleet raises friction costs. Insurance is more expensive, voyage risks are higher, and cargoes sometimes move through multiple transfers. The result is an upward bias in transport costs embedded into Brent (BZ=F) differentials even if headline production volumes do not collapse.

US Macro, Risk Assets, and the Demand Side for Oil

Equity markets show a very different picture from the oil complex’s three-year slump. In the United States, the S&P 500 recently closed around 6,902.05, up about 0.6% on the day and just below its record high. The Dow Jones Industrial Average hit a new record near 48,977.18, gaining 1.2%, while the Nasdaq Composite traded around 23,395.82, up 0.7%. Small-caps outperformed, with the Russell 2000 rising 1.6%, signalling broad risk appetite rather than narrow mega-cap leadership.
Outside the US, Asian indices also gained. The Nikkei 225 climbed about 1.1% to 52,389.63, the Kospi rose 0.8% to 4,495.49, Hong Kong’s Hang Seng jumped 1.8% to 26,815.75, and the Shanghai Composite advanced 1.1% to 4,069.38. At the same time, Australia’s S&P/ASX 200 slipped 0.4% to 8,697.10, and India’s Sensex edged 0.1% lower, underscoring that the global risk rally is not perfectly uniform.
Energy equities reacted strongly to the Venezuelan developments. Chevron’s stock climbed roughly 5.1%, Exxon Mobil advanced about 2.2%, and Halliburton surged around 7.8% after the US president floated plans for US oil companies to spearhead a rebuild of Venezuela’s industry. Those moves show equity investors see option value in having first call on Venezuelan reserves, even if cash flows are several years away.
Gold and silver confirm risk hedging remains in play. Gold added about 0.6% after a sharp 2.8% jump the previous day, and silver rallied another 2.7% after a 7.9% surge. These metals recently notched record prices near the $4,450 region for gold and strong levels for silver, fuelled by geopolitical concerns and war-driven uncertainty. Bitcoin, after climbing to about $93,700, has slipped roughly 1.5%, reflecting volatility in the broader risk complex.
For oil, the takeaway is clear: risk assets are firm, but part of that demand is rotating into metals and crypto as hedges. Growth is not booming across all sectors; the services economy is still carrying more weight than manufacturing, and that matters for refined product demand.

US Oil Market Tightening: API and EIA Drawdowns Support WTI (CL=F)

Against the backdrop of structural oversupply from recent years, the latest US inventory data look surprisingly tight. Industry data showed a crude drawdown of about -2.8 million barrels, where markets initially expected a small build. Official figures then reported an even larger draw of around -3.832 million barrels. Combined, the US crude system lost more than 6.6 million barrels of inventory in a single week.
This outcome means aggregated demand – including domestic consumption, refinery runs, and exports – exceeded production plus net imports. If similar draws continue over the coming weeks, the narrative that WTI (CL=F) is doomed to grind lower on excess supply becomes much weaker. A sustained pattern of draws at this scale would justify a trading band shifting from the current mid-$50s to low-$60s up toward the $60–$65 range for WTI and $65–$70 for Brent (BZ=F), even before Venezuelan volumes materially change.
At the same time, macro data on the demand side are mixed. The US manufacturing sector continues to contract according to the latest manufacturing PMI, and the factory orders growth rate for November also softened. The services sector, which represents the bulk of US GDP, has continued to grow, but only modestly in many months of 2025. A services-heavy expansion uses less diesel and petrochemicals per unit of GDP than a manufacturing-led cycle. That is the main structural constraint on a runaway oil bull market.

Central Bank Policy, Bond Yields, and the Price Band for Brent (BZ=F)

US monetary policy remains a critical input for oil. The central bank cut rates three times late in 2025, but inflation is still above the 2% target. Rate markets mostly expect the bank to hold at the upcoming meeting later in January, though traders are slowly pricing the probability of additional cuts by year-end.
Meanwhile, the 10-year US Treasury yield has fallen toward roughly 4.14% as weak economic data, including softer private-sector payrolls, nourished expectations that policymakers will have room to ease. Bond markets in Asia followed the move, with Australian and New Zealand debt rallying, while long-dated Japanese bonds held gains after a solid 30-year auction.
Lower yields and stable, if not booming, growth typically support risk assets and commodities through a weaker discount rate and a search for yield. For Brent (BZ=F), that means the current low-$60s band is underpinned by financial conditions: as long as real yields do not spike and global growth avoids a hard landing, dips toward the low-$50s are likely to attract buyers – especially if Venezuelan supply remains slow to ramp and Russian exports remain constrained by logistics and sanctions.

Iberian Downstream Restructuring: Galp–Moeve and Regional Demand for Crude

The planned merger of downstream operations between a major Portuguese energy group and Spanish refiner owners is another structural development that matters for crude flows into the Atlantic Basin. The partners intend to bundle their retail and refining businesses into two new entities, tentatively labelled RetailCo and IndustrialCo.
RetailCo would run an estimated 3,500 service stations, mostly across the Iberian Peninsula, while IndustrialCo would own and operate refining, petrochemical, and supply assets with a combined crude processing capacity near 700,000 barrels per day. This includes the Sines refinery in Portugal and three Spanish refineries, plus planned hydrogen and low-carbon fuel projects.
Both entities are expected to be self-funded, focus on efficiency gains, and pursue energy-transition-aligned investments. For Brent (BZ=F) and related grades, that means a more consolidated buyer with greater bargaining power and clearer optimisation of crude diets. The merger can reduce redundant capacity, cut costs, and improve utilisation across the system. A more efficient Iberian refining system tends to support steady crude intake even in the face of demand noise, which is constructive for medium-sour grades and for Atlantic Basin benchmark demand.
The transaction is not yet final. It requires due diligence, board approvals, and regulatory clearance, with a potential binding agreement targeted by mid-year. But the direction of travel is clear: consolidation and transition-focused capex rather than aggressive new fossil-only capacity. That supports refined margin resilience more than it drives incremental crude demand.

Technical Picture for WTI (CL=F): Sideways Bias Between $56 (S1) and $59.80 (R1)

On the daily chart for WTI (CL=F), price action remains bounded inside a well-defined range. Key levels are:
Support near $56.00 (S1), followed by $51.40 (S2) and $46.15 (S3) further below.
Resistance around $59.80 (R1), $62.40 (R2), and $66.20 (R3) on the upside.
Current trade is testing the $56.00 area, which has acted as first support. There is a visible downward trendline from late October, but crucially, price has struggled to form decisively lower troughs, suggesting selling pressure is losing momentum. As long as $56 holds and $59.80 caps rallies, the dominant pattern is a sideways consolidation band rather than a clean bear trend.
Momentum indicators confirm this neutral bias. The RSI on the daily chart sits just below the 50 line, indicating neither overbought nor oversold conditions. Bollinger Bands are narrowing, signalling reduced volatility and often preceding a larger directional break later. In this configuration, a sustained break below $56.00 would open room for a test of $51.40, while a clear move above $59.80 would target $62.40 and then $66.20.
In other words, the chart is telling you the same story as the fundamentals: the oil market has stopped collapsing, but it has not yet found a catalyst strong enough to start a sustained uptrend.

Fundamental–Technical Alignment: How Venezuela, Russia, and US Inventories Shape the Range

Three core forces now anchor the trading band for WTI (CL=F) and Brent (BZ=F).
First, Venezuelan supply is a huge medium-term bearish risk but a slow-moving one. The seizure of 50 million barrels and talk of raising output from 1 million bpd to 3 million bpd will cap expectations for a big, extended rally above the $70 area for BZ=F unless there are severe disruptions elsewhere. However, the time needed to repair infrastructure and secure corporate commitments prevents those barrels from crushing spot prices in the next quarter.
Second, Russian sanctions introduce upside risk. A shift from a price-cap regime to a full maritime services ban, on top of a dark fleet already managing 45% of flows and more than 550 ships under suspicion, raises the odds of lost barrels. If enforcement tightens, seaborne Russian exports could shrink, pushing Brent (BZ=F) toward the upper end of the current range or beyond, especially if demand surprises on the upside.
Third, US inventories and demand are currently supportive. Drawdowns of -2.8 million and -3.832 million barrels from key datasets underscore that the US market is tighter than consensus assumed. If draws persist and refinery runs remain strong, WTI (CL=F) has a solid floor in the low- to mid-$50s, with every dip toward $51–$52 likely to attract buying interest from physical players and macro funds positioning for a re-steepening of the curve.
These three forces broadly balance each other. The Venezuelan overhang leans bearish beyond the next 12–24 months; Russian sanctions lean bullish; US inventory draws lean modestly bullish; sluggish manufacturing offsets part of that positive story. The net result is a wide but defined sideways structure rather than a clear bear or bull market right now.

Trading Stance on Oil: WTI (CL=F) and Brent (BZ=F) — Bias to Hold with Tactical Bullish Trades

Given the data:
Spot levels near $56.97 for WTI (CL=F) and $61.09 for Brent (BZ=F).
Three consecutive annual losses, including a ~20% drop in 2025, already priced in.
US crude inventories drawing by more than 6.6 million barrels in one week.
Prospects of Venezuelan barrels increasing, but only after substantial capex and political risk management.
Russian flows subject to tightening sanctions and logistics friction.
Risk assets strong but with manufacturing indicators flashing caution.
The rational stance is Hold on a medium-term view, with a tactical bullish bias for dips rather than a structural bearish call. At current prices, downside toward $50 in WTI (CL=F) is conceivable if Venezuelan supply expectations accelerate or global growth disappoints, but the combination of US draws, sanctions risk, and a supportive rates backdrop makes a sudden sustained collapse less likely than in earlier phases of the cycle.
Short-term traders can justify buying WTI (CL=F) near the $56–$57 area with tight risk below $56.00, targeting the $59.80–$62.40 band, and selling strength toward the high-$60s unless there is concrete evidence of large, imminent supply disruptions. For investors with a longer horizon, the correct label on oil at these levels is Hold with selective accumulation on deep pullbacks, not an outright Sell, and not yet a full-throttle structural Buy until the Venezuelan path, Russian sanctions regime, and global growth trajectory become clearer in hard numbers.

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