Will oil prices spike? Analysts explain Middle East implications after US strikes Venezuela

The January 2026 US military operation in Venezuela, culminating in President Nicolás Maduro’s capture, has reverberated far beyond geopolitics, drawing intense scrutiny from energy markets including in the Middle East, where oil remains the economic backbone of many nations. While headlines have fixated on the diplomatic fallout, analysts from UBS, Energy Aspects, Kpler and the International Energy Agency (IEA) have offered grounded insight into how this event really affects global oil pricing, supply and market risk, with clear implications for Gulf producers and consumers alike.

Immediate market reaction: Limited price shock, bigger “risk premium”

Despite Venezuela’s status as home to the world’s largest proven oil reserves, its current actual production is only about 900,000–1.1 million barrels per day, roughly 1% of global supply. This figure is far below its historic peak due to decades of underinvestment and sanctions.




Giovanni Staunovo, a strategist at Swiss bank UBS, told The National that because Venezuela is no longer a major exporter, “a US attack is unlikely to trigger a material supply crisis.” He noted that while the oil market could see short-term jitters, the impact on prices is modest because Venezuela’s exports are already under pressure from sanctions and logistical constraints.

Meanwhile, Vandana Hari, chief executive of Singapore-based Vanda Insights, described the oil price response as similarly muted, “There is not much beyond another uptick in the Venezuela risk premium,” reinforcing the idea that markets are pricing geopolitical uncertainty rather than immediate physical supply disruptions.

Why the global market is not in crisis even after the US action

A key reason for restrained market reaction is the ongoing global supply dynamics that have shaped oil pricing throughout 2025 and into 2026.

According to the International Energy Agency (IEA), the oil market was already forecast to be in surplus in 2026, with supply expected to exceed demand by several million barrels per day due to strong production from OPEC+, the United States and other non-OPEC producers. This oversupply undercuts the potential for a dramatic price spike even after geopolitical shocks.

This means that even though Venezuela’s political turmoil adds uncertainty, it arrives in a market where supply fundamentals are softening price pressures rather than amplifying them.

Middle East implications: Risk premium vs real supply

For Middle Eastern producers, this context matters. Gulf oil exporters including Saudi Arabia, the UAE and Kuwait, hold significant control over global supply capacity. Their combined output dwarfs Venezuela’s current contribution and tighter production coordination through OPEC+ has helped temper price volatility in recent years.

Even after the US action, an OPEC+ meeting in early January 2026 reaffirmed steady output levels, prioritising market stability as political uncertainties outweighed fundamental supply shifts. Jorge Leon, head of geopolitical analysis at Rystad Energy, noted, “Right now, oil markets are being driven less by supply-demand fundamentals and more by political uncertainty,” underscoring how Gulf producers are maintaining calm rather than reacting to headlines.

Heavy crude and refinery dynamics still matter

Although Venezuelan crude is a small part of global flows, its quality, predominantly heavy and sour, makes it a valuable feedstock for certain refineries, especially along the US Gulf Coast. This nuance emerged in detailed market commentary. Rystad Energy and others point out that Venezuelan heavy crude cannot be easily replaced by lighter grades, which could exert subtle pressure on specific market segments even if overall crude pricing stays stable.

From a Middle Eastern perspective, this is noteworthy because heavy crude from Saudi Arabia, Iraq and the UAE competes in many of the same refining markets. Any future shift in Venezuelan production, especially if sanctions are eased and output restored, could influence how heavy crude competes in Asia and the Americas, even if global price benchmarks remain anchored primarily by supply from the Gulf and other major producers.

Long-term uncertainties: Oil production revival and geopolitics

An Associated Press-cited analysis points to the long-term challenge that rebuilding Venezuela’s oil industry will require decades and tens of billions of dollars in investment, even under a favourable political environment. This means that while a restored Venezuelan role in global markets could eventually increase supply, it is not a near-term driver.

For the Middle East, this reinforces two key lessons for 2026. Short-term price responses remain muted because Venezuela’s current output is small and markets were already well supplied heading into the year. Long-term market dynamics could shift gradually only if Venezuelan production increases substantially, a process that is likely multi-year and contingent on political stability, legal clarity and major foreign capital inflows.

What Middle Eastern markets should watch next

Ongoing developments that Gulf investors and policymakers should monitor include:

• Sanctions policy changes and whether Venezuelan crude can legally access broader export markets.
• OPEC+ coordination and whether production policies adjust in response to geopolitical risk premiums.
• Heavy crude demand shifts, especially where US and Chinese refiners source their feedstocks.
• Global inventory levels and demand forecasts, which remain central to price formation beyond short-lived risk events.

Far from fuel-price shocks seen during past geopolitical crises, analysts from UBS, Vanda Insights, Rystad Energy and the IEA suggest the US attack on Venezuela is likely to have only limited short-term impact on oil prices because of existing oversupply and Venezuela’s small current production share. However, the event does heighten geopolitical risk premiums and underscores longer-term uncertainties about how and when Venezuela might re-enter global energy markets, a development that Middle Eastern oil producers and refiners will be tracking closely in 2026 and beyond.