Oil Muted as US Blockade on Venezuela Fails to Shake Surplus Fears
Energy stocks fall despite geopolitical flare-up, as traders weigh global oversupply concerns against a targeted squeeze on Venezuelan crude exports.
A dramatic escalation in U.S. pressure on Venezuela, including an order to blockade sanctioned oil tankers, failed to ignite a rally in energy markets on Tuesday, with traders appearing more focused on forecasts of a global supply glut than on the immediate geopolitical risk.
While benchmark crude prices saw a slight uptick, major energy stocks slid, signaling investor skepticism that the move will significantly disrupt global oil supply. Brent crude futures edged up just 0.4% to trade around $61.37 a barrel, a far cry from the sharp rallies that typically accompany major military actions in oil-producing regions. The muted response was more pronounced in equity markets, where major oil producers saw significant selling pressure. Shares of Chevron (CVX), which has unique U.S. authorization to operate in Venezuela, fell 2.04% to $146.75, while industry giant Exxon Mobil (XOM) dropped 2.62% to $114.68 in afternoon trading.
The White House announced the naval blockade as part of a broader anti-drug trafficking operation, but the action is widely seen as a tool to enforce petroleum sanctions against President Nicolás Maduro's government. The move follows the recent U.S. seizure of the 'Skipper', a tanker carrying nearly 2 million barrels of Venezuelan crude, which The Guardian reported was the first such capture since sanctions were imposed in 2019.
While the blockade introduces a new layer of maritime risk, its impact on global supply is being tempered by several factors. Analysts suggest the market reaction remains subdued because Venezuelan exports were already heavily constrained by existing U.S. sanctions. Furthermore, concerns about a potential global supply surplus in 2026 are overriding fears of a short-term supply shock.
The real impact is being felt acutely within Venezuela itself. The nation's oil exports are on pace to plummet to 702,000 barrels per day (bpd) in December, the lowest level since May, according to shipping data. The blockade has left a reported 11 million barrels of oil stranded on tankers in Venezuelan waters, with some vessel owners ordering abrupt U-turns to avoid confrontation, as detailed by MarineLink.
This has created a two-tiered system for Venezuelan oil. Chevron-chartered vessels, operating under a specific license from the U.S. Treasury, are among the only ones able to freely export crude. Meanwhile, other buyers on the black market are reportedly demanding deeper discounts to compensate for the elevated risk, further squeezing the nation's revenues.
Looking ahead, the key variable for Venezuela's energy sector will be its ability to import necessary diluents. The country's extra-heavy crude cannot be processed or exported without being mixed with lighter naphtha, which it primarily imports. A successful blockade of these inbound tankers could cripple Venezuela's production capabilities, forcing it to shut in wells if it cannot move its crude. For the global market, the muted reaction suggests that until a broader demand recovery takes hold, even significant geopolitical events may struggle to break oil out of its current range.