Crude Oil Prices Under Pressure as Supply Glut Fears Grow for 2026

Crude oil prices remained under pressure in Asian trade on Tuesday, as market volatility eased after sharp swings earlier in the week. Brent crude traded near USD 61 per barrel, while US West Texas Intermediate hovered below USD 58. A stronger US dollar and profit-taking by investors weighed on prices, even as geopolitical risks continued to create short-term uncertainty.

Oil markets are also coming off their weakest annual performance in five years in 2025. Persistent worries about excess supply and slower demand growth have kept sentiment fragile, limiting the scope for a sustained recovery in prices.

Geopolitical Shock and Market Reaction

Global markets were unsettled by the recent capture of Venezuelan President Nicolás Maduro by US forces. The development briefly lifted oil prices as traders added a risk premium linked to potential supply disruptions. However, the rally proved short-lived as investors struggled to assess the real impact on global oil flows.

The United States has indicated that it may temporarily take control of Venezuela and open up the country’s oil sector to foreign investment. In theory, this could boost global supply over time. In practice, the situation remains highly uncertain due to political instability and the poor state of Venezuela’s oil infrastructure.

Venezuela’s Oil Industry Faces Major Hurdles

Venezuela holds the world’s largest proven crude oil reserves, but years of sanctions, mismanagement, and underinvestment have sharply reduced output. Even if restrictions are eased in the future, restoring production would require significant capital, technology, and time.

The appointment of an interim leader has not removed concerns about internal resistance or prolonged instability. This uncertainty is likely to discourage international oil companies from making quick investment decisions. As a result, any meaningful increase in Venezuelan oil supply is unlikely in the near term, keeping short-term supply risks elevated.

Rising Global Supply and Weak Demand Outlook

Beyond Venezuela, broader market dynamics are adding pressure to crude oil prices. Production from non-OPEC countries continues to rise, while demand growth remains modest. Improvements in energy efficiency and a gradual shift towards alternative energy sources are also limiting long-term demand growth.

These factors have fuelled concerns about a global supply glut emerging in 2026. With supply expected to outpace demand, markets are finding it difficult to sustain higher price levels despite ongoing geopolitical tensions.

Read more: Top SIP Stocks for January 2026: Hindalco, BEL, NTPC, and Others Based on 5Y CAGR and D/E Ratio.

Conclusion

Crude oil prices are being shaped more by long-term supply and demand fundamentals than by short-lived geopolitical shocks. While developments in Venezuela have added uncertainty and volatility, they have not changed the broader outlook. With rising global supply and restrained demand growth, oil prices are likely to remain under pressure through 2026.

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