CARACAS, Jan 5, 2026, 02:46 ET — Market closed
- PDVSA has begun curbing crude output as a U.S. oil embargo and tanker blockade leave storage close to full, sources said
- Brent and U.S. crude edged lower as traders bet any near-term supply hit is limited in a well-supplied market
- Investors are watching a U.S. court hearing for Nicolas Maduro on Monday and any shift in U.S. sanctions policy
Venezuela’s state oil company PDVSA has started cutting crude production as it runs short of storage space under a sweeping U.S. oil embargo and tanker blockade that has pushed exports to zero, people familiar with the matter said. More than 17 million barrels of crude and fuel are stuck on ships waiting to depart, according to tanker-tracking data. 1
The move matters for markets because Venezuela’s oil sales are the country’s main source of hard currency, and PDVSA’s forced shut-ins risk spilling into refining and domestic fuel supply in the coming days. It also lands at the start of the first full trading week of 2026, when investors are recalibrating geopolitical risk after Washington’s weekend raid that seized President Nicolas Maduro and his wife. 1
Oil traders, for now, are treating the Venezuela shock as more of a policy story than an immediate supply shock. In a market with ample global supply, the bigger swing factor is whether U.S. sanctions stay tight or shift toward allowing foreign firms to restart and expand Venezuelan output over time. 2
Brent crude futures fell 0.4% to $60.54 a barrel by 4:52 GMT, while U.S. West Texas Intermediate was down 0.5% at $57.04, after President Donald Trump said the U.S. embargo on Venezuelan oil remained in full effect. 2
Chevron shares (CVX) last traded at $155.90, up about 2.3% from the prior close, after the company’s Venezuela-linked cargoes were halted by the embargo, according to market data. 1
PDVSA’s cuts include shutting down oilfields and well clusters, and requesting reductions at joint ventures that include China National Petroleum Corporation’s Petrolera Sinovensa and several Chevron-linked projects, people familiar with the operations said. Venezuela’s extra-heavy crude typically needs imported “diluents” — lighter hydrocarbons used to thin it for pipeline transport and export — and PDVSA has struggled to source them under the blockade. 1
Chevron said on Sunday it continues to operate “in full compliance with all relevant laws and regulations,” without giving details. Shipping data showed its tankers have not left Venezuelan waters since Thursday, even though loading has continued at some facilities, and storage limits could force output cuts if the logjam persists, sources said. 1
PDVSA’s operational strain has been compounded by a December cyberattack that workers said left systems only partly restored. The company has also faced problems receiving the naphtha and light oil it had been importing — including from Russia — to keep blending operations running, according to the sources. 1
Analysts said the longer-term price implications could run in the opposite direction if Washington moves from embargo enforcement to sanctions relief and investment openings. JPMorgan analysts projected Venezuela could lift output to 1.3–1.4 million barrels per day within two years under a political transition, while Goldman Sachs estimated a $4-per-barrel downside to 2030 prices in a scenario where Venezuelan output rises to 2 million bpd; Goldman kept its 2026 average forecasts at $56 for Brent and $52 for WTI. 3
But the near-term path is messy: deeper shut-ins remain possible if storage fills and diluent supplies stay constrained, while a sudden loosening of sanctions could prove difficult to implement amid political instability and legal fallout from the raid. “All bets are off in a chaotic change of power scenario like what occurred in Libya or Iraq,” Helima Croft, head of commodities research at RBC Capital Markets, said. 2
The next test comes later Monday, when Maduro is scheduled to appear in Manhattan federal court at 12:00 p.m. EST, and when the U.N. Security Council is set to discuss the U.S. attack. Traders will also watch for any new U.S. guidance on sanctions and licenses, and for signs in tanker movements that PDVSA’s export freeze is easing or tightening. 4
