Oil Holds Biggest Gain in a Week as Venezuela and Glut in Focus

Core Viewpoint - Oil prices are experiencing slight increases amid geopolitical risks and ongoing concerns about a global surplus in oil supply [1][2]. Group 1: Oil Price Movements - Brent crude oil is trading near $62 per barrel, having closed 1.7% higher in the previous session [2]. - The market is currently facing a significant surplus, which is expected to expand in the first half of the year and peak mid-year, leading to a reduction in price forecasts for the first three quarters of 2026 by Morgan Stanley [4]. Group 2: Geopolitical Factors - The ousting of Venezuelan leader Nicolás Maduro has led to discussions among companies regarding Venezuela's energy sector and potential talks with Washington [2][6]. - There are ongoing tensions in the Middle East, particularly with Israel's stance on Iran's ballistic missile program, which adds to the geopolitical risks affecting oil prices [2]. Group 3: Venezuela's Oil Production - Venezuela's oil exports have halved due to ongoing US sanctions, and the country now accounts for less than 1% of global oil supplies, a significant decline from its previous status as a major oil producer [5]. - Chevron Corp. remains the only American major operating in Venezuela under special US permission, indicating limited foreign investment in the country's energy sector [5]. Group 4: Market Reactions - Hedge funds have increased bullish bets on crude oil to the highest level since November, reflecting market speculation about potential actions against Venezuela [7]. - Shares in American oil firms rose on the prospects of reviving Venezuela's energy sector, following discussions about possible US subsidies to support rebuilding efforts [6].