Oil and gas markets opened 2026 under heavy pressure as rising supply met weakening demand, dulling the impact of political shocks that would normally send prices higher.
Brent crude pricing hovered just above $60 a barrel in the first full trading week of the year, despite U.S. strikes in Venezuela and the arrest of President Nicolas Maduro. Markets largely shrugged off the developments, signaling that global supply remains the dominant force.
“This year, oil prices will need a much more major disruption to rebound,” analysts said, noting that any recovery in Venezuelan output would likely add supply rather than remove it.
U.S. President Donald Trump said American oil firms would invest billions to repair Venezuela’s damaged oil infrastructure. However, analysts warned that restoring output would require sustained capital and political stability. The Wall Street Journal cited estimates of $10 billion per year to revive production, while Jefferies said investment would depend on U.S. government guarantees.
OPEC+ Policy Fails to Shift Market Sentiment
The latest meeting of OPEC+ production policy reaffirmed a pause in output increases. The move had little effect. Oil benchmarks fell nearly 20% in 2025 despite earlier supply cuts, leaving traders unconvinced that restraint alone can tighten markets.
Data from Kpler shows oil volumes stored on tankers have risen to their highest level since April 2020. While some of that oil is in transit, the overall scale has raised concerns about excess supply.
Europe buys less US crude despite commitments
The European Union pledged to buy $750 billion in U.S. energy over three years. In reality, purchases fell. The EU imported 1.73 million barrels per day of U.S. crude in 2025, down from 1.91 million a year earlier.
LNG imports rose sharply, climbing from 45.14 million tons in 2024 to 72.24 million tons in 2025. Even so, total U.S. energy imports reached just $82.3 billion, far below the $250 billion implied by annual commitments.
U.S. LNG export capacity faces margin risk
New U.S. LNG export capacity is entering the market as European prices weaken. Analysts warn that falling spreads between U.S. gas prices and the European TTF gas benchmark could force exporters to curb output.
“Margins have come back to normal levels,” MST Marquee’s Saul Kavonic told Reuters, adding that if spreads fall below $4 per mmBtu, many exporters would scale back production.
For now, energy markets are signaling a familiar message, there is simply too much supply.
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