Oil Prices Rebound as Investors Track Venezuela Developments and Progress on U.S. Sanctions Against Russia

Oil prices rebounded on Thursday after sliding earlier in the week, as traders and investors closely tracked escalating geopolitical developments involving Venezuela and the progress of a new U.S. sanctions bill targeting countries that continue energy deals with Russia.

The international benchmark Brent crude rose by roughly 1.7–2%, trading above $60 per barrel, while U.S. West Texas Intermediate (WTI) crude jumped nearly 2%, moving back above $56–$57 a barrel in mid-day trading. The gains marked a bounce after two consecutive sessions of weakness that had reflected persistent concerns about ample global supply. 

One major factor lifting oil prices was renewed focus on pending U.S. sanctions legislation aimed at widening penalties on nations and companies that do business with Russia’s energy sector. Republican Senator Lindsey Graham said President Donald Trump has authorised the bill’s advancement, potentially paving the way for a vote as soon as next week. Market analysts interpreted this as a sign that further limits on Russian crude exports could come into force. 

Heightened sanctions rhetoric tends to tighten expectations around Russian oil availability, underpinning crude prices even as global supply fundamentals remain soft.

Venezuela has taken centre stage in risk pricing across oil markets. Recent moves by the United States — including the seizure of Venezuela-linked oil tankers, one of which was sailing under a Russian flag — have amplified fears of supply disruptions. Although Venezuela currently accounts for a modest portion of daily global oil output, traders increasingly view instability there as a potential wildcard for market balance. 

Reports suggest that the U.S. government is negotiating arrangements that could give American companies access to $2 billion worth of Venezuelan crude and potentially reroute supplies originally bound for China to U.S. ports, altering long-established trade flows. 

Moreover, U.S. policymakers have reportedly discussed efforts to exert long-term control over Venezuelan crude sales under a new political order in Caracas, which has further fuelled market attention. Such plans could reshape the way Venezuela’s once-globally significant oil reserves are marketed and managed. 

•U.S. inventory data provided a supportive backdrop: crude stocks unexpectedly declined last week, suggesting tighter immediate supply than analysts had predicted. However, gasoline and distillate inventories rose more than expected, indicating mixed signals on refined product demand. 

•Despite these draws, global markets are still expected to face a significant oversupply in early 2026, with some forecasters predicting a surplus of up to 3 million barrels per day. This surplus reflects continued high output from major producers outside geopolitical flashpoints, including OPEC+ members and U.S. shale producers. 

The oil market’s sensitivity to geopolitical risk is being underscored as the U.S. engages more assertively in Venezuela while also tightening the screws on Russia’s energy exports. Both dynamics feed into a broader narrative of energy being used as a tool of U.S. foreign policy, with potential ripple effects on trade patterns, refinery throughput and financial markets.

With Venezuela’s oil industry still struggling after years of sanctions and underinvestment, even small disruptions or reconfigurations of supply chains carry outsized psychological impact on markets — often disproportionate to their immediate volume consequences. Analysts note that price movements currently reflect risk premiums and uncertainty, rather than clear shifts in physical supply and demand fundamentals. 

In the near term, the oil market looks poised for continued volatility:

•Heightened geopolitical risk premiums in energy prices as Washington advances sanctions and restructures relations with Venezuela.

•Oversupply pressure lingering from strong global production outside of conflict zones.

•Traders balancing inventory data, refinery throughput and growing macroeconomic concerns — especially in major consuming regions like China and the U.S.

In this dynamic environment, oil prices are likely to remain sensitive to both political headlines and economic data, with any escalation in sanctions or disruptions potentially pushing prices higher, even as the underlying balance remains soft.