Crude oil prices have remained largely range-bound despite heightened geopolitical tensions following US political intervention in Venezuela, as markets adopt a cautious wait-and-watch approach amid uncertainty over the country's leadership and oil output prospects.

Current Price Action Shows Modest Movement

Brent crude futures rose 17 cents to $60.92 per barrel, while US West Texas Intermediate crude climbed 11 cents to $57.43 per barrel. The modest gains reflect market uncertainty rather than panic, with both benchmarks having recorded steep annual losses of nearly 20%, marking their biggest decline since 2020.

Expert Analysis Points to Political Vacuum

Vandana Hari, Founder of Vanda Insights, told ET Now that the oil market is grappling with "a power vacuum and political abyss" in Venezuela, with conflicting signals emerging from Washington and Caracas. While US President Donald Trump suggested temporary US oversight of Venezuela's transition, subsequent remarks from US officials indicated a more complex path ahead.

Vice President Rodriguez and senior military officials in Venezuela have reiterated support for President Nicolás Maduro, signalling resistance to US influence. Meanwhile, US Secretary of State Marco Rubio confirmed that sanctions and restrictions on Venezuelan oil exports remain firmly in place.

Production Impact Remains Limited

Venezuela currently produces an estimated 600,000-700,000 barrels per day, down sharply from nearly one million barrels per day earlier. State-run oil company PDVSA has asked joint venture partners to cut output after running out of storage capacity, pointing to continued disruption rather than any near-term supply surge.

Hari noted that even a worst-case scenario involving complete shutdown of Venezuelan production—around 900,000 barrels per day—would be only "moderately bullish" for global oil prices given the well-supplied market conditions.

Long-term Recovery Prospects Remain Distant

Commenting on President Trump's remarks about US oil companies entering Venezuela, Hari cautioned that such developments are highly aspirational for near-term pricing. "Restoring Venezuela's oil infrastructure would require investments running into hundreds of billions of dollars," she explained, adding that US oil majors would first demand political stability, regulatory clarity, and predictable fiscal regimes.

Even under favorable conditions, tapping Venezuela's vast oil reserves would span five to ten years or longer, making any significant supply impact a distant prospect.

Market Outlook Balances Multiple Factors

For India and global markets, the impact of Venezuelan uncertainty remains marginal as oil markets continue being driven by broader supply-demand fundamentals rather than isolated geopolitical events. With crude prices showing only modest upticks of 30-40 cents, experts expect volatility to remain contained unless disruptions escalate significantly.

The Organization of the Petroleum Exporting Countries and allies maintain current production levels amid ongoing market uncertainty, while analysts monitor potential developments in other oil-producing regions for broader market implications.

Oil prices settled more than 2% lower on Friday as investors weighed concerns over a looming global supply glut while monitoring potential developments in Ukraine peace negotiations. The decline comes amid broader market concerns about oversupply conditions and geopolitical developments that could impact future oil pricing dynamics.

Market Performance and Price Movements

Crude oil futures experienced significant declines across major benchmarks on Friday's trading session:

Despite recent rebounds from supply disruptions that helped prices recover from their near five-year low on December 16, both benchmarks remain on track for their steepest annual decline since 2020. Year-to-date performance shows Brent down 19% and WTI declining 21%, primarily attributed to rising crude output and growing concerns about market oversupply.

Global Supply Outlook and Market Fundamentals

The oil market faces significant oversupply challenges heading into next year, according to international energy forecasts. The Paris-based International Energy Agency's December oil market report projects global oil supply will exceed demand by 3.84 million barrels per day next year, highlighting the scale of the supply imbalance facing the market.

Aegis Hedging analysts noted in their Friday assessment that "geopolitical premiums have provided near-term price support, but have not materially shifted the underlying oversupply narrative." This analysis underscores how fundamental supply-demand dynamics continue to weigh on oil prices despite temporary geopolitical support factors.

Ukraine-Russia Peace Process Developments

Market participants are closely monitoring developments in the Russia-Ukraine peace process and their potential impact on future oil pricing. Ukrainian President Volodymyr Zelenskiy is scheduled to meet with U.S. President Donald Trump in Florida on Sunday to discuss territorial issues, which represent the main stumbling block in negotiations to end the conflict.

Key developments in the peace process include:

• A 20-point peace framework nearing completion
• Security guarantees deal approaching finalization
• Zelenskiy's statement that "a lot can be decided before the New Year"
• Ukrainian president's willingness to call a referendum on an agreed peace framework if Russia agrees to a ceasefire

The Kremlin confirmed on Friday that a foreign policy aide to Russian President Vladimir Putin spoke with members of the U.S. administration after Moscow received U.S. proposals about a possible Ukrainian peace deal. A potential peace agreement could lead to the removal of international sanctions against Russia's oil sector, which would have significant implications for global oil supply dynamics.

Additional Market Factors

The White House has ordered its military forces to focus on a "quarantine" of Venezuelan oil for at least the next two months, indicating Washington's preference for economic rather than military pressure on Caracas. However, market analysts suggest the global impact on crude prices from U.S. actions to intercept sanctioned oil tankers leaving and entering Venezuela appears minimal at this time.

Dennis Kissler, senior vice president of trading at BOK Financial, summarized the current market sentiment: "The negatives remain of elevated global oil storage, and slight progress on Ukraine-Russia peace talks." Despite headline risks pertaining to Venezuela, Aegis Hedging analysts note that the broader market remains focused on the growing global surplus, which continues to be the primary driver of price weakness in the oil market.

Oil India , along with other oil companies, is likely monitoring these global developments closely as they may impact future market conditions and pricing strategies.