Global oil markets are preparing for a volatile start to the week after the United States carried out a major military operation in Venezuela, a country that holds the world’s largest oil reserves. The sudden escalation has injected fresh geopolitical risk into energy trading, raising concerns about supply security and market stability.
Crude oil prices are widely expected to open higher on Monday, January 5, as traders react to the uncertainty created by the conflict. On Friday, Brent crude futures ended just below $61 a barrel, while West Texas Intermediate closed above $57 in relatively subdued trading. However, the situation changed dramatically after news of the US action broke over the weekend.
Market experts believe the shock could push prices sharply upward. Anuj Gupta, Director of Ya Wealth, said that geopolitical tensions typically increase risk premiums across commodity markets. He added that crude oil, along with gold, silver, copper and gasoline, could see a gap-up opening when trading resumes. According to him, Brent crude may test the $62 to $65 per barrel range if uncertainty continues to dominate market sentiment.
Venezuela plays a critical role in the global energy landscape. The country holds more than 300 billion barrels of proven oil reserves, making it the largest oil-rich nation in the world, even ahead of Saudi Arabia. A large portion of this oil lies in the Orinoco Belt, a vast region that has remained underdeveloped due to years of sanctions, political instability and lack of investment. Despite its enormous reserves, Venezuela’s oil production has dropped to around one million barrels per day, making any disruption in the country a serious concern for global supply.
Some analysts believe the conflict goes beyond politics and is rooted in control over energy and financial influence. Sandeep Pandey, Co-founder of Basav Capital, said Venezuela’s past efforts to challenge the dominance of the US-led petro-dollar system may have made it a strategic target. He pointed out that recent comments from US leadership about controlling Venezuelan oil resources have only strengthened that view.
While the developments have rattled global markets, India is unlikely to face a major economic impact. According to the Global Trade Research Initiative, India significantly reduced its oil imports from Venezuela after US sanctions came into force in 2019. Although Indian companies once had upstream investments in Venezuelan oil fields, trade ties have steadily declined. Today, India imports only limited quantities of crude from the country, making it largely insulated from the current crisis.
Still, the global oil market remains sensitive to geopolitical shocks, and traders will closely monitor how the situation unfolds. If tensions between the US and Venezuela intensify further, supply risks could increase, keeping oil prices under upward pressure. All eyes will now be on the opening of Asian markets, where the first clear reaction to the crisis is expected to emerge.