The geopolitical risk premium is fading, leaving the market to face a bearish physical reality.
Oil prices drifted lower on Monday (Brent ~$63, WTI ~$59) as traders assessed the cooling of immediate supply threats in Iran and the imminent return of Venezuelan barrels to the US market.
🇻🇪 THE VENEZUELA PIVOT: Following the ouster of Nicolas Maduro, a massive logistics scramble is underway.
- The Volume: The US administration stated that up to 50 million barrels of sanctioned oil will be turned over to the United States.
- The Logistics Race: Trading giants Trafigura and Vitol are reportedly moving swiftly to secure vessels. Trafigura expects to load its first cargo as early as next week, signaling a rapid return of Venezuelan crude to the global pool despite dilapidated port infrastructure.
🇮🇷 THE IRANIAN SITUATION:
- The Narrative: Foreign Minister Abbas Araqchi declared the situation “under total control” following widespread anti-government protests, easing fears of an immediate supply disruption.
- The Risk: President Trump has warned of “military intervention” if the crackdown turns violent, keeping a floor under prices despite the government’s claims of stability.
📉 THE GOLDMAN SACHS OUTLOOK: Despite the headlines, the medium-term view remains bearish due to a structural surplus.
- 2026 Forecast: Maintained average price targets of $56 (Brent) and $52 (WTI).
- The Trajectory: Analysts expect prices to bottom in Q4 2026 (hitting $54/$50) as OECD inventories build up, driven by a wave of new supply that outweighs geopolitical disruptions.
💡 ANALYST TAKEAWAY: The market reaction (prices falling despite regime change in two major OPEC nations) confirms that Supply Glut fears are currently overpowering Geopolitical Risk. With 50 million barrels of Venezuelan crude hitting the water and Russian/Iranian supply remaining offline only in theory, the path of least resistance for 2026 appears to be lower.
👇 Energy Traders: Can the market absorb 50M barrels of Venezuelan crude without breaking the $60 support level?