Oil prices climb after Trump's Venezuela raid as investors eye global supply

• Oil prices extended gains throughout Monday trading after initially falling over the weekend.
• The US captured Venezuelan President Maduro, and President Trump touted billions in potential oil investment.
• Any rebound in Venezuelan production could deepen an ongoing long-term decline in oil prices.

Oil futures gained in volatile trading on the first day since the US captured Venezuelan President Nicolas Maduro over the weekend.

US benchmark West Texas Intermediate crude oil futures fell as much as 1.4% in the opening hour of trading on Sunday evening before climbing more than 2% at Monday session highs.

International benchmark Brent crude futures were 1.7% higher on Monday afternoon at $61.75 a barrel after initially falling as much as 1.2%.

The oil market has been under pressure, with crude prices falling 20% last year. A main issue facing the market is an oversupply of global crude. It's been a focus of OPEC+, which also over the weekend said it will refrain from pumping new oil during the first quarter.

Despite Venezuela's vast oil reserves — estimated at about one-fifth of the global total — the country's output accounts for less than 1% of global daily oil production, reflecting years of aging infrastructure and the impact of sanctions.

Against that backdrop, President Donald Trump said on Saturday that US oil companies will invest billions of dollars in Venezuela.

If Venezuelan oil production does pick up, analysts say it could take time and big money.

"It will take tens of billions of dollars in investment and at least a decade of Western oil majors committing to the country," wrote Peter McNally, the global head of sector analysts at research firm Third Bridge, on Sunday.

McNally added that there are no swift solutions for Venezuela, where years of underinvestment have eroded infrastructure across the economy, and a severe power crisis continues to disrupt daily life.

Analysts at Goldman Sachs echoed that view in a Sunday note, writing that "higher recovery rates of heavy Venezuela oil will likely require financial and time investments in oil-processing upgraders and improvements in operational efficiencies, power availability, and oil transporting infrastructure."

Venezuela produced around 3 million barrels a day of oil at its peak in the mid-2000s.

Even before the US captured Maduro, Venezuela's oil exports had already come under pressure after Trump imposed a blockade of sanctioned oil tankers entering or leaving Venezuelan waters last month. The blockade remains in place.

Goldman Sachs said the latest developments increase the likelihood of a shift toward a policy environment more supportive of oil investment, even as short-term changes to oil flows — including both modest increases and further disruptions — remain possible.

The developments are negative for oil prices over the long run, as any sustained increase in Venezuelan output would add to already ample supply at a time of slowing demand growth, according to Goldman.

"Production may edge up slightly in the short run, including in a scenario with a US-supported government and full sanctions relief. Alternatively, disruptions to Venezuela oil deliveries could continue and/or intensify in the short-run, for instance because Maduro's cabinet has asserted its control," wrote Goldman's analysts.

Goldman estimates WTI and Brent to average $51 a barrel and $58 a barrel, respectively, should Venezuelan crude production fall by 400,000 barrels a day by the end of 2026.

Should the country's crude production rise by 400,000 barrels a day instead, WTI and Brent are expected to average $50 a barrel and $54 a barrel, respectively, in 2026, the analysts added.