Venezuela, Iran could further pressure oil prices in 2026

We won’t know how traders will ultimately price in the U.S. moving to effectively take control of Venezuela’s oil at precisely the moment when the global system is struggling to absorb existing supply—let alone more—the until oil markets reopen Sunday night. But the early implication is clear: A market already leaning toward surplus now has even fewer reasons to expect relief.

Even before the latest developments in Caracas, forecasts from the International Energy Agency, the U.S. Energy Information Administration, and major investment banks were converging on a projected surplus of roughly 1.5 to two million barrels a day in 2026. That outlook follows a steep 20% decline in crude prices in 2025, as OPEC+ began unwinding production cuts and additional supply hit a market already showing signs of fatigue. As prices fell, the cartel slowed the pace of further adjustments and has more recently held output steadier, reducing its capacity—or willingness—to absorb new barrels.

Non-OPEC supply growth from the U.S., Brazil, Guyana, Canada, and Argentina is expected to remain the dominant source of global production growth into 2026, while global demand growth is forecast to remain modest.

The timing of the U.S. move in Venezuela matters as much as the move itself. The country holds more than 300 billion barrels of proven reserves, but production has been stranded near one million barrels a day for years due to underinvestment and infrastructure decay. While meaningful output gains would still require years of capital and political stabilization, U.S. involvement reshapes long-term expectations. For oil markets, even the outline of such a pathway signals that a massive pool of sidelined supply may no longer be permanently off the table.

At the same time, other sanctioned producers are reassessing their options. Iran, in particular, represents a more immediate and flexible supply risk. Iranian crude exports have already rebounded to roughly 1.5 to two million barrels a day, near multiyear highs, largely flowing to China under uneven sanctions enforcement.

After mid-2025 direct strikes exposed the limits of Iran’s longstanding “forward defense" strategy built around regional proxies, some analysts argue Tehran is under pressure to prioritize economic stability over confrontation.

The economy has deteriorated sharply, with inflation high and the currency under strain, increasing the regime’s dependence on oil revenue. The antigovernment protests in Iran are likely to up the pressure to relieve the economic stress most of the nation’s citizens are feeling.

As a result, Iran could shift toward a more transactional posture, one focused on monetizing energy rather than escalating conflict. That need not involve a revived nuclear deal. Even looser U.S. enforcement, limited waivers, or tacit tolerance could allow more Iranian barrels to move into formal markets.

“Combined with rising and significant odds of a change of national policy in Iran, the long-term outlook for global oil supply is improving, and market expectations of a glut may be reinforced," said Matt Gertken, chief geopolitical strategist at BCA Research.

Because Iran’s oil infrastructure is far better maintained than Venezuela’s, even modest policy shifts could translate into hundreds of thousands of barrels a day returning to the market on a much shorter timeline.

Oil prices don’t need a flood of new supply to fall. They only need the belief that scarcity is fading. As the market opens for the week, that belief is getting harder to dismiss.

Write to Laura Sanicola at laura.sanicola@barrons.com