WTI falls to near $57 as US pledges to build Venezuela Oil infrastructure
- The Oil price declines to near $57.00 as the US vows to restructure Venezuela’s Oil industry.
- The US led Venezuela takeover is unlikely to bring an immediate knee-jerk reaction on the Oil price.
- OPEC decided to leave Oil production targets unchanged in January’s meeting on Sunday.
West Texas Intermediate (WTI), futures on NYMEX, trades 0.4% lower to near $57.00 in the late Asian trade on Monday. The Oil price is under pressure after the United States (US) struck Venezuela to capture President Nicolas Maduro against drug-trafficking charges, and vowed to restructure its Oil industry, a move that could increase the global crude supply.
While speaking with reporters at his Mar-a-Lago club on Saturday, US President Donald Trump said that he will bring major American oil companies into Venezuela to build their infrastructure and will sell Oil to other countries.
According to the London-based Energy Institute, Venezuela’s Oil industry accounts for 7% of global reserves or 303 billion barrels.
Currently, Venezuela produces under one million barrels per day of crude oil and exports about 0.5 million barrels per day (bpd), according to Dow Jones Newswires.
Market experts believe that the impact of the US-led takeover of Venezuela won’t bring an immediate knee-jerk reaction on the Oil price, given that the overhaul of the Venezuela’s Oil industry won’t be done overnight.
Meanwhile, the OPEC decided on Sunday to leave the Oil output unchanged again, and didn’t discuss any impact of the US’ pledge to build Venezuela’s Oil infrastructure, CNBC reported. In 2025, OPEC+ members raised oil output targets by around 2.9 million bpd in the first ten months, and kept production targets steady in November and December meetings.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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