Insights 
VT 
The US government’s stricter approach towards Venezuela has yet to visibly impact oil production. Despite the closure of Venezuelan airspace, oil production remains steady, as November oil exports rose to 590,000 barrels per day. This level offsets concerns about US pressure on President Maduro.
The closure of airspace and increased US presence in the Caribbean have not disrupted oil production significantly. October’s oil production reached 950,000 barrels per day, only 50,000 barrels short of the 5½-year high seen in September. Export data indicates that November exports were 160,000 barrels higher than in October.
Market Observations
Market observations noted that the ongoing tensions between the US and Venezuela have not influenced oil prices noticeably. Efforts by the US, primarily aimed at tackling drug trafficking, have thus far not affected Venezuela’s oil export activity significantly. These developments highlight the resilient nature of Venezuela’s oil sector amidst geopolitical tensions.
We are seeing a familiar pattern with US-Venezuela tensions, but the market context is different now in late 2025. A few years back, we saw similar escalations fail to disrupt Venezuelan oil exports, which actually rose at the time. This history suggests we should be cautious about reacting to political statements alone.
Today, Venezuelan production is more significant than it was during its lowest points, with recent industry trackers putting November 2025 output at around 870,000 barrels per day. The current administration’s threat to re-impose sanctions if certain political conditions are not met by year-end is creating uncertainty. However, the spot price for WTI crude has remained stable near $82 per barrel, indicating traders are waiting for concrete actions rather than rhetoric.
Broader Market Context
The broader market is much tighter than it was in the past, especially after the latest OPEC+ meeting confirmed production cuts will extend through the first quarter of 2026. This tight supply backdrop means any actual disruption from Venezuela would have a more pronounced effect on prices. Therefore, an actual drop in Venezuelan exports could quickly add a $5-$7 risk premium to crude prices.
For derivative traders, this means outright long positions in futures may be premature. A more prudent approach in the coming weeks is to use options to position for potential upside with defined risk. Buying near-term call options on WTI or Brent allows us to capture a sharp rally if sanctions are re-imposed and enforced, while limiting our potential loss to the premium paid.
We should also pay close attention to implied volatility in the options market. Even if spot prices are calm, a rise in implied volatility would signal that the market is beginning to price in a higher probability of a large price swing. This could be an early indicator to establish positions, perhaps through strategies like call spreads to lower entry costs, before any official announcement is made.
