(Source: Jiemian News 2026-01-08)
Recently, Venezuela and Iran, two members of the Organization of the Petroleum Exporting Countries (OPEC), are in political turmoil. However, international oil prices have fallen instead of rising. In this regard, analysts said that the current global energy supply structure has undergone major changes, and the oil market is bidding farewell to the old era dominated by geo-premiums and entering a new stage based on fundamental supply and demand pricing. Against the backdrop of the current oversupply of crude oil, international oil prices will continue to remain depressed in 2026.
The geopolitical situation has been turbulent since last week. First, Iran experienced the largest domestic protests in three years, and US President Donald Trump threatened to intervene. Then over the weekend, the United States raided Venezuela and announced that it would take over the country's oil industry. However, the overall performance of international oil prices was uneventful.
On Monday, affected by the U.S. military attack on Venezuela, the New York Mercantile Exchange (NYMEX) light sweet crude oil (WTI) futures contract rose 1.8%, reversing the previous three consecutive days of decline. However, the good times did not last long, falling by 2.3% and 1.3% respectively in the next two days. As of around 10:20 on January 8, Beijing time, the WTI crude oil futures contract rose 0.6% to US$56.35 per barrel.
In the past, geopolitical unrest has been an important catalyst for higher oil prices. For example, the Islamic Revolution in Iran in 1979 and the attempted coup against then-President Hugo Chavez in Venezuela in 2002 caused oil prices to soar by nearly 150% and 40% respectively within a few months.
However, the impact of geopolitical conflicts on oil prices has subsided significantly in recent years. In September 2019, Saudi Arabian Oil Company (Aramco)'s Abqaiq refinery and Khurais oil field were attacked by drones, causing Saudi Arabia's daily crude oil production to drop by 5.7 million barrels, accounting for about 6% of the global daily supply at the time. However, oil prices only fell after two days of highs. In 2025, the global geopolitical situation continues to be turbulent, the conflict between Russia and Ukraine continues to escalate, and the conflict between Iran and Israel in the Middle East has reached the brink of war. Even so, international oil prices continued to fall throughout the year, with WTI crude oil futures falling by nearly 20% and Brent crude oil futures falling by more than 18%.
Analysts pointed out that behind this is a major change in the global energy supply structure - oil has been significantly replaced by some non-fossil products, leading to a fundamental reversal of the traditional geopolitical risk premium logic.
“I made this judgment ten years ago that traditional geopolitical risks will basically have no effect on oil prices.” Xu Qinhua, director of the Center for International Energy Strategy at Renmin University of China, told Jiemian News, “The biggest reason is that the global energy structure has undergone overall changes, and oil has been significantly replaced by some non-fossil products. For example, traditional conventional crude oil has been largely replaced by unconventional US shale oil and gas.”
The U.S. shale oil revolution began in the late 1990s. This wave of unconventional oil and gas development driven by technological breakthroughs has profoundly changed the U.S. and global energy landscape. The United States transformed from one of the world's largest oil importers to a major global producer and exporter of oil and natural gas. In 2013, U.S. oil production was 7.5 million barrels per day, of which shale oil production accounted for approximately 45%. By 2023, U.S. oil production will reach 12.9 million barrels per day, with shale oil production accounting for more than 65%. For the global energy market, shale oil has broken OPEC's monopoly on crude oil supply and prices, making the global energy supply more multi-polar and enhancing market flexibility. From a geopolitical perspective, the extensive development and use of shale oil has greatly enhanced the United States' initiative in energy diplomacy, giving it more confidence to impose sanctions on oil-producing countries such as Iran and Russia.
"If geopolitics still maintains its dominant role in oil prices, the United States will definitely not dare to raid Venezuela." Xu Qinhua said that even in the Chávez era when relations between the two sides were more sour, the United States still needed to import Venezuelan heavy oil. Now the United States is no longer dependent on this commodity, which has led to its foreign policy becoming more arbitrary.
Zhu Zhaoyi, associate researcher on world economy at Peking University HSBC Business w88 casino think tank, pointed out that in addition to U.S. shale oil, emerging oil-producing countries are also a force that cannot be ignored. In 2025, Brazil put a number of offshore deepwater oil fields into production, and in October of that year, daily crude oil production exceeded the 4 million barrel mark for the first time in history. In 2020, Guyana started the development of offshore oil fields, and its annual production increased nearly tenfold within five years. The average daily crude oil production in 2025 will be about 750,000 barrels, with a peak of more than 900,000 barrels at the end of the year, making it a "dark horse" that cannot be ignored.
A report released by the U.S. Energy Information Administration in December 2025 shows that in 2025, the global crude oil supply increase will be approximately 1.7 million barrels per day from non-"OPEC+" countries, of which Brazil, Guyana and Argentina contributed nearly 30% of the increase. This means that even if a large-scale conflict breaks out in the Middle East and some supply is disrupted, production capacity in other parts of the world will be enough to fill the gap, and the substantial threat to supply from geopolitical risks has been significantly reduced.
While the geo-risk premium fails, the global crude oil market has faced the contradiction between oversupply and weak demand in recent years, causing the oil price center to continue to shift downward. Since the second half of 2022, oil prices have always been in a downward channel. On the last trading day of 2025, the price of WTI crude oil futures fell below US$58 per barrel, with a cumulative decline of nearly 20% during the year, marking the worst annual performance since the 2020 epidemic. Brent oil fluctuated violently in the range of 58-83 US dollars per barrel throughout last year, and ended with an annual decline of nearly 20%, setting a record for the longest monthly losing streak since 2014.
Dong Xiucheng, Executive Dean of the China International Carbon Neutral Economic Research Institute, w88 casinotold Jiemian News that the current fundamentals of oil supply and demand are: excess global crude oil supply has led to high inventories. This is due to both the "OPEC+" and the U.S. shale oil competition to increase production, as well as contributions from oil-producing countries other than "OPEC+"; the demand side is affected by the economic cycle and off-season, and growth is weak.
However,Dong XiuchengI don’t think traditional geopolitics is losing its dominance over oil prices. He pointed out that as far as recent events are concerned, Iran's protests have not damaged oil facilities and production has not been affected; although Venezuela is known as the world's largest reserve, its oil production capacity is seriously insufficient under the long-term sanctions of the international community, and the impact of short-term supply interruptions is limited. In addition, the market has long expected the escalation of tensions between the United States and Venezuela and social unrest in Iran.
"In addition, the United States has made it clear that it will push oil companies to enter Venezuela, which may increase mid- to long-term supply, which will be negative for oil prices. The situation in Venezuela and Iran has not yet escalated into a regional conflict, has not threatened key transportation channels such as the Strait of Hormuz, and has not triggered large-scale supply risks."Dong XiuchengSay.
The International Energy Agency (IEA) pointed out in its monthly report in December 2025 that the global crude oil supply surplus in 2026 may be as high as 3.84 million barrels per day, showing huge surplus expectations. The IEA also predicts that global oil demand growth will slow to 0.8% in 2026 from 1.2% in 2025, mainly due to weak economies in Europe and the United States and weak recovery in emerging markets.
In November last year, the internationally renowned investment bank Goldman Sachs lowered its forecast for the average Brent crude oil price in 2026 to US$56 per barrel from the previous US$63 per barrel, and WTI crude oil from US$60 per barrel to US$52. Goldman Sachs pointed out that the global crude oil market will face a supply surplus of approximately 2 million barrels per day in 2026. This huge excess pressure will keep oil prices under pressure until at least mid-2026. Goldman Sachs also said that if the output of non-OPEC countries exceeds expectations, or a global economic recession occurs, Brent oil prices may even fall to around US$40 per barrel from 2026 to 2027.
JP Morgan predicts that the average prices of Brent crude oil and WTI crude oil in 2026 will be US$58/barrel and US$54/barrel respectively. JPMorgan Chase pointed out that global oil demand will grow by 900,000 barrels per day in 2025, and is expected to maintain a similar growth pace in 2026, with demand growth accelerating to 1.2 million barrels per day in 2027. However, supply growth will be stronger, with supply growth expected to be three times the demand growth in 2025 and 2026, and will slow to one-third of the demand growth in 2027.
From a comprehensive institutional perspective, global crude oil oversupply and weak demand work together. Oil is returning to its nature as an ordinary commodity from a political gaming tool, and low oil prices may become the new normal.
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