Morning Highlights: Oil Slides Toward Weekly Loss Despite Venezuela Seizure Threats

Friday, December 12, 2025

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Oil edged lower and headed for a weekly decline as oversupply concerns overshadowed geopolitical risks. Brent crude fell $0.11 (0.31%) to $61.17/bbl, while WTI dropped $0.08 (0.26%) to $57.52/bbl as of 7:00 EST. Both benchmarks tumbled roughly 1.5% Thursday and are down over 4% for the week.

Markets are prioritizing fundamental supply glut fears and potential Russia-Ukraine peace deal over escalating U.S.-Venezuela tensions and Ukrainian attacks on Russian energy infrastructure.

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TOP DEVELOPMENTS

U.S. Preparing Multiple Venezuelan Tanker Seizures

The U.S. is preparing to intercept more vessels transporting Venezuelan oil following this week's dramatic seizure of the VLCC Skipper, six sources told Reuters Thursday. Approximately 30 tankers under U.S. sanctions transport Venezuelan crude to international clients and could be forced to remain in port to avoid seizure.

"We're not going to stand by and watch sanctioned vessels sail the seas with black market oil, the proceeds of which will fuel narcoterrorism of rogue and illegitimate regimes around the world," White House spokeswoman Karoline Leavitt said Thursday.

Fresh Treasury Sanctions: The Treasury Department targeted Maduro family members, a longtime business ally, and six tanker companies using deceptive AIS practices to mask routes. The newly sanctioned vessels, flagged in Marshall Islands, Panama, or Cook Islands, include the White Crane and Kiara M, which loaded barrels as recently as October and are now frozen out of the U.S. financial system.

Market Reaction: Despite the clear threat to Venezuelan supply (1.1 million bpd), traders sold off Thursday and continued lower Friday, suggesting skepticism that seizures will materially disrupt flows or that the administration will target Chevron's operations.

Ukrainian Strikes Hit Russian Caspian Rig

Ukrainian drones struck a Russian oil rig in the Caspian Sea, expanding the geographic scope of infrastructure attacks. "Some price-supportive factors remain, including the ramping up of tensions between the U.S. and Venezuela and Ukrainian drone strikes," noted Rystad's Janiv Shah.

Despite attacks, Russian seaborne oil product exports in November fell just 0.8% from October, as completed refinery maintenance offset slumping fuel exports from southern routes like the Black Sea and Azov Sea, according to industry data and Reuters calculations.

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COMPETING OUTLOOKS FUEL UNCERTAINTY

OPEC vs. IEA: OPEC data indicates world oil supply and demand will be closely balanced in 2026, contrasting with the IEA's projection of a 3.84 million bpd surplus. OPEC's outlook is more bearish than earlier this year when the group saw demand outstripping supply, adding to market confusion about the true supply-demand picture.

Implication: The diverging forecasts from major oil watchers highlight deep uncertainty about 2026 fundamentals, making it difficult for traders to establish conviction in either direction.

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TRUMP OPENS ALASKA FOR EXPANDED DRILLING

President Trump removed Biden-era legislative protections restricting oil and gas exploration in Alaska, including the Arctic National Wildlife Refuge and federal lands, using several Congressional Review Act measures.

The Opportunity: Alaska oil production peaked at 2 million bpd in 1988 but now accounts for barely 3% of U.S. output. High costs, aging fields, and limited leasing have stalled investment for decades. The Interior Department restored the full 1.5 million-acre Coastal Plain to leasing in October and reinstated previously canceled leases held by Alaska Industrial Development and Export Authority.

Earlier this year, the administration opened 82% of the National Petroleum Reserve for new drilling. With the U.S. pursuing energy security and Asian buyers showing renewed interest in long-term crude and LNG supply, Washington is betting on Alaska's North Slope revival.

Environmental Pushback: The National Wildlife Federation called the move "a direct attack on public input, science, and responsible stewardship," while the Brooks Range Coalition warned it "leaves Alaska's rural communities, hunters, and Tribal governments with fewer protections at a time when climate change and resource pressures are rapidly intensifying."

Timeline: Any production increases from Alaska are years away, making this a long-term supply story rather than a near-term market factor.

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Oil is ending the week sharply lower despite headline-grabbing geopolitical developments. The market's message is clear: fundamental oversupply concerns trump geopolitical theater unless actual barrels are removed from the market. Venezuelan tanker seizure threats haven't translated to meaningful supply disruption yet, while Russian exports prove resilient despite drone attacks. The OPEC-IEA divergence on 2026 balance adds confusion, but traders appear to be siding with the bearish view. Alaska drilling expansion is a multi-year story that won't impact near-term supply. Brent and WTI are testing critical support levels, with both benchmarks approaching their lowest levels in years. Without a genuine supply shock or credible OPEC+ production cuts, the path of least resistance appears lower as the market braces for 2026 oversupply. Watch for any actual disruption to Venezuelan flows or unexpected movement in Ukraine peace talks that could shift the narrative.