Morning Highlights: Oil Steady Awaiting Oman Talks Outcome; Reliance Buys First Venezuelan Cargo Since U.S. Takeover

Friday, February 6, 2026

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MARKET SNAPSHOT

Oil held steady as investors awaited news from high-stakes U.S.-Iran talks in Oman. Brent rose $0.14 (0.1%) to $67.69/bbl, while WTI gained $0.10 (0.1%) to $63.39/bbl as of 6:40 AM EST.

Weekly Performance: Brent is set to end the week down 4.3%, while WTI is on track to end little changed, reflecting the Iran war premium deflation from Monday's 5% plunge.

Lack of consensus on the agenda for the meeting between Iran and the U.S. has kept investors anxious about geopolitical risk. Iran wants to stick to nuclear issues, while the U.S. wants to discuss ballistic missiles and support for armed groups.

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TOP DEVELOPMENTS

Oman Talks: Agenda Dispute Creates Uncertainty

Any escalation between the two nations could disrupt oil flows, since about one-fifth of the world's total consumption passes through the Strait of Hormuz. Saudi Arabia, UAE, Kuwait, and Iraq export most of their crude via the strait, as does Iran.

If Talks Succeed: "If the U.S.-Iran talks ease the prospect of conflict in the region, oil prices could decline further," analysts noted.

Capital Economics View: "We think that geopolitical fears will give way to weak fundamentals," Capital Economics analysts said, pointing to a recovery in Kazakhstan's oil output that will help push prices lower, towards $50 a barrel by end-2026.

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WEEKLY PRESSURE FROM OVERSUPPLY EXPECTATIONS

On a weekly basis, prices were weighed down by a broader market selloff and persisting expectations of oil oversupply, analysts said.

Saudi Signal: Saudi Arabia cut the official selling price of Arab Light crude to Asia for March to around a five-year low Thursday, marking the fourth straight month of price cuts

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Saudi going to five-year lows (first discount since December 2020) while cutting for four consecutive months is a powerful fundamental signal that contradicts current $67+ Brent prices.

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RELIANCE BUYS FIRST VENEZUELAN CARGO SINCE U.S. TAKEOVER

Historic Purchase: India's largest private refiner, Reliance Industries, is buying Venezuelan crude again, securing the first Indian purchase from Venezuela since the U.S. took control of the country's oil sales early last month.

Deal Details: Reliance purchased a cargo of around 2 million barrels, an anonymous source told Bloomberg Friday.

Timeline Context: Reliance last bought Venezuelan crude in mid-2025 under a special U.S. waiver from mid-2024. Last month, Reliance said it would consider buying Venezuelan crude again if sales are permitted to non-U.S. buyers.

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INDIA'S CRUDE SUPPLY RECONFIGURATION ACCELERATES

Venezuela Replaces Russia: The latest purchase signals that India would be taking Venezuelan crude going forward as it looks to replace Russian supply to honor the trade deal with the U.S. The deal for lower U.S. tariffs (from 50% to 18%) is conditional upon India slashing Russian crude imports.

Reliance's Russian History: Before U.S. sanctions on Rosneft and Lukoil, Reliance was the biggest buyer of Russian crude oil globally, importing more than 500,000 bpd thanks to a long-term Rosneft deal. However, the Indian refiner halted all Rosneft purchases after U.S. sanctions and turned to non-Russian sources.

MRPL Also Exploring: Indian state-run Mangalore Refinery and Petrochemicals Limited (MRPL) is also exploring potential Venezuelan crude purchases after stopping Russian oil imports. MRPL is actively weighing the opportunity if commercial terms, including freight rates, are favorable, said MRPL's head of finance Devendra Kumar in January.

Marketing Push: Two of the world's biggest independent traders, Vitol and Trafigura, which last month were tapped by the U.S. to help market Venezuela's crude, are offering Venezuelan oil to India and China for March and April delivery.

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BOTTOM LINE

Oil is treading water awaiting Oman talks outcome, with the 4.3% weekly Brent decline reflecting Monday's Iran war premium collapse. The agenda dispute (Iran: nuclear only; U.S.: missiles and proxies too) creates uncertainty, but successful dialogue would likely push prices toward Capital Economics' $50 year-end target as "geopolitical fears give way to weak fundamentals." The real story is India's crude supply revolution. Reliance Industries, the world's former largest Russian crude buyer (500K+ bpd), purchasing its first Venezuelan cargo since U.S. takeover demonstrates the India-U.S. trade deal is working. India is systematically replacing Russian crude (down from 2M bpd peak to potentially 800K-1M bpd post-deal per JPMorgan) with Venezuelan, U.S., and Middle East supplies. This accelerates Russia's crude crisis: already facing record $9-12/bbl discounts, China at capacity limits, and rising floating storage, Russia now loses its second-biggest customer's largest buyer. Reliance alone represented 500K+ bpd of Russian demand - gone. The displaced Russian barrels (1-1.2M bpd from India overall) have nowhere to go as Chinese teapots hit limits and state refiners stay out. Russian production cuts or continued discount widening appear inevitable. Venezuelan supply normalization (U.S. refiners, now Indian refiners, Chinese demand continuing) adds to global supply even as it provides Russian crude alternatives. Saudi Arabia's four consecutive monthly OSP cuts to five-year lows while Brent trades at $67 screams fundamental disconnect. The IEA's 4.25M bpd Q1 surplus, Goldman's $54 Q4 target, Capital Economics' $50 year-end, and Reuters poll $62 annual average all point significantly lower. Brent's 4.3% weekly decline is just the beginning of January's 16% rally reversal. Once Oman talks conclude (successfully removing Iran premium or failing and recreating it temporarily), focus returns to the brutal fundamentals: massive oversupply, Russian crude crisis, and demand growth unable to absorb supply additions. The trend is toward the low-$50s as multiple analysts now forecast.