Global oil markets experienced a sharp sell-off on Wednesday, 7th January 2026, after US President Donald Trump declared that Venezuela would relinquish a massive quantity of crude to the United States.
Trump's Announcement Sends Shockwaves Through Markets
The price of Brent crude oil, the international benchmark, dropped below the significant threshold of 60 US dollars a barrel following the President's statement. In a post on Truth Social, Mr Trump stated that "interim authorities" in Venezuela would provide between 30 million and 50 million barrels of what he described as "high quality" oil to the US, to be sold at market price.
This substantial volume of crude is estimated to be worth close to two billion US dollars, equivalent to approximately £1.5 billion. President Trump detailed that the oil "will be taken by storage ships, and brought directly to unloading docks in the United States". He asserted that the resulting funds would be under his presidential control but used to benefit the people of both Venezuela and the US.
Market Fears of a Supply Glut Intensify
The announcement immediately stoked fears of a potential oversupply in the already cautious market. Analysts had previously forecast that worldwide oil supplies would exceed demand in 2026, and this unexpected influx from Venezuela amplified those concerns.
Kathleen Brooks, research director at XTB, commented on the sensitivity of the market, stating: "Although the oil price was initially able to absorb the Venezuela news, today’s move lower is a sign that the oil price continues to be sensitive to any shift in supply dynamics."
The move follows the recent US military operation which led to the capture of ousted Venezuelan leader Nicolas Maduro, who was flown to the US to face drug charges. Furthermore, the White House is understood to be organising a meeting in the Oval Office on Friday with executives from major oil firms, including Exxon, Chevron, and ConocoPhillips, to discuss the Venezuelan situation.
FTSE 100 Feels the Pressure from Energy Giants
The ripple effect of the falling crude price was felt acutely on the London Stock Exchange. The share prices of oil and gas behemoths BP and Shell suffered early declines, dropping by 3% and 2% respectively during the session.
This created a significant headwind for the wider FTSE 100 index. Richard Hunter, head of markets at Interactive Investor, explained: "A further dip in the oil price on concerns of potential oversupply as a result of developments in Venezuela weighed on BP and Shell, providing a headwind which dragged the FTSE 100 back from the record closing high set yesterday."
The blue-chip index was down 0.5%, or 50 points, at 10072.5 in morning trade. This pullback came just a day after the FTSE 100 soared to new highs, having closed above the symbolic 10,000 level for the first time on Monday.
