Oil prices unexpectedly score first monthly gain in half a year. So what's the next move for OPEC+?

By Myra P. Saefong

Angst over Venezuela and Iran boosts oil prices in January

Oil prices ended the month of January with their first gain in six months.

Oil prices ended the month of January with their first gain in six months. That's no surprise given the risks to the global flow of oil tied Venezuela and Iran, but the world's supply of crude is still expected to outpace demand this year.

The Organization of the Petroleum Exporting Countries and its allies - the group of major oil producers known as OPEC+ - will have to take all of that into account when they meet this weekend to discuss their oil-production targets.

January has seen a "repricing of geopolitical risk layered on top of a market that had grown far too comfortable with the surplus story," said Stephen Innes, managing partner at SPI Asset Management.

On Friday, West Texas Intermediate crude for March delivery (CLH26) (CL.1) posted a 14% gain for the month of January, following five consecutive months of declines. It edged down by 0.3% Friday to settle at $65.21 a barrel on the New York Mercantile Exchange.

March Brent crude (BRNH26), which expired at the end of Friday's session, finished little changed at $70.69 on ICE Futures Europe, for a 16% monthly climb.

Oil prices saw their first monthly gain in six months "not because balances suddenly tightened in a structural way, but because the market had underpriced geopolitical optionality and was forced to buy it back in a hurry," Innes said.

After the U.S. military on Jan. 3 captured then-Venezuelan President Nicolás Maduro, who was later charged with narcoterrorism, the world wasn't quite sure if the developments would lead to more oil on the global market or less, at least in the near term.

The verdict, for now, appears to be that it will take a long time to rebuild Venezuela's oil infrastructure to the point where it can see a significant rise in production levels. But in the meantime, Venezuelan crude exports to the U.S. have reached their highest levels in almost a year, according to data from Kpler.

Venezuelan crude exports bound for the U.S. have hit their highest level in almost a year, according to Kpler. (The missing bars represent months when the Trump administration temporarily revoked Chevron's license to operate in Venezuela.)

Tensions with Iran have also been in the spotlight, with U.S. President Donald Trump ratcheting up pressure on the Middle Eastern nation to reach a nuclear deal.

Venezuela is more background noise than a primary driver, but together with Iran, the developments were "sufficient to shake a market that had been trading as if nothing bad could happen," Innes said.

Despite all the developments in January, however, the global oil market is still expected to see a supply surplus this year. The narrative has just been "muted by geopolitics and positioning" in the oil market, he said.

Knowing that can make the output decision a bit easier for the eight members within the OPEC+ alliance that had been subject to voluntary production cuts.

At their last meeting, held Jan. 4, the group of eight reaffirmed their decision to pause production increases through the first quarter of 2026.

OPEC+ is 'likely to sit on its hands, let the premium do its work, and reassess once the market is trading fundamentals again rather than headlines.' Stephen Innes, SPI Asset Management

For this weekend's meeting, the "base case is policy inertia," Innes said. "Reconfirm the current framework, signal discipline and avoid becoming the source of volatility while geopolitics is doing that job for free."

He added: "Prices have recovered enough to buy patience, not confidence." The rally in oil looks to be driven by geopolitical risk, rather than demand-validated, and OPEC+ "understands that leaning into it by adding supply would likely cap the move rather than monetize it."

So OPEC+ is "likely to sit on its hands, let the premium do its work, and reassess once the market is trading fundamentals again rather than headlines," Innes said.

-Myra P. Saefong

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01-30-26 1721ET