Venezuela state of affairs’s affect on diesel costs probably minimal

When President Donald Trump on Saturday, Jan. 3, held a press convention to announce the seize and elimination of Venezuelan president Nicolas Maduro, a part of his remarks targeted on Venezuela’s oil enterprise.

The nation has the world’s largest confirmed oil reserves, estimated at greater than 300 billion barrels as of 2020. At one time, the South American nation was additionally one of many world’s largest oil exporters, however enterprise has slowed significantly because the flip of the century. In 1999, the nation exported almost 3.2 million barrels of crude per day. Lately, exports fell under 1,000,000 each day barrels. 

Equally, U.S. imports of Venezuelan oil fell throughout that interval. In 2000, in line with the U.S. Vitality Info Administration, imports hit 1.3 million barrels/day. In 2024, that had fallen to 231,000 barrels, in line with Denton Cinquegrana, Chief Oil Analyst for Oil Worth Info Service (OPIS).

President Trump mentioned American oil corporations would “spend billions of {dollars}” to “repair the badly damaged infrastructure, the oil infrastructure, and begin being profitable for the nation.” How or when that may even start stays to be seen. Present world oil market dynamics already present a measure of disincentives to producers to ramp issues up. 

• Costs for crude oil are already decrease than what many oil producers would love.
• WTI crude costs sat under $56 a barrel as of Wednesday, Jan. 7, whereas Brent crude was just under $60 a barrel: close to five-year lows for each commodities.

Truck owner-operators and fleets have loved the outcomes of barrel-price decline on the pump. Lately, retail diesel costs fell under $3.50 a gallon for the primary time since June 2025 and approached averages not seen since late 2021. In EIA’s newest weekly report for the week ending Jan. 5, the nationwide common worth was $3.48 a gallon.

“Who is aware of what’s going to occur within the subsequent 12 months or two years,” Cinquegrana mentioned. “I can inform you proper now there’s going to be no short-term impacts on diesel costs for now. That could be a form of, if something, an end-of-decade sort factor. Possibly throughout the subsequent couple of years, they may add a pair hundred thousand barrels a day and get again over 1,000,000 barrels a day” with infrastructure buildout and enchancment. “Even that’s going to be a heavy raise, particularly when you’ve oil costs which might be $56 a barrel.”

Cinquegrana added that oil producers will not be “tripping over each other to start out producing or investing billions and billions of {dollars} of capital in a spot that’s nonetheless not protected. Let’s get security and management put in first earlier than we even contemplate getting in there to start out producing or investing.”

Matt Muenster, Chief Economist for transportation administration agency Breakthrough, mentioned it grew to become clear shortly after the information of the U.S. motion in Venezuela that world oil market impacts could be minimal. The times because the occasion have “been modest market shifting days,” he mentioned. “No actual leap or drop in crude oil costs.”

For the U.S., Venezuelan oil isn’t a necessity, he added. “It’s not like there’s a tightness out there that may require us to be importing Venezuelan merchandise.”

Muenster famous, nonetheless, that oil refiners alongside the Texas Gulf Coast do lean on refining heavy crude oils, which is what comes from Venezuela. “These oils, usually talking, for diesel shoppers have a optimistic affect within the refinery base as a result of they’ll typically result in larger diesel yields,” he mentioned. 

However with Venezuelan manufacturing as little as it’s, not a lot change is anticipated short-term.

Impartial oil market analyst Tom Kloza provided comparable evaluation, calling the market “bearish” for the producers. “The crude oil market is already oversupplied,” he mentioned. “The prospects for 2026 are that that is going to be an inexpensive 12 months for crude. It’s going to be a less expensive 12 months than the final three years for diesel, and it’s going to be the most affordable 12 months for gasoline because the COVID 12 months of 2020.”

If oil costs fall a lot additional, Kloza mentioned producers would get near a break-even level of kinds, and start to chop again on manufacturing to create extra supply-side stress to carry up pricing. 

“We’re above break-even” for now, he mentioned. “There are in all probability some fields within the Permian [Basin] and New Mexico and Texas that in all probability want one thing within the mid-$50s [per barrel], nevertheless it has to do with how a lot debt a few of the operators have and issues like that. … We’ll begin to fear about that, I believe, when costs drop under $50.”

Breakthrough’s Muenster added that $56/barrel is under the “vary at which some manufacturing is worthwhile.” If oil have been to drop under $50, “I wouldn’t anticipate that lower cost might linger for an prolonged time frame,” he mentioned. “There’d be extra stress put again out there based mostly on adjustments to manufacturing.”

OPIS’ Cinquegrana mentioned producer manufacturing cuts to affect pricing would definitively produce the ripples that result in larger gasoline and diesel costs, “however I don’t assume that’s gonna occur anytime quickly,” he mentioned.

[Related: Bye-bye 2025: Hope and headwinds for freight, costs, regs in focus]

2026 diesel outlook

Diesel costs hit their the 2025 excessive mark of $3.87 a gallon nationwide common in the course of the week ending Nov. 17, and have fallen since to the newest week’s $3.47 a gallon.

Kloza believes the development will proceed by means of the primary quarter, with the nationwide common in the end under $3.25. “I believe will probably be the most affordable 12 months since 2021,” he mentioned. “Excessive costs actually got here with the Ukraine-Russia conflict,” beginning in 2022. “We’re going again to type of the place the numbers have been pre-war.”

If that conflict sees a decision and “if Russia will get again within the good graces of Europe and in any other case, you then’re actually speaking about deflationary costs and power,” Kloza added. For oil producers who wish to see larger oil costs, “it’s laborious to be a bull underneath the circumstances.”

Breakthrough’s projections for 2026 are in step with these: Muenster expects worth reductions “front-loaded, so I’ve better confidence that Q1 will proceed to see decrease diesel costs.”

Long term, he added, “geopolitics stays the main target of upside danger. Nonetheless, when an occasion like [Venezuela] occurs and there’s a really muted response from the market, it helps provide you with that sign that, proper now, wanting one thing very drastic, these geopolitical occasions aren’t going to shift market costs.”

OPIS expects diesel costs for 2026 to in the end be in step with 2025’s costs, regular, round $3.54 a gallon on common for the 12 months, Cinquegrana mentioned.  “I don’t see something on the market that may recommend we’re in for a giant form of spike in costs.” 

One space the place Kloza sees the largest detrimental affect of the present low-price setting for oil is for producers of biodiesel and renewable diesel. 

“You’re not seeing the costs for soybean oil and issues like that drop,” he mentioned. “Everyone in that sector, the bio sector, has actually been struggling for a pair years, and it appears to be like like they’re going to wrestle some extra as a result of they really want larger costs for legacy diesel, for hydrocarbon diesel.”

[Related: Diesel prices down 37 cents since hitting 2025 high mark, reefer rates on holiday tear]