M. Juan Szabo [1] y Luis A. Pacheco [2]
Published Originally in Spanish in LA GRAN ALDEA
To see the oil market react to unfolding events, sometimes in contradictory ways, should not be a surprise. After all, the market trades not only on fundamentals but also speculates on expectations, whether well-founded or not.
During the now-elapsed first week of February 2026, the market experienced a trend reversal after reaching six-month highs. Driven by signs of geopolitical de-escalation, prices recorded their first weekly decline in 7 weeks. However, late on Friday, the market rebounded after the first round of talks between the U.S. and Iran stalled, and additional sanctions were imposed on tankers and companies involved in Iranian crude exports.
Russia-Ukraine Peace Negotiations
In the same vein, the Trump administration is maintaining economic pressure on the Kremlin to accept a negotiated solution with Ukraine. The White House has set the ambitious goal of achieving a peace agreement between Russia and Ukraine by March. During a second round of trilateral peace talks in Abu Dhabi this week, there were no signs of progress, although an exchange of 314 prisoners of war was concluded, the first of its kind since October.
Ukrainian President Volodymyr Zelensky told reporters on Saturday that the United States had proposed a new round of talks in Miami within a week, to which Kyiv had agreed. According to Reuters, if an agreement is reached, it would be submitted to a referendum by Ukrainian voters, who would vote simultaneously in a national election, according to anonymous sources.
Cautious Forecasts for 2026
Despite the many geopolitical uncertainties, the Energy Information Administration (EIA) and some major banks are being cautious about oil for the coming year; they observe the fundamentals (rising inventories and moderate geopolitical risk) and continue to forecast prices averaging below $60 per barrel in 2026; according to the EIA, the increase in crude oil production and the rise in oil in floating storage outweigh the effect of potential disruptions in oil exports driven by tensions in Russia and Venezuela.
Global Production and Supply Factors
In the U.S. and Canada, oil production remains affected by winter shutdowns. At the same time, the increase in rig activity reported by Baker Hughes is concentrated exclusively in the natural gas sector, driven by seasonal demand. Minor contributions from Russia and Mexico to the global oil supply serve as a mitigating factor against the projected overproduction in the first half of 2026. In particular, Russia could be affected by India's decision to substitute Russian crude with Venezuelan crude and by the reduction of the Russian oil "price ceiling" to $44.1/BBL in February, a measure aimed at reducing Russia's oil revenues and intensifying pressure on its exports.
Global Demand Behavior
In this regard, crude purchases by China continue to show a modest uptick, driven by the central government's interest in boosting product exports and strategic inventories. India's demand maintains its forecasted growth, while increases observed in the Middle East and Latin America bring demand closer to OPEC's forecasts than to those of the International Energy Agency (IEA).
Price Volatility
The intersection of overproduction projections and the changing dynamics of geopolitical activity led to a weekly decline in oil prices, though a Friday rally was interrupted by the weekend closure. This volatility is largely attributed to the start of nuclear energy talks between Iran and the U.S. in Oman, which reduced fears of supply disruptions from the Middle East and lowered the geopolitical risk premium that had driven prices. However, that trend reversed upon learning of the meetings' failure.
As things stand, the Brent and WTI benchmark crudes, at the close of markets on Friday, February 6, 2026, were trading at $68.05/BBL and $63.55/BBL, respectively, reflecting a reduction of around 1.8% compared to the previous week.
Note: at the close of Monday, February 9, Brent crude was recovering, with gains of nearly 1.7% for the day.
CUBA
After Maduro, Cuba?
On this side of the world, the situation in Cuba has reached a critical point, with international warnings of a possible economic and humanitarian collapse. In 67 years since the Castro insurgency, numerous predictions have projected the end of the Cuban revolution. Still, time and again, the Cuban regime has shown its resilience and, despite having become a practically unviable country, through repression and social control, the regime survives, albeit seriously weakened.
Energy and Humanitarian Crisis
The UN warned that the Caribbean country faces collapse if it fails to meet its energy needs, particularly for oil. Supply from Venezuela was interrupted in January following the capture and extraction of Nicolás Maduro, and Mexico, which had been supplying part of the demand, also recently stopped its exports to the island.
Blackouts on the island exceed 20 hours daily in many areas, affecting vital services such as hospitals, water pumping, and food refrigeration. Cuba's electrical sector faces a significant deficit, often exceeding 1,800 megawatts, due to aging infrastructure, fuel shortages, and inadequate investment. The government implemented a four-day workweek, reduced working hours, and offered online university classes to conserve energy. Recently, the Cuban government announced that there is no aviation fuel, which could worsen the shortage of goods.
Search for Solutions
The accumulation of decades of mismanagement, ideology, corruption, and the U.S. blockade has left the Cuban State at its most vulnerable moment since the triumph of the Revolution in 1959 and with very limited options. Indeed, there is already talk that Cuba's president, Díaz-Canel, is seeking a negotiated solution to the situation and has initiated secret meetings with the U.S. in Mexico.
VENEZUELA
Changes and Internal Conflicts... and the Transition?
Economic Stabilization and Petroleum Cash Flow
After an unthinkably dynamic January politically, Venezuela continues to surprise, some surprises welcome and others not so much. In the economic sphere, the late 2025 oil quarantine, followed by the removal of Maduro and his wife, was closely followed by the reorientation of Venezuelan crude sales to premium markets under U.S. government "tutelage," which enabled the establishment of a protected cash flow controlled by the U.S. Treasury. Foreign currency proceeds from these exports have entered the BCV and been auctioned in the foreign exchange market, partially mitigating the bolívar's devaluation and slowing the uncontrolled growth of inflation.
January exports ended up in the U.S. market, but in February, we see a diversification of destinations towards Asia and Europe. Indeed, India's largest private refinery, Reliance Industries, is again buying Venezuelan crude: 1.9 million barrels will be shipped from the José terminal in February. Likewise, Repsol formalized a barter of Spanish diluent for Venezuelan crude.
Hydrocarbons Law Reform
Also, in a rushed manner, a reform to the Organic Hydrocarbons Law was presented, discussed, and approved in the National Assembly (AN). The liquid hydrocarbons law reform has been widely analyzed by jurists and oil analysts, laypeople and experts, and most agree in characterizing it as a much less statist law and more attractive for private investment, but with important limitations regarding the participation mechanisms allowed and, above all, with great discretion granted to the executive branch that would give opacity to the contracting and flexibilities that the law establishes for present and future investors.
The maximum "Government Take" under the new law is considerably lower than the nearly 90% under the 2006 Law. However, in each case, negotiations to reduce that burden depend on executive discretion and therefore take away formality and solidity from the contractual offer.
It is worth noting that, unlike most legislation worldwide, the "restoration of the original economic balance," a concept introduced by the approved reform, is an obligation of the executive rather than a prerogative. In any case, a new law will probably be required for Venezuelan hydrocarbons to be competitive and provide the legal security necessary to attract the massive investments required for the country's development.
New Licenses and Investment Expectations
We understand that, as a result of this new legislation, OFAC has received some requests for licenses to operate in Venezuela from OFA. We believe OFAC may be considering issuing a general license, like LG46, covering primary activities (exploration and extraction). Based on this accelerated process, the interim government has met with Repsol and Maurel & Prom, and expectations of increased oil activity have emerged.
Another aspect, little commented on but, in our opinion, worrying, is the "express" formalization of the many contracts concluded under the so-called "anti-blockade law." Contracts granted, by definition, with much opacity, and that would not only control an important part of quality reserves but also limit a new administration's capacity to restructure the oil industry optimally.
Political Dynamics and Transition
In the political sphere, things have also moved at a dizzying pace. The United States chargé d'affaires, Laura Dogu, met with the Rodríguez brothers upon her arrival in the country and promised to work for Venezuela's development. For its part, the AN began discussions on the Amnesty Law, a complex law that, like everything in this situation, could become a double-edged sword.
Rumors persist of disagreements between the Rodríguez brothers and Diosdado Cabello, but the matter has not been confirmed. It was also reported that Alex Saab and Raúl Gorrín had been detained, according to various media outlets, including Reuters, and that their whereabouts are unknown.
The process of releasing political prisoners continues, albeit slowly; Jorge Rodríguez visited the families of inmates in Zone 7 in Boleíta and promised that all would be free next week. It later turned out the event had been a propaganda stunt. The re-imprisonment of opposition leader Juan Pablo Guanipa, less than 24 hours after his release from prison, demonstrates the fragility of the regime's promises and evidences its intention to continue inducing unease in the population.
Venezuelan leader María Corina Machado, for her part, indicated that she wants to return to Venezuela and thought it was possible to hold elections before the end of the year. We think her return would be part of a concerted strategy with the White House to activate the population and energize the political transition from within the country.
Although it had been reported that U.S. Energy Secretary Chris Wright was in Venezuela on Friday to review oil activity, the visit, at the time of writing this note, remains uncertain.
Despite the rapid and multiple changes designed to stabilize the economy and restore oil activity, described as the first two phases of the Marco Rubio Plan, no activity aimed at promoting the political transition to democracy is known... for now. The changes that have occurred have given the impression of a relaxation of repression, judging by the incipient union protests, calls for student protests, and the release of important opposition figures.
Petroleum Operations
Oil production tends towards normalization and even shows a slight uptick as some companies prepare to obtain OFAC licenses. In particular, Chevron is already shipping larger volumes to the U.S.
Reuters reported at least one land rig departing from the port of Houston bound for Maracaibo.
Production and Export Data
This week's production was 875 Mbpd, geographically distributed as follows:
- West: 251 Mbpd (Chevron: 104 Mbpd)
- East: 112 Mbpd
- Orinoco Belt: 512 Mbpd (Chevron: 131 Mbpd)
TOTAL: 875 Mbpd (Chevron: 235 Mbpd)
At national refineries, 212 Mbpd of crude and intermediate products were processed, yielding 76 Mbpd of gasoline and 62 Mbpd of diesel.
February exports appear to maintain the same level as in January. If a monthly export of 840 Mbpd were achieved, Chevron would export 30% of the total.
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