According to Donald Trump, the end of the Ukraine conflict has never been closer than it is now. Following this statement, the oil market declined sharply. The recovery of oil production may trigger a decline in prices. Let’s discuss this topic and make a trading plan for Brent.
The article covers the following subjects:
Major Takeaways
- The US has blocked oil exports from Venezuela.
- Removal of sanctions against Russia will increase supply.
- OPEC+ recognises the problems of market imbalance.
- Short trades on Brent can be opened with the target of $56.5.
Monthly Fundamental Forecast for Oil
Washington’s blockade of sanctioned tankers linked to Venezuela has boosted oil prices. Donald Trump has demanded that Caracas return what it took from the United States, while the oil market is taking a breather after a tsunami of sell-offs. About 80% of Venezuelan oil exports go to China, and some are supplied to the US under a special license. ING estimates the total volume at 600,000 bpd. This is a small amount compared to the flows that will come from Russia after the US sanctions are lifted.
Venezuela’s Oil Exports
Source: Financial Times.
Donald Trump has rattled the financial markets with his statement that the Ukraine crisis is closer to resolution than ever before. The removal of the geopolitical risk premium, the reduced threat of supply disruptions, the arrival of large volumes of Russian oil at sea, and the narrowing of its discounts to Brent and WTI will lead to increased supply and a surplus, which may reach record levels in 2026. Against this backdrop, Brent crude has fallen to its lowest level since 2021.
Technical analysts are warning that oil is oversold, which, combined with large speculative short positions on Brent and WTI, may trigger a rebound if a new geopolitical crisis emerges. However, the US blockade of tankers from Venezuela has only allowed oil to recover slightly, showing that bulls are weak at the moment.
Brent and WTI Performance
Source: Bloomberg.
The International Energy Agency and the US Energy Information Administration’s downbeat forecasts, disappointing economic data from China, and record US oil production are fueling the sell-off in Brent.
OPEC+ also understands market balance issues very well. This is evidenced by Saudi Arabia’s lowest oil price in five years and the coalition’s decision not to increase production in the first quarter of 2026.
The downward trend for Brent remains intact, and the greatest risk is not the US blockade of oil tankers from Venezuela. Over the past year, there has been progress in the peace talks between Russia and Ukraine on more than one occasion, but something has been missing to end the armed conflict. If history repeats itself, crude may skyrocket again.
Monthly Trading Plan for Brent
The optimism surrounding the prospects for peace in Eastern Europe has proven well-founded. Short positions on Brent, formed at $62.3 per barrel, currently appear promising. However, it is important for traders to maintain a level-headed perspective. The $62.3, $60.4, and $61.15 act as the key resistance levels. If Brent quotes rebound from these levels, short positions can be increased with the target of $56.5 per barrel.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of UKBRENT in real time mode
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