OIL prices are falling after Donald Trump’s strikes in Venezuela with experts claiming it will cut inflation and ease fuel and energy bills in the UK.
President Nicolás Maduro and his wife were captured and brought to the US last week and are being held in New York.
Venezuela has the world’s largest crude oil reserves and the US now claims control over them.
The price of a barrel of oil has fallen from $58 to $56 since Monday – and it is expected to fall further with worries about oversupply at a time of weak demand.
FTSE oil giants fell sharply in early trading after Donald Trump said Venezuela would turn over sanctioned oil to the US.
UK oil companies, Shell and BP were down as much as 2.4% and 3.2%, respectively, after the US president said he wanted to sell the oil at market rates.
The two companies were the heaviest drag on the performance of the FTSE 100, which was down 0.5%. But experts said that falling oil prices would cut inflation in the UK and help to ease fuel and energy bills.
Worries about oversupply
Melvyn Wilson, Energy Trader at Troo Ltd, said: “Oil prices have eased after President Trump said Venezuela would hand over about 50 million barrels of crude to the US to be sold at market rates.
“That’s stirred worries about oversupply at a time of weak demand and lines up with Morgan Stanley’s warning of a surplus in the first half of 2026. You saw the ripple straight away in London: Shell fell around 2.4% and BP about 3.2% in early trade, helping pull the FTSE 100 down roughly 0.5%.
“For the UK, cheaper oil cuts inflation, eases fuel and energy bills, and lowers costs for businesses, but it also pressures the North Sea, with risks to jobs, investment, and tax receipts. If prices drop too fast while demand stays soft, deflationary pressure is a risk.”
Reshape global energy dynamics
George Lagarias, Chief Economist at Forvis Mazars, said we need to wait to see the consequences of Trump’s actions.
He added: “The US’s dramatic raid into Venezuela could prove game changing for the global oil market though the impact will take time to materialise, so patience is essential. What happens next remains uncertain, but the US signalled its intent to oversee Venezuela until a transition is arranged and to deploy major US oil firms to revitalise the country’s struggling energy sector.
“Why is this significant? Venezuela holds the world’s largest proven oil reserves – an estimated 303 billion barrels, roughly 17% of global supply – compared to Saudi Arabia’s 267 billion barrels. Yet Venezuela currently produces only around 1 million barrels per day, less than 1% of global output, due to sanctions, chronic underinvestment and mismanagement.
“If the US can take control and successfully develop these reserves, it could reshape global energy dynamics, potentially challenging Saudi Arabia and OPEC’s dominance over oil pricing.”
Oil could weaken further and maintain its downtrend
Alexander Londoño, Market Analyst at ActivTrades, said oil prices could continue to go down if a peaceful regime change happens in Venezuela.
He continued: “If a regime change in Venezuela were to occur and a peaceful transition were to take place, it is possible that oil could weaken further and maintain its downtrend, as this would imply a potential increase in crude production.
“Gold and silver have been rising because they act as safe-haven assets during periods of uncertainty. The events in Venezuela have increased that uncertainty in the financial markets and, to some extent, have also been supporting gold and silver.
“However, there are other factors affecting precious metals far more, such as the possibility that interest rates in the United States continue to fall during this year.”
