Oil Down as Well-Supplied Market Shrugs Off Venezuela Upheaval

Oil prices ​slipped on Monday as ample global supplies offset concerns about the impact on oil flows from the U.S. capture ⁠of President Nicolas Maduro of Venezuela, home of the biggest global oil reserves.

Brent crude futures were down 23 cents, ⁠or 0.4%, ‌to US$60.52 a barrel at 0940 GMT, while U.S. West Texas Intermediate crude was 21 cents, or 0.4%, lower at US$57.11 a barrel. The benchmarks were volatile in early Asian ⁠trade as investors assessed the situation in Venezuela, an OPEC member whose crude exports had been under a U.S. embargo, and the potential impact on oil supply.

U.S. President Donald Trump said Washington would take control of the country and that the embargo remained in place, after Maduro was detained in ⁠a New York jail on Sunday. In ​a global market with plentiful oil supply, analysts said any further disruption to Venezuela's exports would have little immediate impact on prices.

Oil ‍output in the country has plummeted in recent decades amid mismanagement and a lack of investment from foreign firms after Venezuela nationalised ​oil operations in the 2000s.

Output averaged about 1.1 million bpd last year, or just 1% of global production. Kazuhiko Fuji, consulting fellow at Japan's Research Institute of Economy, Trade and Industry, noted also that U.S. strikes had not damaged the South American country's oil industry.

"Even if Venezuelan exports are temporarily disrupted, over 80% are destined for China, which has built up ample reserves," Fuji said. Venezuela's acting president offered on Sunday to collaborate with the U.S.

"This reduces the risk for an extended embargo on Venezuelan oil exports with oil potentially flowing freely out of Venezuela in not too long," said SEB analysts. Trump also raised the possibility of ⁠further U.S. interventions, suggesting Colombia and Mexico could face military action ‌if they did not reduce the flow of illicit drugs.

Analysts are also watching Iran's reaction after Trump threatened on Friday to intervene in a crackdown on protests in the OPEC producer. Elsewhere, the Organization of the ‌Petroleum Exporting Countries and ⁠its allies decided to maintain their output on Sunday.