While the global oil market faces elevated geopolitical risk — headlined by potential disruptions involving Iran and Venezuela — the oil market is currently oversupplied, which offers a cushion amid uncertainty, says Fitch Ratings.
In a new report, the rating agency noted that, despite increased price volatility, it forecasts the global oil market will remain oversupplied this year.
Fitch estimates that global supply rose by three million barrels per day in 2025, and it is expecting a further increase of 2.5 million barrels per day in 2026 — with demand only growing by about 0.8 million barrels both this year and last year.
Against that backdrop, “Any possible supply disruptions in Iran can be absorbed by an oversupplied market,” it said.
Currently, Iran exports about two million barrels per day. “Material interruptions to Iranian oil production would boost prices, although the impact would still be limited given global market oversupply,” it said.
For Venezuela, oil production has dropped in recent years due to a combination of sanctions and weak investment, Fitch said.
And, while production could increase a bit if sanctions are eased, the impact on the global market is likely to be modest, it said — estimating that its output could increase from 0.88 million barrels per day to about 1 million barrels. That is “unlikely to materially affect the global market,” it added.
A more meaningful increase in Venezuelan production — back to its 2010 level of 2.5 million barrels per day — faces challenges, as this would “require substantial investment to modernize its dilapidated infrastructure,” it noted.
“Renewed investment by U.S. and other international oil companies would require a reliable regulatory framework and fiscal stability in the sector, particularly given the expropriation of U.S. oil companies’ assets in 2007,” it said.