Oil prices are drifting lower with a stubborn sense of inevitability, weighed down by swelling supply and an unconvincing geopolitical risk premium, even after the shock of a US strike in Venezuela.

From Wall Street to Mumbai, analysts are converging on a view that crude could revisit levels last seen during periods of acute oversupply, with Brent flirting with $50 a barrel by mid-year and struggling to mount a durable recovery.

The immediate drag is Opec+ itself. After years of restraining output to prop up prices, the producer group has begun loosening the taps, betting that demand will eventually absorb the extra barrels. So far, the market is unconvinced. The additional supply is landing at a time when consumption growth is slowing, inventories are rebuilding and non-Opec producers, led by the US, Brazil and Guyana, continue to pump at or near record levels.

SBI Research in India recently put a stark number on this imbalance, forecasting Brent could slide to around $50 a barrel by June. In its base case, the Indian basket of crude imports softens in line with international benchmarks, easing inflationary pressures at home but underscoring how fragile the global price floor has become.

The call echoes projections from major investment banks. Goldman Sachs expects US benchmark WTI to average roughly $53 a barrel in 2026, warning that the market is facing a surplus of around 2 million barrels per day this year alone.

What makes this downturn distinctive is not just the size of the surplus, but its persistence. According to Goldman’s commodities team, 2026 is likely to mark the last major wave of new supply before the market begins to rebalance later in the decade. Until then, producers are effectively competing for market share in a world that no longer fears scarcity. The US Energy Information Administration has reinforced that view, forecasting Brent to average close to $55 a barrel through much of next year as global production growth outpaces seasonal demand and accelerates stockbuilding.

Against that backdrop, the dramatic US intervention in Venezuela might once have sent prices sharply higher. Instead, the market barely flinched. Traders appear to have concluded that Venezuela, despite sitting on the world’s largest headline oil reserves, cannot materially alter the supply picture in the short term — either as a source of new barrels or as a sudden loss.

The distinction between reserves on paper and barrels that can actually be produced is crucial. Venezuela’s oft-quoted figure of roughly 300 billion barrels dates back to a period of $140 oil, when high prices made technically challenging projects appear viable. At today’s much lower price levels, and with Venezuelan crude typically selling at a steep discount to Brent, the volume of economically recoverable oil is likely far smaller. Much of the country’s output is ultra-heavy and sulphur-rich, requiring costly dilution, specialised transport and complex refining. Only a limited number of refineries, mainly on the US Gulf Coast and in parts of Asia, can handle it efficiently.

Years of underinvestment, sanctions and political interference have hollowed out Petróleos de Venezuela, slashing production from more than three million barrels a day two decades ago to well under one million. Energy economists widely agree that reversing that decline would take billions of dollars and many years, even under a stable and investor-friendly government. As one veteran oil analyst put it recently, Venezuela is “resource-rich but capacity-poor,” a mismatch that blunts its immediate relevance to price formation.

That helps explain why the initial market reaction to the US strike was a modest dip rather than a spike. In an oversupplied system, even the unlikely scenario of Venezuelan exports disappearing entirely would not dramatically tighten balances. Conversely, any gradual recovery in Venezuelan output would only add to the glut confronting Opec+, making its task of managing prices even harder.

There is also a broader shift in how markets process geopolitical risk. Unless an event threatens a large, immediate disruption — such as a closure of the Strait of Hormuz — traders are increasingly inclined to fade the headlines. Spare capacity in Opec+, high commercial inventories and resilient US shale output have collectively dampened the fear factor that once defined oil trading.

Some strategists caution that the long-term political implications of US action in Venezuela could be more destabilising than the near-term supply effects. Heightened uncertainty around sanctions, property rights, and the use of force adds a layer of unpredictability to energy investment decisions globally. There is also unease that a more interventionist US posture could spill over into other sensitive regions, including the Middle East, where even a small miscalculation could have outsized consequences for oil flows.

For now, however, fundamentals are firmly in the driver’s seat. With Opec+ adding barrels, non-Opec supply surging, and demand growth failing to accelerate, oil’s centre of gravity is drifting lower. Unless producers change course or a truly systemic shock emerges, the path of least resistance for prices still points down — towards $50, and possibly below.