(UBS)
But while investors should brace for further volatility, we maintain the view that oil prices should recover this year, supporting our preference for broad commodity exposure. We also expect US dollar weakness to persist in the first half of 2026, and recommend investors align their currency allocations with their liabilities and spending plans.
A narrowing market surplus should push up oil prices later this year
Venezuela possesses significant oil reserves with relatively low geological risks. But its current level of production, at around 1 million barrels per day, accounts for less than 1% of global oil production. Any expansion in output would require substantial investment given the neglected infrastructure resulting from years of mismanagement and underinvestment. While media reports suggest oil chief executives are expected to visit the White House this week to discuss investments in Venezuela, it remains unclear which companies would commit capital at current oil prices, particularly since a stable regulatory framework and political continuity are still elusive.
We also believe peace between Russia and Ukraine is unlikely to add much crude oil to global supply in the near to medium term.
We therefore expect improving demand and stalling supply growth to support Brent crude prices. Our year-end target is USD 67/bbl.
Original report – Commodities offer opportunity despite geopolitical volatility , 7 January 2026.
