Oil prices have spiked amid rising tensions in Iran and the Venezuela situation. Both situations have the potential to create bearish pressure in 2026, but in the short term the Iran situation could create a significant problem for oil supply. 

The protests in Iran are not like the previous ones, and the regime is having difficulty quelling the anger. The response to the protests has turned violent, with more than 2,500 people believed to be dead in the clashes. It could turn into a civil war, it could trigger a US response, and it could trigger a blockade on the Strait of Hormuz. 

The Strait of Hormuz carries nearly 20% of global oil. Oil from Iraq, Iran, Kuwait, the UAE, and Saudi Arabia relies on the strait for transportation. If the Iranian regime feels its survival is at stake, it might attempt to use the threat of a blockade to deter other nations from intervening. However, its ability to do so is questionable. 

As for Venezuela, the successful US operation and the new administration’s cooperative stance with the US increase the likelihood of additional oil supply entering the market. The oil market is expected to have a large surplus in 2026, and extra oil from the country will increase the downward pressure. However, pumping from Venezuela is likely to remain limited because the sector needs reconstruction, which will take a long time, and many American firms are reluctant to invest so far. 

(Brent Oil) 

Brent has been rising in recent days because of the Iran risks, and it has the potential to spike further if risks escalate, especially if anything happens in the Strait of Hormuz. But the base case for 2026 is that any spike presents a potential selling opportunity. The downward trend continues and will continue unless the supply situation changes permanently, apart from sudden spikes. 66 and 71 are the key resistance levels to watch in the medium term.