Potential Venezuelan oil revival risks deepening recycled resins downturn

Recycled market participants are increasingly concerned that a potential ramp-up in Venezuelan oil production could further worsen demand and pricing for recycled resins in 2026 by intensifying the current supply glut of oil and tepid demand.

Venezuela has some of the largest crude reserves in the world, at over 300 billion barrels. After President Donald Trump met with executives from 17 oil companies on Jan. 9, vowing to secure $100 billion in new investment for Venezuelan oil production, sources believe this could further pressure pricing for virgin resin, inevitably worsening demand for recycled resin.

"Ramping up Venezuela's oil production could add a large amount of oil to the world supply," a source from a material recovery facility said. "There's no guarantee that things will improve if the current regime is left in place (albeit minus Maduro) or if the USA takes more control. A lot of uncertainties."

Despite the potential oil supply surge, the members of OPEC+ recently said on Jan. 4 that they would keep oil production steady through the first quarter of 2026 to "support market stability." Despite the comments from Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, sources remain concerned.

The recycled market began 2026 with a weak performance after a difficult 2025. The year prior was marked by historically low virgin pricing, persistent virgin resin oversupply, recycler shutdowns and a pullback from corporate sustainability commitments.

"We observe a direct correlation between oil production and polymer resin prices, which in turn impacts the price spread between virgin and recycled plastic and affects demand for recycled material," a second source from a material recovery facility said. "There is already a huge oversupply of crude and if we increase production, it will impact virgin pricing."

With virgin plastic already at all-time lows, if the price spread between recycled and virgin material further widens, buyers are more likely to choose virgin material, resulting in weaker demand for recycled products.

"Oil production is through the roof and cost prospects for recycled materials start to fall apart when you buy it so cheap," a US recycled material broker said. "No one buys recycled materials if they can get virgin. Plus, green initiatives are disappearing."

According to data from S&P Global Energy CERA, the Platts Dated Brent averaged $69/b in 2025, near a five-year low, amid oversupply, weak demand, and geopolitical concerns.

The global crude oil benchmark was down about $12/b from $81/b in 2024 and is expected to further decline to $58.60/b in 2026 before recovering to $63.90/b in 2027, according to S&P Global Energy analysts.

Platts, part of S&P Global Energy, assessed post-consumer HDPE natural bales at 53 cents/lb ex-works Chicago on Jan. 9, down almost 50% from its 2025 peak of 105 cents/lb on May. 6.