2026 started with a geopolitical earthquake, with US President Donald Trump ordering an attack on Venezuela that led to the capture of Venezuelan President Nicolas Maduro. For now, this seems to be a limited military operation with no plan for American troops or administrators on the ground in Venezuela, even as Trump caused confusion initially by his remark that the US plans to “run” Venezuela. The key is that the US is supporting Maduro’s right hand person Delcy Rodriguez to assume the role of interim President, rather than opposition leader Maria Corina Machado, which overall suggests this is much less about regime change at least for now.
The initial implications for Asia’s markets probably include a bias for oil prices to head lower over time, which could be positive at the margin for larger oil importers in Asia such as KRW, THB, PHP and INR. With oil markets already expected to be in a meaningful surplus in 2026, this could add further pressure for oil prices to head lower, even as there is uncertainty around whether and how quickly Venezuela may be able to ramp up oil production and also regime stability.
Longer-term, these developments are another nail in the coffin of the post World-War II rules based world order, and also importantly speak to the US’ willingness to enforce the modern-day version of the Monroe doctrine – that the US is the pre-eminent power in the Western Hemisphere and it should not be afraid to guard its backyard. Of course, whether the corollary is that the US will retreat more from the rest of the world including here in Asia will be important longer-term, together with how the rest of the world perceives their space for further action in their own backyard given the US’ precedent setting actions. Understandably, these military actions were met with extreme consternation and condemnation in public statements by a variety of countries including China, Brazil, Russia.
