In the early hours of Saturday 3 January, US forces executed a military strike capturing Venezuelan President Nicolás Maduro and his wife Cilia Flores from Caracas. Within hours, Maduro was aboard the USS Iwo Jima bound for New York, where he now faces narco-terrorism and drug trafficking charges.
President Trump announced the US would ‘run’ Venezuela temporarily, though Secretary of State Marco Rubio later clarified Washington would not assume day-to-day governance. Venezuelan Vice President Delcy Rodríguez has assumed power as acting president for 90 days under a Supreme Court ruling. Despite initially condemning the operation as a ‘cowardly kidnapping’, Rodríguez has since adopted a more conciliatory stance. United Nations Secretary-General António Guterres expressed concerns regarding regional instability and international relations following the operation.
Venezuela’s direct economic significance remains limited. The country produces approximately 800,000–900,000 barrels of oil daily, accounting for less than 1% of global supply. Its gross domestic product (GDP) represents roughly 0.1% of the world economy, containing direct contagion risks.
However, longer-term implications warrant attention. Trump’s pledge that ‘we’re going to have our very large US oil companies go in, spend billions of dollars, fix the badly broken infrastructure and start making money for the country’ may change the oil supply landscape. For Venezuela, regime change opens possibilities for sanctions relief and economic recovery following years of decline that saw the economy contract 71% between 2012 and 2020.
The indirect implications carry greater weight. By demonstrating willingness to deploy military force for regime change, the US has established a precedent that draws attention from both allies and adversaries. This action coincides with Trump’s interest in Greenland and China’s ambitions regarding Taiwan, intensifying fears of escalating territorial disputes.
The intervention amplifies tensions beyond the Americas. China and Russia, both close allies of the Maduro regime, swiftly condemned the operation and demanded his release. China had extended over $60 billion in loans to Venezuela and purchased 80% of its oil exports, whilst Russia provided key military and diplomatic support. The forceful removal of a government backed by both powers delivers a confrontational signal that could heighten geopolitical tensions. The operation has amplified uncertainty, typically a catalyst for safe-haven demand even as certain risk assets rally on optimism regarding potential changes in Venezuela.
Oil prices demonstrated moderate volatility. Brent crude oil and West Texas Intermediate (WTI) crude futures both rose just below 2% on Monday before paring gains. Venezuela’s current production level cannot materially shift global supply-demand dynamics.
US energy equities painted a different picture. Chevron, the only US oil company currently operating in Venezuela under sanctions waivers, surged 5% on Monday on prospects of expanded operations. Exxon Mobil and ConocoPhillips gained 2–3%, whilst oilfield services companies Halliburton and SLB jumped 7.8% and 9.0% respectively on potential infrastructure rebuild contracts.
Gold rallied 2.7% to $4,448 per ounce, whilst silver spiked 5.4% as demand for safe-haven assets rose amid geopolitical uncertainty. Bitcoin climbed 4.5% above $94,000.
Major equity indices shrugged off the news. The Dow Jones reached a record high, rising 1.2%. The S&P 500 advanced 0.6% and Nasdaq 100 gained 0.8%. Asian markets rallied strongly, with Japan’s Nikkei up 3.0% and South Korea’s Kospi surging 3.4% to a new record high.
The US dollar remained largely unchanged as safe-haven demand was offset by disappointing US manufacturing data. Bonds issued by the Venezuelan government and state oil company Petróleos de Venezuela (PDVSA) surged as much as 10 cents on the dollar from deeply distressed levels, on expectations that regime change could eventually enable debt restructuring. Liquidity on these instruments remains thin.
Despite dramatic headlines, markets have made minimal adjustments for broader geopolitical risk. Treasury yields, credit spreads and inflation expectations all remain stable, suggesting investors view this as an isolated event rather than the beginning of more interventionist foreign policy.
Oil curve structures show no signs of supply concern — the market remains in contango rather than backwardation, indicating little immediate scarcity fears.
Fundamental oversupply conditions continue to dominate. OPEC+ maintains production discipline, US output reached record levels above 13.8 million barrels daily in 2025, and new supplies from Brazil, Guyana and Argentina continue adding pressure. The International Energy Agency’s (IEA) December report projects a substantial market surplus of 3.8 million barrels per day in 2026, representing nearly 4% of global demand, as supply growth outpaces consumption.
Should Venezuela eventually restore production to the 2–3 million barrels daily seen a decade ago, it would deepen the glut, with some analysts projecting WTI could fall below $50.
