The year started not with a whimper, but with a bang. On 3 January, Donald Trump ordered and successfully carried out a military strike in Venezuela, resulting in the ‘extraction’ of its President, Nicolás Maduro. The action has many layers and, while it’s too early to gauge the full impact on markets, the initial reaction has been muted.
However, the operation highlights several themes likely to shape markets and geopolitics in 2026 and beyond. It already signals factors investors will need to monitor closely, from implications for oil and US domestic politics, to the evolving ‘Donroe’ Doctrine.
The Oil Dimension
Trump has made no secret of his interest in Venezuela’s oil. While restoring democracy in Caracas and addressing concerns surrounding Maduro’s involvement in narcotics and weapons were cited as key reasons for the intervention, the prospect of US oil companies returning to the region has become a central narrative.
Initially, major oil companies saw rises in share prices. However, within a week, gains returned to just above pre-operation levels. Big oil has been largely absent in Venezuela since the industry was nationalised fifty years ago. Maduro’s predecessor Hugo Chavez, forced any remaining international firms to cede control of operations to the state-owned PDVSA in 2007, sparking an array of legal battles and the departure of all firms except Chevron. The market quickly recognised that the infrastructure remains largely unchanged since the US left. There may be significant reserves but tapping them will require considerable investment.
Production has fallen from a peak of three million barrels a day in 1998 to under one million today.[1] Rystad Energy estimates that $110bn in capital expenditure will be needed to produce two million barrels a day – twice what US oil giants invested globally in 2024.[2] In other words, progress is unlikely to be fast. ExxonMobil Chief Executive Darren Woods appeared to confirm this view, suggesting Venezuela is “uninvestable” without “significant changes”.[3]
The ‘Donroe’ Doctrine
Beyond oil, the operation also appears to benefit the Trump administration’s broader geopolitical ambitions, known as the ‘Donroe’ Doctrine. This is a reference to the Monroe Doctrine of the early 19th century, reflecting a desire for US dominance across the Western Hemisphere.
The extraction of Maduro and seizure of Venezuelan oil assets have significantly weakened Cuba’s position, which relied on cheap Venezuelan oil. In addition, Cuba’s security service, tasked with protecting Maduro, was directly affected by the strike, with 32 Cuban guards reportedly killed during the operation.
The move also strengthens US leverage over China, Iran and Russia, all of which had invested in Venezuela and benefitted from diplomatic ties. Trump may see any increased pressure on China as particularly advantageous. China has been one of the few countries to resist US tariffs with relative success, by using their rare earth minerals as leverage, and any disruption to their oil imports could undermine that position.
Meanwhile, developments on Greenland, while still unfolding, suggest that US strategic considerations extend beyond Latin America. Venezuela appears to be part of a broader repositioning of America’s foreign policy priorities, which will be important to watch in the coming months.
Looking towards the midterms
Despite legal questions surrounding the Venezuela operation, some may view it as a shrewd manoeuvre for Trump’s domestic audience. Venezuela’s authoritarian regime displaced nearly eight million people[4] with many ending up in the US. A meaningful proportion of Venezuelan and Cuban voters in Florida, a critical swing state, appear to be largely supportive of the move.
These voters will be important in the midterm elections. Even if Congress challenges the operation’s legality or seeks to limit further actions, Trump may have gained favour with an influential section of the Hispanic electorate.
It’s also worth noting that, although Venezuela’s oil infrastructure is in poor condition, many US refineries are geared towards similar heavy crude. Any eventual increase in Venezuelan output could benefit US refineries, offering important political currency.
Keeping eyes open
The key takeaway from the 3 January intervention is that the situation remains fluid. Currently, markets appear relaxed, but confidence could easily be gained or shaken depending on how much uncertainty – the enemy of investing – enters the picture.
That said, most regional markets remain encouraging. Our Risk Barometer, which measures an array of relevant data points for market health, currently sits in the green.
Anyone hoping for a quiet start to the year will be disappointed. But if nothing else, recent events ensure that we will be keeping our eyes firmly on what comes next.
By Peter Wasko, senior portfolio manager, Copia Capital
[1] Venezuela: Oil, oil everywhere — but not a drop to pump
[2] An American oil empire is a deeply flawed idea
[3] Our perspective regarding the situation in Venezuela as shared with President Trump | ExxonMobil
