Geopolitical risk returns to fore as Venezuela upheaval tests investor sentiment

Global investors are confronting a renewed surge in geopolitical risk following the U.S. capture of Venezuelan President Nicolás Maduro, a development that could eventually unlock the country’s vast oil reserves but is weighing on market sentiment in the near term, according to a Reuters report.

Market reaction on Monday was relatively restrained, Reuters said. Equities edged higher, oil prices fluctuated and gold found support, suggesting investors largely absorbed the immediate implications of the U.S. action. According to market data cited by Reuters, U.S. stock futures and Asian equities traded higher in early Asian hours, while gold rose more than 1% after struggling in the previous week’s initial response to the military operation.

U.S. President Donald Trump said Washington would take control of the oil-producing nation following Maduro’s capture, marking the most direct U.S. intervention in Latin America since the 1989 invasion of Panama, Reuters reported. Maduro was being held in a New York detention facility on Sunday as U.S. authorities prepared formal charges, according to Reuters, which added that the U.S. administration has long accused the Venezuelan leadership of corruption, election manipulation and ties to narcotics trafficking.

Economists cited by Reuters said the episode underscores how geopolitical developments have once again become a dominant driver of financial markets.

Markets Extend Strong Start to 2026

The geopolitical shock came as global markets began 2026 on a firm footing. Wall Street closed higher on the first trading day of the year, while the dollar strengthened against a basket of major currencies, according to data referenced by Reuters. U.S. and global equities ended 2025 near record highs after posting double-digit gains in a volatile year marked by tariff disputes, shifting central bank policies and persistent geopolitical tensions, Reuters said.Gold, which recorded its strongest annual rise in 46 years in 2025, remained elevated near $4,400 an ounce, supported by expectations of U.S. rate cuts and recurring geopolitical flashpoints, according to metals market data cited by Reuters.
Trump said over the weekend that the United States would oversee Venezuela until conditions allowed for a stable political transition, though the administration has provided limited details on governance plans or the duration of U.S. involvement, Reuters reported. The developments have also refocused attention on Venezuela’s debt crisis, one of the world’s largest unresolved sovereign defaults, according to Reuters.
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Oil Markets Weigh Long-Term Potential, Short-Term Risks

The U.S. administration has signalled that American oil companies could eventually return to Venezuela and invest billions of dollars to revive crude production, a move that could support global growth over time by increasing supply and easing energy prices, Reuters said. However, analysts cautioned that such benefits would not materialise quickly.

Oil prices were relatively stable on Monday, Reuters reported. Brent crude futures traded near $60.89 a barrel, while U.S. West Texas Intermediate hovered around $57.43. Prices had edged above $62 a barrel in December after the U.S. blocked sanctioned tankers linked to Venezuela but have since settled into a narrow range, according to Reuters.

Strategists cited by Reuters noted that the potential reopening of Venezuela’s oil sector could eventually release large volumes of supply, which markets may begin to price in as geopolitical risks ease, though the timing remains uncertain. Regional markets reflected some of these concerns, with several Gulf stock markets closing lower on Sunday as investors weighed oversupply risks against heightened geopolitical uncertainty, Reuters said.

Structural Hurdles Limit Near-Term Upside

Despite Venezuela holding some of the world’s largest proven oil reserves, analysts cited by Reuters widely agree that it could take years to meaningfully boost output. Production has collapsed over recent decades due to mismanagement, underinvestment and the nationalisation of oil assets in the 2000s, including holdings belonging to Exxon Mobil and ConocoPhillips. Chevron remains the only major U.S. oil company currently operating in the country, Reuters reported.

According to analysts cited by Reuters, companies considering a return would face substantial challenges, including security risks, severely degraded infrastructure, uncertainty over contract frameworks, legal questions surrounding the U.S. operation to capture Maduro and the likelihood of prolonged political instability.