Blog

January 5, 2026

 

Taylor Salisbury, CFP® | Partner & Private Wealth Manager

The detention of Venezuelan President Nicolás Maduro by U.S. military forces marks a noteworthy and unanticipated geopolitical development. As widely covered in the media, American forces carried out an operation resulting in Maduro’s apprehension on allegations involving drug trafficking and corruption. In a public statement, President Trump indicated that the United States would assume control of Venezuela with the objective of boosting its oil production capacity.

While the humanitarian concerns and geopolitical ramifications for Venezuela and its neighbors remain paramount, clients may understandably question how these developments affect their investment holdings. This situation prompts numerous questions regarding America’s regional involvement, the potential for democratic electoral processes in Venezuela, implications for drug trafficking networks, prospects for substantial increases in oil output, and shifts in influence among nations such as Iran and China.

Historical analysis offers valuable perspective: geopolitical developments frequently generate near-term market fluctuations, yet their lasting influence on markets generally remains contained. These events typically fail to alter the trajectory of fundamental economic and market forces, even when oil production faces disruption. Recent geopolitical tensions, including those in Ukraine and the Middle East, have demonstrated this pattern. Recognizing this historical tendency can help clients maintain composure and concentrate on elements that have traditionally influenced market outcomes.

Context from history

Understanding U.S. engagement in Latin America requires examining historical precedents, as debates surrounding American intervention in Venezuela encompass subjects ranging from international legal frameworks to regional security. The Monroe Doctrine, initially expressed by President James Monroe in 1823, declared that European nations should refrain from intervening in Western Hemisphere affairs. When applied to current circumstances, this doctrine positions South America within America’s sphere of influence, meaning hostile actions in the region would be interpreted as threats to U.S. interests. President Trump has referenced this concept, recently terming his foreign policy approach the “Don-roe Doctrine.”

American intervention in Latin American nations is not unprecedented. For instance, U.S. forces apprehended Manuel Noriega in Panama in 1990, precisely 36 years prior, on drug trafficking charges. Although the recent Venezuelan operation came as a surprise to many, Maduro has faced indictment by the U.S. Department of Justice since 2020 on narco-terrorism and drug trafficking allegations. The Biden administration imposed sanctions on Venezuela and established a $25 million reward for Maduro in early 2025, which the Trump administration subsequently increased to $50 million.

Similar to other U.S. military and enforcement operations, multiple related goals are involved. The operation’s stated purpose focused on combating narco-terrorism, the basis for criminal charges filed against Maduro and 14 Venezuelan officials by U.S. authorities in 2020. The widespread international perception that Maduro’s governance lacks legitimacy, stemming from Venezuela’s 2024 election, reinforces this objective. Before the administrations of Maduro and Hugo Chávez, Venezuela functioned as a democracy and ranked among the region’s most prosperous nations.

For clients with extended time horizons, the critical takeaway is that geopolitical uncertainty constitutes an inherent aspect of investing, regardless of varying specific circumstances. These developments may appear more troubling as they diverge from typical business coverage regarding company profits and economic indicators. The accompanying chart illustrates numerous notable geopolitical events spanning recent decades. Markets typically rebounded within weeks or months in most instances, when they experienced any impact whatsoever.

The oil connection between geopolitics and markets

From an investment standpoint, the implications for oil markets may represent the most significant consideration. This stems from the fact that commodity prices serve as the principal mechanism through which geopolitical events influence financial markets, with oil maintaining its crucial position in the global economy. Venezuela holds particular importance in this context, possessing the world’s largest verified oil reserves at roughly 304 billion barrels, as reported by the U.S. Energy Information Administration. For comparison, this surpasses even Saudi Arabia’s reserves of 267 billion barrels.

Notwithstanding these substantial reserves, Venezuela’s actual oil output remains considerably lower than other producing nations. Venezuelan production has experienced a sharp decline over the last two decades due to poor management, insufficient infrastructure investment, and economic sanctions. Current production has dropped to under 1 million barrels daily, while the U.S. produces nearly 14 million.
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Should Venezuelan production expand, achieving meaningful additions to global supply will likely require considerable time and capital investment. This reduces any immediate market effects.

Looking ahead, U.S. energy firms may find opportunities to expand their access to these reserves, though lower oil prices resulting from increased supply might partially counterbalance this benefit. For the wider economy and consumers, any market disruption could potentially prove beneficial since expanded Venezuelan production would likely exert downward pressure on oil prices over time. This distinguishes it from conflicts such as Russia’s 2022 invasion of Ukraine, which interrupted existing supply channels and pushed oil prices to nearly $128 per barrel. Those circumstances intensified post-pandemic inflation and drove average U.S. gasoline prices above $5 per gallon.

Present oil prices remain well below those peak levels. Prices have remained relatively modest over the past year, with WTI crude trading under $60 per barrel and Brent crude hovering around that threshold. According to available information, OPEC+ countries have responded to recent Venezuelan developments by maintaining existing production quotas, indicating they are observing the situation before implementing strategic changes. The United States’ position as the world’s largest oil and gas producer further diminishes potential domestic economic impact.

Nevertheless, it bears noting that energy price movements are challenging to forecast precisely, and the U.S. continues to rely on crude imports. Following Russia’s invasion of Ukraine, widespread predictions suggested oil and natural gas prices would remain elevated indefinitely, particularly with Europe facing a severe winter forecast. However, prices stabilized and declined much earlier than many anticipated. This serves as a reminder that numerous factors can unexpectedly influence prices for oil as a global commodity.

Venezuela’s limited presence in global markets

An additional important consideration for investors is Venezuela’s negligible presence in global financial markets. The Bolsa de Valores de Caracas, Venezuela’s stock exchange, remains small and illiquid with limited international participation. It lacks inclusion in the MSCI Emerging Markets Index, meaning most international investors maintain minimal or zero direct exposure to Venezuelan equities. The nation’s economic deterioration over the previous decade has effectively eliminated it from emerging market investment portfolios.

Regarding fixed income markets, Venezuela has remained in default since 2017 after failing to service its debt obligations. Bondholders continue negotiating restructuring arrangements, though the bonds trade at substantially distressed valuations reflecting anticipated significant losses.

The Venezuelan situation will continue developing, potentially producing additional developments that attract market focus. The indirect effects through oil prices and uncertainty will likely exceed any direct impacts from the country and its equity markets. Instead of attempting to forecast precisely how events might unfold, clients should prioritize aligning their portfolios with their financial objectives.

The bottom line? The detention of Venezuela’s president constitutes a notable geopolitical event with humanitarian and regional consequences. History demonstrates that portfolios constructed around long-term financial objectives can successfully navigate geopolitical uncertainty.

References

1. https://www.eia.gov/outlooks/steo/tables/pdf/3dtab.pdf

 

 

Taylor Salisbury is a registered representative with, and securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor.  Stratos Wealth Partners, Ltd. is a separate entity from LPL Financial.  Trading instructions sent via email, fax, or voicemail will not be honored.  There is no assurance that these messages can be retrieved on a timely basis, nor is there any sure method of confirming the customer identity. The information contained in this message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed.  If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited.  If you have received this message in error, please immediately delete.

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