From Caracas to Wall St: Oil, risk assets on edge after US action in Venezuela sparks market volatility

An audacious US military strike in Venezuela has injected fresh geopolitical risk into global markets just as 2026 begins. The capture of President Nicolás Maduro and his wife has unsettled investors and reignited concerns that energy politics — particularly control over oil supply — could once again drive market volatility as the markets reopen on December 5. 

The operation — unprecedented in its scale and symbolism — has immediately reignited debates over energy security, international law and the enduring role of fossil fuels in shaping global power politics. While Washington has framed the action as a law-enforcement-driven intervention, critics argue the move fits a long-established pattern in which strategic energy interests sit just beneath the surface. 

Oil at the centre of the storm 

Venezuela holds the world’s largest proven crude oil reserves, estimated at more than 300 billion barrels, according to OPEC. Before the US imposed a blockade on sanctioned vessels, the country was producing roughly 1 million barrels per day, including refined products and petrochemicals — about 0.9% of global supply. 

For many analysts, the seizure of Maduro underscores how control over energy resources continues to shape foreign policy. Julian Popov, former environment minister of Bulgaria and senior fellow at Strategic Perspectives, said the explicit targeting of Venezuela’s oil wealth was “another warning sign of how politically explosive and toxic oil interests can be.” 

“Reducing dependency on fossil fuels by shifting to clean energy will reduce the dictatorial, corruption and military conflict risks around the world,” Popov said. 

That view was echoed by Sascha Müller-Kraenner, executive director of Deutsche Umwelthilfe and founder of the Ecologic Institute, who accused the Trump administration of prioritising oil over democracy. “Trump is not concerned with democracy in Venezuela, but with oil,” he said, calling the operation a violation of international law. 

Fragile supply chains, nervous markets 

The immediate market concern is whether the shock could disrupt energy flows in the Caribbean and Gulf of Mexico, regions already sensitive to geopolitical stress. Ana Maria Jaller-Makarewicz, lead energy analyst for Europe at the Institute for Energy Economics and Financial Analysis (IEEFA), warned that oil and gas markets remain highly vulnerable to political shocks. 

“Last year, oil and gas prices continued to fluctuate due to geopolitical issues, and this year that trend could continue,” she said. “If Guyana, Mexico or Trinidad & Tobago production in the Caribbean/Gulf of Mexico were to be impacted by conflict, oil prices would likely rise.” 

Venezuela’s exports have already been under strain. China is the primary buyer of Venezuelan crude, with Cuba taking smaller volumes, but shipments have effectively stalled since the US blockade. At the same time, US major Chevron had gradually increased its Venezuelan shipments — from around 128,000 barrels per day in October to about 150,000 bpd last month — after exports to the US resumed earlier this year under a special licence. 

The US refining system adds another layer of complexity. American refineries rely heavily on heavy crude — such as that produced in Venezuela, Canada and parts of Latin America — to blend with lighter domestic oil. Any prolonged disruption to Venezuelan supply could therefore have knock-on effects well beyond Latin America. 

Energy security meets geopolitics 

Beyond immediate market volatility, the episode has sharpened concerns in Europe, which remains heavily dependent on imported fossil fuels. Pauline Heinrichs, lecturer in war studies (climate and energy) at King’s College London, said the intervention highlighted the strategic vulnerability created by that reliance. 

“The EU’s massive reliance on imported oil and gas — 95% of crude oil and 86% of gas — has left it powerless to the geopolitical games of authoritarians and would-be authoritarians from Moscow to Washington,” she said, adding that fossil fuels remain “volatile and unstable” at the core of global conflict. 

Environmental and civil society groups have gone further, arguing that the crisis exposes how extractive industries benefit from instability. Elizabeth Bast, executive director of Oil Change International, said the escalation followed a familiar script. 

“This escalation follows a historic playbook: undermine leftist governments, create instability, and clear the path for extractive companies to profit,” she said. “US oil and gas companies are poised to exploit the chaos and carve up one of the world’s most oil-rich territories.” 

A volatile opening to 2026 

As investors brace for the first full trading week of the year, the Venezuela shock has injected a fresh layer of uncertainty into already fragile global markets. Oil traders will be watching for any sign of supply disruption or escalation in the region, while currency and equity markets weigh the broader implications of a renewed era of hard-power geopolitics.