What happened?
Over the weekend, the US military conducted strikes in Venezuela and extracted President Nicoals Maduro and his wife, who have been taken into US custody.
At a press conference, President Trump said the United States would temporarily “run”/take control of Venezuela and prioritise rebuilding and reopening the country’s oil sector, including bringing in major US oil companies to refurbish degraded infrastructure.
Inside Venezuela, Vice President Delcy Rodríguez has emerged as interim leader with the backing of the Supreme Court, while contesting the US narrative about governance and sovereignty—setting up a volatile near-term mix of geopolitical uncertainty and disruption to oil market.
How are markets reacting?
Equities are fading the shock. Oil is trading headlines, not a clean trend. Havens are bid.
Crude oil and energy complex
Base bias:
- Near term: Crude is likely to trade rangebound and choppy, because Venezuela supplies less than 1% of global oil.
- Medium term: The market may start pricing “future Venezuela barrels,” but speed-to-supply is slow even in a best-case political path because rebuilding production requires capital, equipment, and political stability over years
Key risks:
The main risk is that the market overprices how quickly Venezuelan production can recover, because decades of underinvestment and the extra-heavy nature of Venezuelan crude make a rapid ramp-up difficult even if policy shifts.
Instruments:
- Oil: Light Sweet Crude Oil (WTI), Brent Crude
- Gas: Henry Hub Natural Gas, E-mini Natural Gas
- Energy equities (refs): ExxonMobil, Chevron, ConocoPhillips, SLB (beta differs by bucket)
- Chevron is the only major U.S. oil producer still operating in Venezuela under a special Treasury license that permits limited extraction and exports. The company has decades-long joint ventures in the country. If restrictions are loosened or U.S. influence expands, Chevron could gain broader access to Venezuela's heavy crude and potentially ship more barrels to Gulf Coast refineries.
- If Venezuelan heavy crude flows normalise, the more direct beneficiaries are typically the most complex U.S. refiners—especially Gulf Coast plants with meaningful coking capacity—because they can monetise heavy-light spreads and run heavy grades efficiently. Historically, names like Valero Energy, PBF Energy, and Phillips 66 show up in that ‘complex refining leverage’ conversation.
- Energy ETFs: State Street Energy Select Sec SPDR ETF, Vanguard Energy ETF, State Street SPDR S&P Oil & Gas Expl & Prod ETF, VanEck Vectors Oil Services ETF
Gold and silver
Base bias: - Gold is likely to be a cleaner expression of this event than oil, because the shock is geopolitical first and oil-specific second, and gold tends to price uncertainty, credibility risk, and tail hedging demand.
- Silver and platinum can participate, but they usually trade with higher beta and can mean-revert faster if the situation de-escalates.
Key points: The main risk in silver and platinum is that positioning becomes crowded after sharp moves, which can amplify drawdowns if headlines cool or risk appetite returns quickly.
Instruments- Spot: XAUUSD, XAGUSD
- Futures: Micro Gold, Micro Silver, Gold, Silver
- Platinum futures: Platinum, Palladium
- ETFs: SPDR Gold ETF, iShares Silver Trust ETF, Abrdn Physical Platinum Shares ETF
- Miners: VanEck Vectors Gold Miners ETF, VanEck Vectors Junior Gold Miners ETF
Global equities
Base bias- Global equities are likely to keep looking through the geopolitical shock unless it threatens the broader supply chain or tightens financial conditions, because geopolitics has become a persistent feature rather than a surprise.
- Equities can continue grinding higher if earnings expectations, liquidity, and rate expectations remain supportive, especially in tech, but headline risk tends to raise dispersion and rotation under the surface.
Key risk signals to watch: If credit spreads widen, crude spike on further disruptions, and equities roll over together, then the market is re-pricing this as a systemic shock rather than a contained geopolitical event.
Instruments
- Futures: E-mini S&P 500, E-mini Nasdaq-100, Nikkei 225, Micro Nikkei, mini TOPIX, Hang Seng Index, Hang Seng TECH Index, FTSE China A50
- CFDs: US 500, US Tech 100 Nas, Hong Kong 50, US 30 Wall Street, Germany 40, EU Stocks 50
FX
Base bias:- The Trump administration has explicitly warned that Colombia and Mexico could be next targets over drug trafficking concerns, which keeps a live geopolitical tail risk over MXN.
- MXN can weaken even in a stable global risk tape if the market starts to price a tougher US stance on Mexico-related security issues, because traders quickly map that into tariff threats, border frictions, and risk premia.
- The euro may come under pressure if traders remain positioned for a stronger US policy regime and a firmer dollar impulse.
Instruments
- USD/MXN spot or options
- MXN/JPY
- EUR/USD spot or options
- Euro crosses: EUR/JPY, EUR/GBP, EUR/CHF
Defense stocks and ETFs
Base bias
- Defense is likely to remain a relatively clean way to express persistent geopolitical risk, because the key driver is a higher baseline for security spending and procurement rather than the day-to-day direction in oil.
- Defense can outperform quietly in a “risk is being faded” tape, but it tends to mean-revert quickly if markets become confident that geopolitics is de-escalating, particularly after crowded runs.
Instruments
- US defense ETFs: iShares Trust US Aerospace & Defense ETF, State Street SPDR S&P Aerospace & Defense ETF, Invesco Aerospace & Defense ETF
- US defense stocks: Lockheed Martin, Northrop Grumman, RTX, General Dynamics
- Europe defense: Rheinmetall, Leonardo, Germany Mid-Cap 50
