By Samuel Hertz, Head of APAC at EBC Financial Group
On January 3, 2026, the United States confirmed the arrest of Venezuelan President Nicolás Maduro, an event that immediately sent shockwaves across diplomatic channels and global markets. While the incident was framed publicly as a political enforcement action, its deeper significance lies in how closely it aligns with the United States’ 2025 National Security Strategy (NSS). This was not an isolated event, but rather a policy action aligned with broader U.S. strategic priorities related to regional geopolitics, energy security, and global finance.
The Oil Market Paradox: Why Price Did Not Spike
From a financial market perspective, the most striking outcome was not political escalation, but market restraint. Historically, upheaval in a country holding the world’s largest oil reserves would have triggered sharp increases in crude prices. In 2026, however, the response was muted.
Despite possessing approximately 303 billion barrels of reserves, Venezuela’s oil sector has been structurally crippled by decades of underinvestment and infrastructure degradation. Current export volumes hover around 500,000 barrels per day, a figure that is economically insignificant when set against global demand of nearly 100 million barrels per day. As a result, disruptions in Venezuelan supply lack the scale necessary to meaningfully tighten global markets.
This dynamic is further reinforced by the United States’ position as the world’s largest oil producer, with output nearly 13.4 million barrels per day. At this level, US production alone provides a substantial buffer against regional supply shocks, eliminating the need for emergency releases from strategic reserves. Meanwhile, OPEC+ has shown a clear reluctance to reduce output aggressively, even after oil prices declined roughly 20 percent in 2025, underscoring a market still characterised by excess supply. In this context, Venezuela’s political shock registered as a volatility event rather than a structural repricing of oil.
Defending the Petrodollar: The Monetary Dimension
Beyond energy fundamentals, President Maduro’s capture carries deeper implications for the global monetary system. Prior to his detention, President Maduro had accelerated efforts to sell Venezuelan oil in non-USD currencies, while also promoting the petro cryptocurrency as an alternative settlement mechanism.
Although limited in scale, these initiatives symbolised a broader trend toward de-dollarisation in commodity markets. By intervening, the United States effectively ensured that any future recovery in Venezuelan oil production would be reintegrated into the US dollar-based pricing and settlement system. This move strengthens the petrodollar framework at a time when BRICS economies are actively exploring parallel financial architectures. From a financial perspective, Venezuela has thus become less a political battleground and more a frontline in the defence of dollar dominance.
Investment Outlook: Navigating Oil Oversupply in an AI-Driven Energy Transition
The path to recovery, however, is neither immediate nor guaranteed. It is estimated that approximately USD58 billion will be required to modernise Venezuela’s ageing oil infrastructure, much of which dates back more than half a century. Only a small number of global energy majors, predominantly US-based firms such as ExxonMobil and Chevron, possess both the capital strength and strategic incentives to undertake such investment once political conditions stabilise.
From a market perspective, the potential recovery of Venezuelan oil production, if combined with already ample supply from the United States and OPEC+ stance, points toward a prolonged period of relatively low and range-bound oil prices. In such environment, oil is likely to function as a stable, cost-based input that supports global growth, particularly in emerging and manufacturing-intensive economies.
At the same time, global energy demand is entering a new phase of expansion. The rapid deployment of artificial intelligence (AI), high-performance computing, and hyperscale data centres is significantly increasing baseload electricity demand. Unlike traditional industrial cycles, AI-related energy consumption is continuous, power-intensive, and geographically concentrated, placing stress on grids rather than oil supply chains. This dynamic is accelerating capital flows into power generation, grid infrastructure, and energy storage rather than upstream oil exploration.
Investment opportunities are increasingly bifurcated because of that. On one side, traditional oil and gas investments are shifting toward energy efficiency, cost leadership, and brownfield optimisation. In a low-price environment, only producers with strong balance sheets, advanced extraction technologies, and low breakeven costs are likely to generate sustainable returns. Capital expenditure is expected to remain disciplined, favouring incremental capacity expansion over large-scale greenfield projects.
On the other side, structural capital is flowing toward the energy systems that enable digital transformation. Renewable energy, nuclear power extensions, natural gas as a transition fuel, and grid modernisation are emerging as strategic beneficiaries of AI-driven demand growth. Data centres are increasingly co-located with renewable assets, long-term power purchase agreements, and energy storage solutions to ensure cost stability and regulatory compliance.
For institutional investors, this environment favours a more selective and thematic approach. Exposure to energy markets is likely to outperform when aligned with electrification, digital infrastructure, and energy security rather than pure commodity price bets. In this context, geopolitical events such as the temporary control of Venezuela matter less for their immediate price impact and more for how they reinforce long-term supply stability and monetary order, particularly through the continued dominance of USD-denominated energy trade.
In EBC’s view, the coming decade will be defined not by energy scarcity, but by energy allocation. Capital will increasingly flow to systems that can deliver reliable, scalable, and cleaner power for a data-driven global economy. Investors who recognise this shift early—balancing legacy energy exposure with forward-looking infrastructure and technology-linked assets—will be better positioned to navigate a world where oil abundance and energy demand expansion coexist.
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