As you all know by now, the US invaded Venezuela over the weekend and arrested Maduro. I am writing this just after futures markets opened on Sunday evening, and oil prices are basically flat. In other words, the market is telling you that this doesn’t really matter for the oil market, at least in the short-term.

Why? Well first off, the oil industry in Venezuela is a mess. Despite sitting on the largest reserves in the world - larger than the US, Canada, and Mexico combined - Venezuela struggles to stay in the top 20 of global oil production. It’s not a big mystery why. They run their national oil company (PDVSA) like a mix of Dunder Mifflin and the Fyre Festival. Since the late 90’s their oil production has fallen by ~70% even though oil-producing technology has gotten radically better during that period.

This means that no matter what happens in the short-term to Venezuelan supply - whether it is slightly higher from a relaxation of sanctions, or lower from some kind of unrest, it won’t change the global supply and demand synthesis. Right now the world is producing much more oil than it is consuming, and the difference is being made up by strategic stockpiling, mostly by China. Nothing in Venezuela will change that.

Obviously in the longer-term, unlocking such a large pool of oil could be a huge deal. My advice to you is to not hold your breath. Iraq post-Saddam Hussein isn’t a perfect comparison, but it is a helpful frame of reference. It took several years to just stabilize the situation enough to start meaningful investment and repairs. Then it took several more years for the infrastructure improvements to reach a level that output could start to really grow. The sweet spot of Iraqi production growth was 11 years after the regime change. So while there are ways this could go somewhat faster, and there can be smaller improvements along the way, nothing is going to change overnight.

Interestingly - while oil opened flat, and the US stock market opened flat, gold did not: it is up 2%. As we enter 2026 we think the secular shifts that caused gold to rally ~65% in 2025 are still very much intact, and incidents like this reinforce that.