In this Special Report, we:
In the early hours of 3 January 2026 (local time), US military and law enforcement conducted a special operation in Venezuela, capturing Venezuelan President Nicolás Maduro and his wife. They have since been relocated to New York City, where the US has charged them on drug related offences. The US has reported no serious casualties in an audacious yet well-executed special operation.
In the aftermath, US President Trump indicated that the US will “temporarily run” Venezuela and that US companies will re-enter its oil export market. For now, Venezuelan Vice President Delcy Rodríguez has been sworn in as the head of government.
This is precisely the type of geo-political shock that has attracted headlines and attention since 2022 and is emblematic of the multi-polar world we have entered. Our Chief Investment Office has been monitoring these developments through our constraints-based lens, outlined in our February 2025 Observation The New Great Game. Our assessment at this stage is that the macro and market impact is likely to be limited, and our prevailing reflationary outlook and positioning remain unchanged.
Venezuela has been subject to extensive US sanctions for many years and is a very small component of the global economy and global capital markets. While the circumstances of Maduro’s capture are extraordinary, they do not, in and of themselves, amount to a structural macro shock.
The most obvious channel for near-term market impact is via oil prices. Initial moves in this market have been modest, which is consistent with our assessment of the fundamentals.
Venezuela is no longer a major swing producer in global oil markets. Exports peaked at around 2 million barrels per day in the 1990s; today production is closer to 900,000 barrels per day. Even under optimistic assumptions, there is limited scope to lift supply meaningfully in the near term.
Years of mismanagement, corruption and sanctions have left Venezuela’s oil infrastructure in poor condition. Any attempt to restore and expand production would require significant human and financial capital investment and would take time to deliver results. This argues against an imminent “positive supply shock” to global oil markets.
The world is currently dealing with a glut of oil. In December 2025, the International Energy Agency (‘IEA’) projected a global supply surplus of 3.84 million barrels per day in 2026, around 4 per cent of global demand and at the upper end of analyst expectations. Even allowing for some demand growth, there is ample supply.
There may eventually be an increase in reconstruction and capex activity from US energy majors as sanctions are relaxed and assets are rehabilitated. However, this is a multi-year story rather than an imminent risk.
More broadly, our overall macro outlook for a reflationary 2026 remains intact: global monetary policy is easing financial conditions, fiscal stimulus is picking up (especially in Europe), and the AI capex boom should continue to drive economic growth over the next 12 months.
Maduro’s capture sits alongside Russia’s invasion of Ukraine, Thailand’s clashes with Cambodia, the tragic conflicts in Sudan and the ongoing tensions in the Middle East as further evidence that we are operating in a genuinely multi-polar world.
Is the US acting outside traditional international law and UN principles? On most readings, yes. However, this is merely a reflection of how power is increasingly exercised in a multi-polar world: via spheres of influence, great power diplomacy and the ability to project power.
It is also worth acknowledging that the relatively fair, rules-based order of the past 60 years, underwritten by the US as a broadly benevolent hegemon, is historically unique. Previous hegemons, including Persia, Macedon, Rome, the Mongols, the various Chinese empires or the UK, have not typically been as accommodating to lesser powers.
In this specific episode, we are also seeing the direct application of the “Trump corollary”: a willingness by the US to act decisively within its stated sphere of influence in the Western Hemisphere.
While our core geopolitical and macro views are unchanged, this episode does sharpen a few important signposts.
First, this incident further increases our conviction in Eurozone fiscal easing and defence spending. The more the global system tilts towards great power competition, the stronger the incentive for Europe to re-arm and re-assert itself on the world stage. After all, if it wants a seat at the table of Great Powers, Europe needs to show that it can fill the chair. This should provide further tailwinds for European economic activity and asset prices.
Second, the durability of US military primacy. The US remains the sole global power capable of executing missions of this scale and complexity with speed and precision. This is relevant both for how other powers, notably Russia and China, assess US resolve and for how smaller states position themselves.
Third, regarding potential implications for Taiwan and Ukraine. Our assessment of China–Taiwan risks remains low. The US has explicitly noted Taiwan as a red line in its recently published National Security Strategy, and this latest demonstration of military capability actually reinforces the US’ deterrence credibility. Meanwhile, the situation in Ukraine continues to trend, slowly and unevenly, towards some form of stabilisation.
Finally, Iran remains a key macro-relevant tail risk. Domestic tensions there are already elevated due to inflation, economic mismanagement and sanctions. There is a limited possibility that Washington may, at some stage, seek to tip the internal balance. Any overt move towards regime change would be existential for the Iranian leadership and could provoke a significant response, with obvious implications for energy and financial markets.
For investors, the key point is that headline noise does not automatically translate into portfolio relevance. Based on what we know today, global oil markets remain comfortably in surplus, and the broader geopolitical backdrop is noisy but broadly consistent with the multi-polar world we have been preparing for.
We will continue to monitor developments through our Chief Investment Office and global research partners and will reassess as facts change. At this stage, we do not see a case for reactive portfolio changes driven solely by this event. Our focus remains on maintaining robust, diversified portfolios that are positioned for a world of higher geo-political noise, but anchored in a disciplined, robust, and long-term framework rather than in day to day headlines.
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