Geopolitical Shock: Trump's Venezuela Raid Sparks Oil Volatility & Impeachment Threats

WikiFX

| 2026-01-05 12:00

Abstract：A shock US military operation in Venezuela has captured President Maduro, triggered a geopolitical crisis, and sparked immediate volatility in energy markets. While oil prices are expected to price in a risk premium, domestic US political fallout—including impeachment threats—adds a layer of uncertainty for the Dollar.

Global markets are bracing for a surge in volatility following a stunning US military operation in Venezuela that resulted in the capture of President Nicolás Maduro. The dawn raid on January 3, confirmed by President Donald Trump, has created an immediate power vacuum in Caracas and reignited geopolitical risk premiums across asset classes.

Crude Oil: The Immediate Reaction

The most direct market impact is visible in energy commodities. Venezuela holds the worlds largest proven oil reserves—approximately 300 billion barrels.

Short-Term Impact: Analysts forecast an immediate $3-$4 hike in WTI and Brent Crude prices as markets price in uncertainty regarding supply chains and potential retaliation.

Long-Term Bearish Signal? Trumps declared intention to “manage” Venezuela via US oil majors suggests a potential flood of new supply in the medium term. Currently, Venezuelan infrastructure is dilapidated, but US capital injection could rapidly modernize extraction, potentially adding to the existing global supply glut.

Despite the shock, the upside for oil may be capped. Global demand remains tepid in Q1 due to seasonal factors and sluggish growth, while OPEC+ supply levels remain robust. The event is a supply-side shock meeting a weak demand environment.

US Domestic Risk: The Impeachment Factor

While the “projection of power” typically bolsters a currency, the domestic political fallout poses a risk to the Greenback (USD). The operation, conducted without Congressional approval, has triggered fierce backlash from Democratic lawmakers.

Impeachment Calls: High-profile Representatives and Senators have labeled the move unconstitutional, initiating discussions on impeachment and the invocation of the 25th Amendment.

FX Implication: Political instability in Washington historically dampens investor appetite for US assets. If the confrontation between the White House and Congress escalates, the USD could face headwinds against safe-haven peers like Swiss Franc (CHF) and Gold (XAU), even as US Treasury yields might fluctuate on safe-haven flows.

Geopolitical Fallout: A “New Monroe Doctrine”

The move has drawn sharp condemnation from Latin American leaders (Brazil, Mexico, Colombia) and global powers like Russia and Iran. The fear of a “New Monroe Doctrine”—where the US actively intervenes to control hemispheric resources—may chill foreign direct investment (FDI) in the LATAM region, potentially weighing on emerging market currencies such as the Mexican Peso (MXN) and Brazilian Real (BRL).

Market Watch: Traders should monitor the USD/CAD pair (sensitive to oil shocks) and Gold, which is likely to bid higher as a hedge against both geopolitical conflict and US institutional instability.