The arrest of Venezuelan President Nicolas Maduro by the United States has sent shockwaves through global commodity markets, with precious metals surging on safe-haven demand while oil prices exhibited volatility before stabilizing. According to an ING Group report, the market's focus is on the long-term potential for increased Venezuelan oil supply rather than immediate disruptions, leading the firm to maintain its 2026 Brent crude forecast at an average of $57 per barrel.
Geopolitical Trigger and Market Reaction: The event unfolded over the weekend when the US arrested Maduro and flew him to face criminal charges related to drug trafficking. This action by the Trump administration, which has adopted an increasingly hawkish stance toward Venezuela, triggered a flight to safety. Gold prices surged over 2% to a one-week high of $4,428.90 per ounce, while silver jumped 5.2% to $74.698 an ounce. Copper prices also rose 2.4% to $12,819.55 per ton.
Oil Market Analysis and Forecast: Despite Venezuela holding the world's largest oil reserves, the immediate market reaction was muted. Oil prices initially declined on Monday before rising slightly, with West Texas Intermediate at $57.63 and Brent at $61.04. Analysts attribute this to a well-supplied global market and the expectation of an orderly political transition. Warren Patterson, head of commodities strategy at ING Group, stated, "We won’t speculate on the exact reasons... but clearly, it has potentially significant implications for the oil market." The key short-term implication depends on the nature of the power transition in Venezuela.
Supply Scenarios and Risks: A smooth transition, particularly with a government more open to working with the US, could lead to the US ending its blockade on Venezuelan-sanctioned oil tankers, potentially lowering oil prices and setting the stage for further sanctions relief. Conversely, a messy, prolonged transition raises the risk of supply disruptions, jeopardizing approximately 900,000 barrels per day (bpd), most of which is destined for China. However, ING believes a well-supplied market would limit any price upside from such a loss.
Long-Term Production Potential and Challenges: Venezuela's oil production has plummeted from nearly 3 million bpd in the early 2000s to just over 900,000 bpd in 2025, accounting for less than 1% of global consumption. While there is potential for a large recovery, ING notes it will require several years and significant investment in neglected infrastructure. This investment depends on foreign oil companies, a challenge given past asset expropriations. Chevron remains the sole US company operating there under a special license. Any future supply increase would primarily benefit US Gulf Coast refiners seeking heavy crude, potentially pressuring other suppliers like Canada.
