What Happened?
At approximately 2am Friday Evening 1/2/26, US forces launched a large scale “air, land and sea” military attack on Venezuela involving at least 150 aircraft and capturing current President Nicolas Maduro and his wife, who are currently on route to New York to be held and charged on drug crimes. The Justice Department is charging them, and 5 others with roles in the drug-trafficking network called Cartel de los Soles and helping move large shipments of cocaine to the USA. This is one of the first US led regime changes in the last 30 years and does follow the script of “Operation Just Cause” in Jan 1990 to remove Manuel Noriega from Panama. And in a twist of fate, the arrest occurred 36 years to the day of the arrest of Manuel Noriega.
Trump’s Press Conference Key Points
- The US will “run” Venezuela for a period of time until there can be elections or a transition to new leadership. Trump stated, “We’re going to run the country until such time as we can do safe, proper, and judicious transition.”
- The US is “not afraid” of having boots on the ground, but vague about details, what that might look like, and how long they would be there
- Much of the press conference was about the Venezuelan oil industry and the desire for US oil companies to come in and rebuild energy infrastructure and sell Venezuelan crude to the world.
- Minimal roles currently planned by the US for current Vice President Delcy Rodriguez or opposition leader Maria Corina Machado. Rodriguez has spoken with Secretary of State Marco Rubio and “was willing” to follow US lead. Trump stated he did not think Machado, who recently won a Nobel Prize for her opposition efforts to restore democracy, have the following or respect to lead the country. He said it would be “very tough” for her to lead.
- Attorney General Pam Bondi stated Maduro and his wife have been charged in New York.
- Ecuador, Columbia and Brazil are all hosting emergency meetings, with some closing their borders or activating security plans to protect from refugees or unrest.
- Russia stated they have “deep concern and condemnation” about the “act of armed aggression against Venezuela.” though also called to avoid further escalation.
- China has issued minimal statements, though released a quick post “China firmly opposes it” and described the strike as an “attack on its president” and “hegemonic act.”
- CVX (Chevron) is the only US company currently operating in Venezuela and has working relationships with PDVSA- the state run-oil company.
- The legal grounds for the large-scale military action without notifying or getting approval from Congress were to protect US personnel making the arrest form actual or imminent harm, per presidential powers under Article II of the Constitution (per US Senator Mike Lee).
- Per Trump and Rubio, Congress was not notified to prevent leaks, stating “this is not the kind of mission that you can do congressional notification on… it was a trigger-based mission, in which conditions had to be met night after night.”
What Happens Next?
his is a rapidly developing story, and could change dramatically depending on who ends up in charge of Venezuela- status quo government, US government overwatch, new elections, or some other combination will all effect the trajectory of that nation. How both Russia and China respond will be crucial. China has been the main buyer of Venezuelan crude, as well as expanding their influence across South America through Venezuela. They are one of VZ’s main allies and have so far made minimal public comment. War and conflict tend to have fleeting impacts, if any, on US equity markets, beyond the knee jerk initial reaction. We saw Monday, as markets opened positively driven by energy and financials. We wrote about war and marked let reaction back in April 2024, as well as on Oct 2023. Oil is the key here, though Venezuelan production was already minimal around 1mm b/d, a much less significant player due to decades long sanctions and only really exporting to China. Venezuela does have what is considered the World’s largest oil reserves likely about 300 billion barrels, though it is heavy, sour crude that needs specific refineries to deal with it. (which the US Gulf Coast just happens to have). All eyes on what we do next, will troops be deployed, how China and Russia respond, as well as what level of interest oil and gas and other firms have in investing in an extremely volatile, possible hostile country. There could be opportunities, especially in oil, but it comes with severe risks as many energy companies know.