Recently, U.S. forces arrested Venezuela’s President Nicolás Maduro. This was a surprising and important global event. According to news reports, the U.S. military carried out this operation. Maduro faces charges connected to drug trafficking and corruption. President Trump said in a news conference that the United States will “run” Venezuela and help increase the country’s oil production.
While the effects on Venezuelan people and the region are the most important considerations, investors may wonder how these events could affect their investment portfolios. This situation brings up many questions about America’s role in the area, whether Venezuela will have democratic elections, how the drug trade might be affected, whether oil production will go up significantly, and how it impacts the influence of countries like Iran and China.
Looking at past events helps us understand what might happen: geopolitical events (major political events between countries) often cause short-term ups and downs in the stock market, but their long-term effects on markets are usually small. This happens because these events typically don’t change the overall direction of the economy and markets, even when oil production is affected. We’ve seen this pattern in recent conflicts in Ukraine and the Middle East. Knowing this history can help investors stay calm and focus on the factors that have historically driven investment performance over time.
Looking at past U.S. involvement in the region
To understand the current situation, it helps to look at the history of U.S. involvement in Latin America. The discussion about U.S. intervention in Venezuela is complicated and includes topics like international law and regional stability. The Monroe Doctrine was a policy first stated by President James Monroe in 1823. It said that European powers should not interfere in the Western Hemisphere (North and South America). Applied to today’s events, it suggests that South America is America’s “backyard,” so any hostile action in the region would be seen as an action against the United States. President Trump has mentioned this idea, recently calling his foreign policy views the “Don-roe Doctrine.”
This isn’t the first time the U.S. has gotten involved in a Latin American country. For instance, in 1990, exactly 36 years ago to the day, the U.S. captured Manuel Noriega in Panama on drug trafficking charges. While the recent operation in Venezuela was mostly unexpected, Maduro has been facing charges from the U.S. Department of Justice since 2020 related to narco-terrorism (terrorism connected to drug trafficking) and drug trafficking. The Biden administration had kept sanctions (penalties) on Venezuela. In early 2025, they offered a $25 million reward for Maduro’s capture, which the Trump administration then increased to $50 million.
Like other U.S. military and law enforcement actions, there are many related goals. The stated reason for this operation was to target narco-terrorism, which Maduro and 14 Venezuelan officials were criminally charged with by the U.S. in 2020. Many nations view Maduro’s rule as not legitimate based on the country’s 2024 election, which strengthens this objective. Before Maduro and Hugo Chávez led the country, Venezuela was a democracy and one of the wealthiest nations in the region.
For long-term investors, the key point is that geopolitical risk (risk from political events between countries) is a normal part of investing, even though the specific details are different each time. These news stories may feel more worrying because they’re different from everyday business news about company earnings and economic data. The chart above shows many significant geopolitical events over the past few decades. In most cases, markets bounced back within weeks or months, if they were affected at all.
Oil connects global political events to financial markets
For investors, the impact on oil prices may be the most important issue. This is because geopolitical events mainly affect financial markets through commodity prices (prices of raw materials like oil), and oil remains essential to the global economy. Venezuela is important here because the country has the world’s largest proven oil reserves (known oil deposits) at approximately 304 billion barrels, according to the U.S. Energy Information Administration. To put this in perspective, this is more than even Saudi Arabia’s 267 billion barrels.
Despite having these huge reserves, Venezuela produces far less oil than other countries. Venezuelan oil production has dropped dramatically over the past two decades due to poor management, lack of investment in infrastructure (equipment and facilities), and sanctions. Today, production has fallen to less than 1 million barrels per day, compared to the U.S. production of nearly 14 million.1 If Venezuelan production increases, it will likely take time and investment to meaningfully add to global supply. This reduces the immediate effect on markets.
Over time, U.S. energy companies could see an opportunity to increase their access to these reserves. However, a lower oil price due to greater supply could offset some of this benefit. For the broader economy and consumers, any impact on markets could potentially be positive because increased Venezuelan production would push oil prices down over time. This makes it different from other conflicts like Russia’s invasion of Ukraine in 2022, which disrupted existing supply and drove oil prices to nearly $128 per barrel. That situation made post-pandemic inflation worse and pushed average U.S. gasoline prices above $5 per gallon.
Current oil prices remain far below those peak levels. In fact, prices have been relatively low over the past year, with WTI crude (a type of oil) trading below $60 per barrel and Brent crude (another type of oil) just around that level. According to reports, OPEC+ countries (a group of oil-producing nations) have kept their production quotas (limits on how much they produce) steady in response to recent events in Venezuela, suggesting they are watching the situation before making strategic changes. The fact that the U.S. is now the largest producer of oil and gas in the world helps further reduce the impact on the domestic economy.
That said, it’s important to remember that energy prices are difficult to predict accurately, and the U.S. still depends on crude imports (oil brought in from other countries). When Russia invaded Ukraine, many predicted that oil and natural gas prices would remain high indefinitely, especially with a harsh winter forecasted for Europe. However, prices stabilized and began declining far sooner than many expected. This reminds us that, because oil is a global commodity, there are many factors that can unexpectedly affect prices.
Venezuela has a small role in global markets
Another important fact for investors is that Venezuela plays a very small role in global financial markets. Its stock market, the Bolsa de Valores de Caracas, is small and illiquid (meaning it’s hard to buy and sell stocks there), with limited foreign participation. It is not included in the MSCI Emerging Markets Index (a measure of stocks in developing countries), so most international investors have little or no direct exposure to Venezuelan stocks. The country’s economic collapse over the past decade has essentially excluded it from emerging market portfolios (investment collections focused on developing countries).
When it comes to the bond market (where investors buy and sell debt), Venezuela has been in default (unable to make payments) since 2017 when it failed to make payments on its debt. Bondholders (people who own Venezuelan bonds) have been negotiating restructuring terms (new payment arrangements), but the bonds trade at deeply distressed levels (very low prices) reflecting the expectation of significant losses.
The situation in Venezuela will continue to change, and there may be additional developments that capture market attention. The indirect effects on oil prices and uncertainty are likely to be more important than the direct effects from the country and its stock market. Rather than trying to predict exactly how the situation might unfold, investors should instead focus on aligning their portfolios with their financial goals.
The bottom line? The arrest of Venezuela’s president represents a significant geopolitical development with humanitarian and regional implications. However, history shows that portfolios built around long-term financial goals can navigate geopolitical uncertainty.
References
1. https://www.eia.gov/outlooks/steo/tables/pdf/3dtab.pdf
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