Market reaction to the changes in Venezuela: oil prices "fall instead of rise," gold leads precious metals higher

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After the United States took military action in Venezuela and captured the country's leader Maduro, global financial markets exhibited markedly divergent trends. Investors quickly flocked to precious metals for safe haven, driving gold and silver prices to reverse previous declines, while the oil market, in contrast, remained unusually composed due to the macro backdrop of global oversupply.

On Monday, January 5, spot gold prices rose nearly 1% in early trading, climbing to around $4,370 per ounce, after falling 4.4% the previous week. Silver prices surged 1.7% to around $74 per ounce, platinum and palladium also climbed simultaneously, with spot palladium up more than 3%. The market's instinctive reaction to geopolitical uncertainty once again turned precious metals into safe harbors for capital.

Meanwhile, the oil market’s response did not follow the traditional "war premium" logic, instead showing a decline. Although President Trump confirmed the U.S. military carried out a large-scale strike, the International Energy Agency (IEA) forecasts a record global crude oil surplus in 2026, coupled with Venezuela’s current production accounting for a very small global share. The market generally believes this event is unlikely to change the overall context of loose oil supply and demand, so oil prices have not seen a panic surge.

According to Xinhua News Agency and CCTV News, on January 3 local time noon (January 4 Beijing time early morning), U.S. President Trump and Secretary of Defense Hegseth held a press conference at Mar-a-Lago in Florida regarding the U.S. military action in Venezuela and the capture and deportation of Venezuelan President Maduro. Trump stated the U.S. used air, land, and sea forces in the operation, and that "all Venezuelan military forces have lost combat capability." Trump said the U.S. will "manage" Venezuela until a "safe" transition is implemented.

Trump said he watched the U.S. Special Forces apprehend Maduro in real time, describing it as like watching a "television show," seeing "every detail." He also told the U.S. media that the U.S. will deeply intervene in Venezuela's oil industry.

Heightened Risk Aversion Boosts Precious Metal Prices

Intense geopolitical turmoil has directly stimulated investors’ risk-averse instincts. After news of the U.S. military action was released, the precious metals market quickly responded. Gold prices strongly rebounded after a week of decline, returning above $4,370/oz.

Spot silver surged 1.7%, quoted near $74.

In addition to gold and silver, platinum and palladium also rose across the board. Spot palladium increased more than 3%, to $1,689.08 per ounce.

Market analysts point out that in the initial stage of a geopolitical crisis, funds tend to rapidly exit risk assets and switch to precious metals with safe-haven attributes. Statements by U.S. Secretary of State Rubio about leveraging oil influence to force change in Venezuela have further heightened market concerns about regional complexity, thereby supporting gold prices.

Oversupply Expectations Suppress Oil Price Fluctuations

In stark contrast to the turbulence of precious metals, the oil market has been relatively calm. Although IG Group retail trading data shows U.S. crude oil prices saw slight fluctuations, most analysts expect market sentiment will remain subdued. The core logic behind this is the fundamental change in global oil market supply and demand.

Brent crude edged down slightly; WTI crude remained stable.

According to International Energy Agency (IEA) data, global oil supply in 2026 is projected to exceed demand by 3.8 million barrels per day, setting a historic surplus record. Arne Lohman Rasmussen, Chief Analyst at A/S Global Risk Management, points out that such large-scale surplus provides the market with a strong buffer. Even if Venezuela's situation is unstable, its current daily output of about 1 million barrels is less than 1% of global supply, and key oil facilities such as Jose port and Amuay refinery have not been damaged, the actual risk of supply disruption is extremely low.

Moreover, OPEC+ and its allies are expected to maintain plans to suspend increased production, which indirectly reflects producing countries' worries about weak demand outweighing the response to localized geopolitical conflict.

U.S. Oil Giants May Return to Venezuela

Although short-term oil prices remain calm, Trump's long-term plans for Venezuela’s oil industry have attracted industry attention. According to Xinhua News Agency, the White House has asked major American oil companies to make substantial investments in Venezuela and restore its crude oil extraction infrastructure.

According to the report, officials in recent weeks have told U.S. oil company executives that if they "wish to be compensated for drilling rigs, pipelines, and other property confiscated by the Venezuelan government, they must be ready to return to Venezuela now and invest heavily to revitalize its devastated oil industry."

Industry insiders are cautious about this government request, concerned about the unclear prospects of rebuilding Venezuela’s dilapidated oil fields, as well as the uncertain outlook for Venezuela’s political situation in the near future.

Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, warns that historical experience shows that forced regime change rarely stabilizes oil supply quickly—Libya and Iraq serve as precedents. Most of Venezuela's oil is expensive, highly polluting extra-heavy crude, and faces deep-rooted issues such as equipment theft and electricity shortages. Restoring capacity will be a long and difficult process.

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