The ripple effect of the Mi-Venezuela situation... Crude oil faces long-term downward pressure, while financial markets stand at a crossroads between 'uncertainty vs normalization'

Source: TokenPost Original Title: The Ripple of the US-Venezuela Situation… Crude Oil Prices Face Long-Term Downward Pressure, Financial Markets at a Crossroads of ‘Uncertainty vs Normalization’ Original Link:

Since the US conducted a surprise airstrike on Venezuela and detained President Nicolás Maduro, both international politics and financial markets are experiencing turbulence. In the short term, geopolitical uncertainty may increase and risk aversion could intensify, but in the medium to long term, expectations of increased oil supply could come to the forefront, potentially exerting downward pressure on crude prices.

US-Venezuela Conflict: What Was the Aim?

The Trump administration announced plans to transfer Maduro to New York for trial on charges of drug trafficking and crimes against humanity. Simultaneously, it revealed plans to effectively manage Venezuela directly until a stable government transition is achieved, and to invest billions of dollars, mainly through US companies, to restore oil infrastructure. The costs are expected to be covered by revenues from oil sales.

Market analysts cite three main objectives behind this operation: ▲Crackdown on drug cartels ▲Enhancement of energy security and oil dominance ▲Blocking Chinese and Russian influence in South America. While the US emphasizes cooperation with Venezuela’s interim government, China, Russia, and North Korea strongly opposed the move, and criticism arose within Europe for violating international law. The US Democratic Party also raised concerns about the use of force without congressional approval.

Geopolitical Risks Expand vs ‘Trump Doctrine’ Materializes

Foreign media and think tanks evaluate this incident as a realization of Trump-style diplomacy and security policies, but warn that it could set a dangerous precedent for weakening international norms. There are concerns that China or Russia might justify the use of force in future, and that US allies’ security support could become more transactional.

From a financial market perspective, short-term volatility and risk asset aversion may increase, but some suggest that the shock could be absorbed quickly, leading to a return to a ‘risk-on’ phase.

Crude Oil Volatility Short-Term, Downward Pressure Long-Term

The oil market is expected to experience increased volatility in the short term. However, if the US eases sanctions on Venezuela and oil infrastructure restoration accelerates, supply from Venezuela could increase, exerting downward pressure on global oil prices in the medium to long term. This scenario, however, depends on large-scale investments by US companies and stability of local security, adding uncertainty.

Global Financial Markets: ‘Year-End Adjustments & Cautious AI Outlook’

Weekly financial markets showed a combination of US stock declines, a strong dollar, and rising Treasury yields. US equities fell due to year-end portfolio adjustments, FOMC minutes, and tech stock sell-offs, while European markets rose on strength in banking and defense stocks. The dollar appreciated on strong US housing data, and the 10-year US Treasury yield increased, reflecting employment data.

Job Growth Slows, Rate Cut Expectations Persist

The US non-farm payrolls for December, to be announced in January, are expected to show a slight slowdown from the previous month, remaining weak. Continued below-target job growth is reinforcing expectations of rate cuts by the Fed. The market generally anticipates two rate cuts this year, but if employment remains sluggish, larger cuts are possible. Fed Philadelphia President also stated that if the economy stabilizes, a modest rate cut later this year would be appropriate.

Early 2026: AI, Stock Markets, and Policy Variables Converge

Meanwhile, in 2026, the AI industry is shifting from ‘expansion’ to ‘validation’ phase. Massive capital expenditures are ongoing, and evaluations of technological efficiency, profit models, and US-China competition are expected to intensify. Despite high valuations, US stock markets may continue rising supported by expectations of rate cuts, corporate earnings growth, and tax cuts, though concerns about overheating persist.

In summary, the US-Venezuela situation temporarily heightens geopolitical risks but also involves long-term variables such as changes in energy supply structures. Coupled with US employment slowdown, rate cut expectations, and reevaluation of the AI industry, the global financial markets are entering a phase where ‘uncertainty and normalization expectations’ intersect in early 2026.