Just days into 2026 the global market and investors were confronted with an unexpected geopolitical jolt: the removal of Venezuelan President Nicolas Maduro by the United States.
While the event is politically dramatic, we look at its implications on the global market.
To unpack what this moment means beyond the headlines we spoke with Chief Investment Officer, Pillow Investment Partner, Alpha Ba.
Geopolitics vs. the Global Market: A Long-Term Perspective
From a market standpoint, Ba cautions against overreacting to geopolitical developments. “Historically, geopolitical crises have had very limited long term on markets,” he said, noting that aside from the 1973 oil crisis, wars and political shocks since World War II have rarely altered long-term market trajectories. While such events can cause short-term volatility, markets tend to look through them.
Early evidence tends to support that view. In the days following the announcement, the global market moved higher, suggesting that investors did not interpret the event as an immediate risk-off shock.
In addition, Ba points out that according to the Uppsala Conflict Data Program, there were about 60 armed conflicts in the world in 2024. Yet, the global equity markets were up 33%.
Oil Supply: Why Venezuela Isn’t a Game Changer – Yet
Much of the the attention has focused on Venezuela’s vast oil reserves. However, Ba emphasized that current production levels significantly limit near-term impact.
“Venezuela produces about one million barrels a day – roughly one percent of the global supply,” he explained. Restoring output to historical levels of 3-4 million barrels per day would require massive infrastructure investment, and, critically, legal and political certainty for foreign capital.
Even then, Ba points out that timing matters. The global market oil demand is expected to peak in the next 5 to 7 years. If Venezuela ramps up production after peak demand, increased supply could actually pressure prices lower – hardly an incentive for energy companies to invest billions.
Ba summarizes that lower prices may appeal politically, particularly in the U.S. where inflation remains a concern, but they undermine the economics of large-scale upstream investment.
Strategic Undercurrents in the Global Market
Beyond energy, Ba points out the broader strategic contest – between the U.S. and China.
China currently receives 80% of Venezuela’s oil exports, although this accounts for only about 5% of China’s total oil imports. While China can easily replace Venezuelan supply, Latin America represents a growing sphere of influence for Beijing. The U.S. action may signal an effort to reassert dominance in its traditional backyard.
More broadly, Ba argues the U.S. is moving toward a world divided into spheres of influence.
- The U.S. dominating the Western Hemisphere
- China leading Asia
- Russia exerting control over Europe
Such a fragmentation of the global order would increase friction, reduce reliance on international rule-based systems, and likely drive sustained investment in defence and strategic infrastructure.
Energy Transition: Oil vs. Renewables
On the topic of oil and renewables, Ba questioned whether an oil-focused strategy aligns with the future of energy.
“The world is moving towards renewables,” he said. While the transition can be slowed, it is unlikely to be reversed. According to international energy estimates, renewables already account for roughly one-third of the global energy mix and are expected to rise significantly over the coming decade.
This shift has major implications for artificial intelligence and data centre growth, which depend heavily on reliable, low-cost power. In this area, Ba highlights China’s advantage: a power grid roughly twice the size of the U.S., with a rapidly expanding ultra-high-voltage network and a higher share of renewables.
Global Market Implications: Volatility, Valuations & Capital Flows
Rather than a single market moving event, Ba sees Venezuela as one more data point in a world where the international rule-based system is fraying.
That erosion, he argues, should lead to higher volatility and gradual changes in global market allocation.
Notably, non-U.S. markets significantly outperformed the U.S. last year, and valuation gaps remain wide. U.S. equities trade roughly at 23 times earnings, compared to about 14 times for the rest of the world. This marks a 50% premium, despite a narrowing earnings growth gap.
While higher U.S. return on equities justifies some premium, Ba suggests it may not justify such an extreme one. At the margin, capital could continue rotating toward non-U.S. assets, including commodities like gold, which saw a strong performance last year, alongside a weaker U.S. dollar.
Bottom Line for Investors
For the long-term investors, the removal of Venezuela’s President is less about immediate market impact and more about what it signals.
- A shift toward geopolitical fragmentation
- Increased uncertainty and volatility
- Potential rebalancing of global market capital flows
- Strategic competition extending beyond energy into technology, infrastructure and influence
As Alpha Ba puts it, markets may be right to, “ignore the noise” for now. But investors should remain alert to the broader structural changes quietly reshaping the global market investment landscape.
For more Expert Exchange interviews, check out Markets Surge, Tariffs Soften, and Crypto Gains Ground: Alpha Ba on What’s Next for Global Investors and Ba’s Stock Picks from Latin America to Canada.
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