Venezuela Shock Lifts Oil as China Slows

Global markets entered the first full week of 2026 with a new catalyst layered on top of an already unusual backdrop. International equities beat the US in 2025, with MSCI ACWI ex-USA gaining 29.2% versus the S&P 500’s 16.39%. A key tailwind was currency. The US dollar index fell 9.4% in 2025, boosting dollar-based returns on foreign assets.

Now, geopolitical risk is back on traders’ screens after the US struck Venezuela and extracted President Nicolás Maduro to face US criminal charges. The immediate market question is how that changes energy and risk premiums. Investors are also trying to price the second-order effects: potential disruption to Venezuelan oil output, sanctions and legal uncertainty around control of infrastructure, and how other producers respond if prices spike.

Positioning is likely to be shaped less by last weekend’s headlines than by what follows next: clarity from Washington on governance, oil policy, and duration of involvement. The market’s sensitivity is heightened because the week is packed with catalysts that can move rates and equities at the same time. Economists expect the US December jobs report to show payrolls rising 55,000 after 64,000 in November, while unemployment is seen at 4.5% versus 4.6%, according to consensus estimates.

Use the Venezuela shock as a stress test. If oil stays contained and labor data softens, risk assets may keep levitating. If crude jolts higher while wages stay firm, 2026 could start with an uncomfortable mix of inflation anxiety and geopolitical volatility.

China’s post-property-slump recovery is still uneven. A private survey showed the service sector expanded at its slowest pace in six months in December. The RatingDog services PMI edged down to 52.0 from 52.1, staying in expansion but losing momentum as new business growth cooled and foreign demand weakened.

The report’s details matter for 2026 positioning. New export business slipped back into contraction, which the survey linked to lower tourism. Firms also cut staffing for a fifth straight month, a sign that companies are still protecting margins rather than hiring into demand. Meanwhile, input costs rose for a 10th consecutive month, but selling prices fell as competition limited pricing power, according to the same survey.

That mix. rising costs, falling prices, shrinking payrolls. helps explain why Beijing continues to focus on deflation risk and confidence building. In the background, China is still managing structural headwinds: a prolonged property downturn and persistent disinflation pressures. Policymakers have signaled more support. At a December leadership meeting, leaders promised a “proactive” fiscal policy in 2026 aimed at stimulating consumption and investment.

There are also signs the broader economy is stabilizing. The official manufacturing PMI returned to expansion in December at 50.1 from 49.2 in November, while the official composite PMI rose to 50.7 from 49.7, according to China’s statistics bureau. But the services slowdown suggests demand is not yet strong enough to restore pricing power across the economy.

For readers watching China exposure. focus on whether fiscal support translates into stronger domestic orders without reigniting unproductive price wars. The next key tell will be whether employment stops shrinking and whether services prices stabilize, because that is where deflation risk becomes entrenched.

Venezuela became the week’s geopolitical shock after President Trump said the US launched strikes and extracted Venezuela’s president Nicolás Maduro to face criminal charges in the United States. Investopedia reported Trump also suggested the US would “run” Venezuela until an orderly transition and that US oil companies would rebuild the country’s oil infrastructure. The who and what are clear. The how and how long are not, and that uncertainty is the market’s immediate problem.

The catalyst was abrupt for most investors, but not for everyone. Polymarket activity jumped late Friday night, before the public announcement. Axios highlighted one account that put up about $30,000 and later showed a profit of roughly $436,759.61, reviving concerns about inside information in prediction markets. Separately, The Information reported a trader who bet $35,000 when odds were around 6% and made over $400,000 within a day, in a timing that looked suspicious.

Beyond the trading intrigue, the real-world stakes are larger. Venezuela is oil-rich, but operationally fragile, and any transition adds near-term uncertainty around exports, contracts, and infrastructure control. A rough guide to the scale of the human backdrop: since 2014 nearly 8 million Venezuelans have fled, and Colombia has absorbed nearly 3 million, according to Gzero’s summary. That context helps explain why regional spillovers matter. political instability can quickly become migration, security, and commodity volatility.

Next steps hinge on concrete details: who administers Venezuelan institutions, what happens to PDVSA and existing oil partnerships, and how quickly production can be stabilized. Watch for US legislative and regulatory spillovers too. Axios noted Rep. Ritchie Torres is expected to introduce a bill targeting prediction-market participation by some political figures, which could tighten rules in a fast-growing corner of finance.

For readers, treat Venezuela as a volatility amplifier. If oil stays calm, the episode may fade into background risk. If crude spikes or the transition drags, it can feed inflation expectations and complicate central bank narratives early in 2026.

• China services pulse: whether the services PMI at 52.0 is a soft patch or a trend, especially on prices and hiring.
• US jobs Friday: consensus looks for 55,000 payrolls and 4.5% unemployment. A miss could revive rate-cut odds quickly.
• Oil volatility: investors want specifics after the US strike on Venezuela, especially around control of infrastructure and export continuity.
• Prediction-market scrutiny: watch regulatory momentum after Polymarket timing questions put insider-access concerns back in play.
• Dollar direction: 2025’s 9.4% drop was a major driver of international outperformance. A reversal would change the calculus fast.