Donald Trump’s Venezuela attack “is likely to backfire” and oil prices could rise in response, financial experts are warning.
Venezuelan president, Nicolas Maduro, is behind bars in New York, facing drug-trafficking charges, after a Delta Force unit snatched him from a central Caracas safe house in the middle of the night.
The Trump administration says it will run Venezuela until there is a safe and judicious transition of power.
Financial experts warn that the move could be damaging for the US in the long term with the Dollar already under pressure against the Pound.
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said Trump may live to regret his action in Venezuela.
She added: “Trump’s renewed ‘Monroe Doctrine’ posture is likely to backfire. Without Maduro his government lives on, probably with greater determination to defend itself. Whichever way you look at it, this is likely to prove a failure for US hegemonic policy on its own doorstep, raising the probability of a costly, protracted US entanglement.
“Geopolitical risk and financial fragility point to further upside in ‘real money’ hedges which are gold and silver. Other than short-term fluctuations, the oil price will almost certainly rise at the prospect of Venezuelan oil supplies being interrupted rather than the longer-term price prospects of increased supply from American investment and control.”
Likely to backfire
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said Trump isn’t done in Venezuela.
He continued: “Markets haven’t yet seen the jitters many would have expected after such a bold and controversial move by Trump. If mission creep occurs here it could be catastrophic for the US, but the signs of this are unlikely although multi faceted.
“The most likely, but politically unpopular, result is that Teflon Trump strikes again and the consequences are good for the US economically, although politically they become and even less trustworthy partner.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the Dollar is strong currently – but it depends on whether the region is stabilised.
He added: “The capture of Maduro creates a potential bonanza for US energy companies to access Venezuela’s 300-billion-barrel oil reserves, the world’s largest. Initially, markets should see a ‘risk-off’ reaction driving gold and silver prices higher.
“The US Dollar has already climbed to a two-week high against the Pound and Euro on safe-haven demand. However, longer-term Dollar strength depends on whether US intervention stabilises the region or prompts retaliatory trade measures from China and Russia.
“With Venezuela’s interim leadership pledging resistance, volatility remains elevated. For investors, the prudent approach is defensive positioning until the legal and geopolitical consequences become clearer.”
The international rulebook has been shredded
Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said the international rulebook has been “shredded”.
He continued: “Let’s strip away the diplomatic gloss: a sovereign leader has been snatched in the night. That’s not foreign policy; it is a hostile takeover. The message to the Global South is clear: if you sit on critical resources, whether it’s the Arco Minero’s gold, Greenland’s rare earths, or Nigeria’s oil, sovereignty is now optional.
“The international rulebook hasn’t just been rewritten; it’s been shredded. For investors, this Dollar rally is built on muscle, not fundamentals. It’s brittle. When the world realises ‘strategic partnership’ is now a euphemism for ‘extraction at gunpoint’.”
