Venezuela’s Upheaval and the Shadow Over Iran

By John Ian Lau
, Contributing Editor, Solomon Grey Capital

January 5, 2026

In the high-stakes arena of global geopolitics, few connections appear as improbable yet strategically potent as the one linking Caracas and Tehran. With the dramatic U.S.-led operation that captured Venezuelan President Nicolás Maduro over the weekend, Washington’s aggressive push to reclaim influence over the world’s largest proven oil reserves—estimated at over 300 billion barrels—has suddenly thrust this axis into sharp relief. The move not only promises to reshape energy markets but could also grant the United States unprecedented leverage in confronting Iran, long a thorn in American foreign policy.

As one Atlantic Council expert observed in the wake of the events, the success in Venezuela sends “shock waves” across the Middle East, reframing U.S. resolve and capability against Tehran. Yet the path forward remains fraught with risks, from prolonged instability in South America to unintended escalation elsewhere. For investors, this nexus presents a volatile mix of opportunities and pitfalls, demanding careful positioning in energy, defense, and emerging market assets.

The Energy Shield: A Buffer Against Persian Gulf Volatility

Venezuela’s heavy crude has long been viewed as a potential counterweight to Middle Eastern supply risks. U.S. Gulf Coast refineries are optimized for this grade, which blends well with lighter shale output. Securing reliable flows from Venezuela could mitigate the economic fallout from disruptions in the Strait of Hormuz, Iran’s key chokepoint.

Energy Aspects’ Richard Bronze noted that while revitalizing Venezuela’s dilapidated infrastructure “is not going to be a straightforward proposition,” greater U.S. access could gradually boost output, providing a strategic buffer. Thomas O’Donnell, an energy and geopolitical strategist, estimated that a peaceful transition might enable a significant production ramp-up in five to seven years—enough to make military pressure on Iran more economically survivable for Washington and its allies.

This dynamic weakens Tehran’s traditional deterrence: the threat of oil-price spikes from Gulf conflict. With ample global supply already pressuring prices downward in late 2025, a Venezuelan resurgence could further dilute Iran’s leverage, as highlighted by Barron’s analysis suggesting that developments in Venezuela and Iran could collectively exert downward pressure on oil prices in 2026.

Reinforcing the Petrodollar and Isolating Adversaries

Control over Venezuelan oil extends beyond volumes—it’s about currency dominance. By steering exports away from non-dollar channels favored by China, Russia, and Iran, the U.S. reinforces the petrodollar system that sustains American financial power.

The Tehran-Caracas alliance, forged under Hugo Chávez and deepened under Maduro, has served as a sanctions-evasion lifeline, including oil blending, tanker swaps, and even drone technology transfers. The fall of Maduro deals a “devastating blow” to Iran’s Western Hemisphere interests, according to experts cited by Fox News, weakening Tehran’s anti-American network and its ability to project influence far from the Middle East. Euronews analysts highlighted that Maduro’s ouster raises questions about broader U.S. military resurgence, potentially signaling to Tehran that alliances with anti-Western regimes offer diminishing returns.

From an investment standpoint, this isolation could pressure Iranian assets further, but it also opens doors for U.S. firms. As Reuters reported in reactions to Maduro’s capture, shares in Big Oil and drillers are likely to see bids, fueled by speculation on rebuilding Venezuela’s oil sector.

Setting a Precedent: Remaking the Global Order

A successful reconfiguration in Venezuela would demonstrate that sustained economic and military pressure can realign sovereign states. Atlantic Council contributors described it as a “bold operation” that puts Trump’s warnings to Iran in a new light—though they cautioned that layered defenses and planning differences make a similar move against Tehran improbable in the near term.

Still, the precedent could accelerate defections among Iran’s proxies or allies, from Yemen’s Houthis to Lebanese Hezbollah, as the costs of alignment with Tehran grow clearer. Chatham House experts note that U.S. strikes on Iran’s nuclear program last year were privately cheered in the region, suggesting Venezuela’s upheaval could embolden similar sentiments.

The Flip Side: Perils of Overreach

The risks are substantial. Rystad Energy’s Jorge Leon pointed to Libya and Iraq as “sobering precedents” where forced regime change failed to stabilize oil supply quickly. A protracted crisis in Venezuela—marked by guerrilla resistance, criminal factions, or humanitarian fallout—could drain U.S. political capital, stretch military resources, and diminish support for allies like Israel amid Middle East flashpoints.

Rapidan Energy’s Bob McNally described the proposition as “complicated,” with U.S. firms wary after past expropriations. If instability persists, adversaries like Iran might exploit perceived U.S. overextension to escalate proxy conflicts or advance nuclear ambitions. Wellington Management’s insights on 2026 geopolitics warn of rising probabilities for direct U.S. military strikes in Venezuela, potentially amplifying global risk premiums.

Investor Positioning: Navigating the Volatility

For investors, the Caracas-Tehran linkage translates into actionable trades amid heightened geopolitical uncertainty. In the short term, instability could drive oil prices higher, as Allianz Global Investors outlined in their analysis of Venezuela’s market implications—suggesting potential gains during the transition period. Positioning here might involve tactical longs in Brent or WTI futures, or energy ETFs like XLE, to capitalize on any supply disruptions.

Over the longer horizon, however, a stabilized Venezuela under U.S. influence could flood markets with additional supply, pressuring prices downward. This scenario favors shorts on oil or hedges via options, while rewarding exposure to U.S. majors like Chevron and ExxonMobil, which stand to benefit from renewed access to Venezuelan fields. As Helima Croft of RBC Capital Markets cautioned, rebuilding the sector is an “enormous undertaking,” but early speculation has already lifted related stocks, per Reuters.

Broader portfolio adjustments should account for spillover risks: Increased national security focus, as noted by Wellington, could boost defense contractors like Lockheed Martin or Raytheon. Emerging market debt traders might eye Venezuelan bonds for a restructuring rally, though Geopolitics Unplugged highlights economic headwinds and lingering expropriation fears that deter immediate foreign direct investment.

Diversification remains key—consider allocating to non-energy commodities or renewables to mitigate downside if global supply gluts materialize. As EnergyNow.com emphasized, from an investing perspective, this could “unlock massive quantities of oil reserves over time,” but markets often shift to risk-on mode post-conflict, rewarding those positioned for recovery.

The Bottom Line: A Pivotal Inflection Point

As markets digest the news—with oil prices remaining subdued amid perceptions of ample supply—the interplay between Caracas and Tehran underscores a core truth: Energy security and geopolitical leverage are inseparable. A decisive U.S. win in Venezuela could reset the board, providing the economic cushion and strategic momentum to prioritize Iran without fear of global recession.

Yet failure risks unraveling influence across hemispheres. Investors should monitor transition stability, investment commitments from majors like Chevron, and Tehran’s response, while positioning portfolios to balance short-term volatility with long-term opportunities. In 2026, the road to Tehran may indeed run through Caracas—and the journey could define thet era of renewed great-power competition.