Venezuela is ‘uninvestable’ as Trump unnerves market analysts
Venezuela is “uninvestable” and requires sweeping reforms before oil giants can support US ambitions, a top chief executive has warned Donald Trump, in a warning that comes amid growing concerns the president is set to rattle markets and hit global economies.
ExxonMobil boss Darren Woods appeared to distance the company from the president’s ambitions to extract oil at a rapid pace in a televised meeting between energy officials and military personnel.
Venezuela has the largest oil reserves in the world but lacks critical infrastructure after years of Nicolas Maduro’s communist rule radically slowed the country’s enrichment.
“If we look at the legal and commercial constructs, frameworks in place today in Venezuela, today it’s uninvestable,” Woods said.
“Significant changes have to be made to those commercial frameworks, the legal system. There has to be durable investment protections, and there has to be a change to the hydrocarbon laws in the country.”
Woods said company representatives would assess the state of oil infrastructure on the ground in comments made a week after Maduro’s shock arrest in a daring operation.
Mark Nelson, the vice chairman of Chevron, which is the only American company operating in Venezuela under a special licensing agreement, said he saw a “path forward” to increase production while Harold Hamm, a fracking executive, said the country had “challenges” which businesses could “handle”.
Venezuela remains under the rule of the same socialist government, with Maduro’s vice-president Delcy Rodriguez taking control of the country under the apparent supervision of the Trump administration.
US analysts and economists are holding back from taking a full view on what the year ahead could mean for various sectors and markets.
The private bank Berenberg’s Richard Hatch and Jasper Mainwaring said they predicted another rally in commodity prices as Trump threatens to take further action in Venezuela, as well as intervene in Mexico, Colombia, Cuba and Greenland.
“If there are further military actions by the US against any of the above countries or increased military action in the east, for example China and Taiwan, we believe that gold and silver will continue to see upward pressure in prices,” they said.
Trump taking US on ‘odd turn’
ING global head of macroeconomics Carsten Brzeski said the events at the start of the year could begin to rub off on markets, which have had a relatively muted response to Trump’s operation and diplomatic threats barring some defence and energy stocks.
ING said a “disconnect between geopolitics and the real economy will persist” over the year in a recent forecast report, with 2025’s stream of unpredictable statements from the US president leading investors to take a more cautious view on geopolitics in order to avoid making rash decisions.
“It’s not based on the assumption that geopolitical shifts will stop, but rather on the assumption that markets have grown numb, companies will adjust, and governments will offset any adverse geopolitical effects with fiscal stimulus.
“The call still holds, but in recent days, I’m getting that eerie feeling that the disconnect won’t last forever and that at some point, something will have to give.”
It’s not just in geopolitics that some investors fear for the worst of Trump’s interventionist stance.
Business relations with Trump could also suffer an “uncomfortable” breakdown due to Trump’s aggressive targeting of defence chiefs and other key industry figures, according to Ipek Ozkardeskaya, senior analyst at Swissquote
“The US government now holds stakes in key sectors, including rare-earth miners and Intel, takes a cut of Nvidia’s China-related revenues, and is signalling limits on capital returns for defence firms,” Ozkardeskaya said.
“It is an odd turn for a country long seen as the godfather of free capital markets. Investors may grow increasingly sceptical of rising government influence in corporate decision-making, especially where political goals diverge from shareholder value.
“One wonders whether this accelerates rotation out of US assets.”