Regime Change in Venezuela

By now, everyone has seen the news. US Special Forces conducted an incredible raid into Caracas and grabbed Venezuelan dictator Nicolas Maduro. Maduro blatantly rigged their 2024 election and had lost virtually all support inside his country, throughout Latin America and around the world (excluding China, Russia, Iran, Cuba). It’s only been ~36 hours but I wanted to give a few quick thoughts on what may come next, politically and economically.

• First, this is not a major surprise to markets (or us). We’ve been talking about this happening for months. Not only was Maduro deeply unpopular in Venezuela but he had lost all support in the region, even from other socialist leaders. I’m not expecting a major market shock in any form.

• This is bearish oil, however not as bearish as many are yelling. Venezuela’s oil production is down ~75% from it’s peak and today it only produces ~1% of global supply. As Venezuela shifts post-Maduro, especially with US involvement, oil production and supply is surely going to increase. It’s specifically bearish for Canada’s oil industry, as Venezuela produces a similar crude as Alberta. As Venezuelan supply increases, Canada will lose a lot of economic activity and trade leverage. The only bullish news, it should take a few years for this to play out. There is no immediate spigot to turn on in Caracas. Oil infrastructure needs to be rebuilt and their oil production will actually be flat/down in 2026.
  
  (Venezuela’s oil production, thousands of barrels)

  

• What comes next for Venezuela? The main problem with regime change isn’t removing the dictator, it’s who/what takes his place. I don’t believe the Trump Administration and Marco Rubio would grab Maduro with no plan on who would assume power. Things are obviously moving quickly and the facts on the ground can change, but here is my leading theory:
  
  Trump announced that we would “run Venezuela” for a period of time until they hold new elections. The media freaked out and assumed that meant we would be sending in troops to take over the capital. In reality, that was Trump speak for “we will be approving the leadership and policy in Venezuela”. I believe their pre-selected leader has already been put into place. Maduro’s Vice President, Delcy Rodriguez, was sworn in as the new President yesterday.
  
  It’s important to note that she was previously in charge of Venezuela’s oil industry. While she was part of Maduro’s government, American officials have long seen her as more willing to work with the US. After being sworn in she gave a speech where she attacked the Trump administration, which I believe was mostly PR. She needs to talk tough publicly to retain support of the party and the military. What she says publicly isn’t that important, her actions will tell the truth.
  
  If she doesn’t play ball and instead defies the Trump administration, expect her to meet the same fate as Maduro. She now knows how easily she could be “replaced” and is also well aware that we clearly have CIA agents inside of Venezuela. Millions of Venezuelan’s have fled the country in the last few years, and obviously the vast majority of the opposition is no longer present. Because of this, the Trump administration believes current opposition leader Maria Corina Machado won’t have the immediate support to take over. They prefer Delcy Rodriguez because of her loyalty from the party and the military. I believe this is the correct move to provide stability in Venezuela for the time being. If she ends up refusing to work with the US, Maria Corina Machado could be the Plan B.

  

• Venezuela is not Iraq. I’m seeing tons of people talking about previous Middle East regime changes and applying the results to today. While the situation in Venezuela could certainly be unstable, this is simply not the same. Venezuela is in the Western hemisphere and had true democracy for decades before recently. The demographics are also nothing like Iraq or Libya. This is a largely European and Indigenous nation. It’s also ~90% Christian. The lines are drawn by political views, not blood feuds and religious extremists.
  

• This move by America has kicked our “Golden Age of Latin America” into hyperdrive. The right-wing political, economic and social shifts were already taking place naturally, and now in addition we have the US openly reviving the Roosevelt Corollary to the Monroe Doctrine (a strong prediction of mine after Trump was elected). Socialism in LatAm is fading fast and let me be clear… I don’t think the Trump administration is done. In my view, Cuba is a clear target for them to go after next. It also wouldn’t be shocking to see some leaders cut deals to live the rest of their days outside of the Western hemisphere to avoid the same fate as Maduro. Plus, Colombia has their election this May and as I’ve been saying, the odds of a right-wing, pro-capitalism, pro-US candidate being elected are still very underpriced. (Ties into our latest large investment linked here).