Venezuela illustrates a problem with market forecasts: Surprises happen

Who had the capture of Venezuelan leader Nicolás Maduro on their 2026 bingo cards? Or the impact on precious metals and Canadian energy stocks just days later?

Happy New Year! It is less than a week old and already we are digesting geopolitical events that were difficult to predict, causing all kinds of market gyrations.

We knew that U.S. President Donald Trump had a problem with Mr. Maduro, accusing him of shipping illegal drugs into the United States. We also knew that the United States was intimidating Mr. Maduro with a military build-up in the region and attacks on alleged drug-running boats.

Nonetheless, what occurred on Jan. 3 came as a surprise. On Monday, when financial markets sprung into action, investors could see another aspect to this surprise.

Precious metals seemed to benefit from the rising global uncertainty and what it might mean for Russia’s war in Ukraine, or the tension between China and Taiwan.

Gold, already a star performer in 2025, jumped 3 per cent on Monday. Silver, another stellar performer last year, gained more than 7 per cent.

Perhaps more importantly, the price of oil also rose –though by less than 2 per cent in the case of West Texas Intermediate, a U.S. benchmark.

That’s because Venezuela is sitting on huge oil reserves, and investors are weighing the immediate impact of the country’s political crisis against the long-term possibility of rising output – when the world is currently facing a glut of oil.

“Our baseline view is that we are likely to continue losing Venezuelan barrels from the global market, a net bullish factor, until a deal is done between the U.S. administration and the current (or future) leadership of Venezuela,” Max Layton, global head of commodities research at Citigroup, said in a note.

Despite the gain in the price of crude on Monday – and Chevron Corp.’s 5.1-per-cent rally – some Canadian energy stocks were hit hard amid concerns of more Venezuelan crude eventually flowing toward U.S. refineries.

Among Canadian producers, Suncor Energy Inc. fell 2 per cent and Canadian Natural Resources Ltd. slumped 6 per cent. Pipelines were hit, too: Enbridge Inc. fell 3 per cent.

How – or more importantly, when – this volatility ends is anyone’s guess. Mr. Layton expects that political uncertainty could take some time to settle down.

“Ultimately, we expect a deal scenario is likely, but this could take months or longer and could see escalation before potential de-escalation,” he said.

Analysts at Bank of Nova Scotia believe that the removal of Mr. Maduro could add a new chapter to the global oil market as the Organization of the Petroleum Exporting Countries, or OPEC, loses sway as a cartel. That could lead the way toward lower prices for heavy oil over the longer term and weigh on Canadian producers.

But in the near term, they too are wary.

“Unless the new government will be able to quickly secure security on the street, oil production growth will be extremely limited and could potentially result in lower output over the next several months if violence and chaos break out because of the power vacuum,” said Scotiabank analyst Paul Cheng in a note.

The bigger issue here relates to how investors approach the year-ahead outlooks from various strategists that have populated their inboxes over the past month.

In particular, oil price forecasts that once rested on estimates for global economic activity are now reacting to other factors that could take a long time to play out. Oh yeah, and Mr. Trump is now threatening other countries, including Colombia and Greenland.

Are you interested in Canadian energy stocks after this new and unexpected curveball? Send your thoughts to [email protected].

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