Global financial markets exhibited a classic risk-off response on Monday, 5th January 2026, following the dramatic arrest of Venezuelan President Nicolas Maduro by the United States. While the geopolitical shock was significant, its immediate impact on oil was muted, with traders instead flocking to traditional safe havens and defence-related equities.
Oil's Subdued Reaction and a Shift to Safety
Despite Venezuela holding the world's largest proven oil reserves, crude prices actually fell in early European trading. Brent crude declined by 0.8% to $60.24 a barrel, while West Texas Intermediate dropped 1.2% to $56.63 a barrel. Analysts pointed out that the petrostate currently contributes less than 1% of global crude supply, with its production infrastructure in severe disrepair.
President Trump's promise to open up Venezuela's oil reserves and spend billions to fix its energy sector was counterbalanced by the ongoing embargo. The more pronounced market movement was a flight to safety. The U.S. dollar strengthened, with the DXY index rising 0.3% to 98.682. Precious metals surged, with gold futures jumping 2.5% to $4,439.10 a troy ounce and silver soaring 6.3% to $75.51.
Defence Stocks Surge, Global Markets Mixed
European markets opened higher, led not by energy giants but by a sharp rally in defence stocks. Investors interpreted the geopolitical instability as a catalyst for increased military spending. Italy's Leonardo surged 5.7% and Germany's Rheinmetall jumped 6.4%, lifting their respective national indices.
Asian markets had a mixed session. Japan's Nikkei 225 climbed 3%, and China's Shanghai Composite gained 1.4%, supported by semiconductor and industrial stocks. U.S. futures pointed to a cautiously positive open, with Dow Jones futures up 0.7%. In contrast, U.K. oil majors Shell and BP traded slightly lower.
Bitcoin and Bonds: Divergent Paths
In a notable move, Bitcoin held firm above the $92,000 mark, rising 1.4% to $92,534. Analysts at Swissquote Bank suggested the rally could be linked to Venezuela's alleged large shadow reserve of over 600,000 coins, with markets speculating on potential supply impacts if these assets are seized.
Meanwhile, government bond markets were relatively calm. The yield on the 10-year U.S. Treasury note fell marginally to 4.176%, while the 10-year German Bund yield was steady at 2.901%. Capital Economics noted that oil supply shocks typically have less impact on U.S. Treasuries than demand shocks.
In other commodities, copper prices rose 2.9% on supply concerns and a broader risk-on mood in some sectors, highlighting the complex and segmented nature of the global market reaction to this major geopolitical event.
