Betting markets are increasingly assigning a non-trivial probability that the U.S. could launch a military operation in Venezuela sooner than many investors expect, even as oil prices continue to trade as if geopolitical risk in Latin America is negligible.
On Polymarket, traders are assigning a 29% chance that the U.S. begins a military engagement with Venezuela by Jan. 15, 2026, rising to 40% by Jan. 31, and reaching 52% by March 31, 2026.
In other words, within just over three months, betting markets suggest it is more likely than not that President Donald Trump orders some form of military action in Venezuela.
Oil markets, by contrast, show little sign of pricing such a scenario. The West Texas Intermediate light crude — tracked by the United States Oil Fund (NYSE:USO) — is trading near $57 a barrel, down about 22% year-to-date.
Earlier this week, prices briefly touched $55 a barrel, the lowest level since January 2021, intensifying concerns over the economics of U.S. shale production and reinforcing a broader narrative of ample global supply and weakening demand.
In short, energy markets appear largely indifferent to a conflict risk in Venezuela. A majority of voters, however, oppose conflict. A recent poll shows that most voters disagree with Trump’s strategy against Venezuela, and want Defense Secretary Pete Hegseth to resign.
Oil Markets Aren’t Pricing The Venezuela Risk — Yet
“I do not think oil prices reflect a meaningful risk of U.S.–Venezuela armed conflict,” said Jeff Krimmel, energy analyst and founder of Krimmel Strategy Group, in an exclusive interview with Benzinga on Friday.
“That’s mostly because for the past several decades, the U.S. has shown very little interest in being militarily entangled in what have historically been incredibly messy South American politics.”
While tensions have drawn more attention recently, Krimmel said the likelihood, and potential consequences, of an escalation have not filtered into oil pricing.
In the event of a military intervention, Krimmel said the immediate impact would likely be bullish for crude.
Historically, armed conflict in oil-producing countries has triggered spikes in crude prices. Venezuela, despite the decay of its national oil industry under Nicolás Maduro‘s regime, remains home to the world’s largest proven oil reserves.
In the near term, the impact would likely be straightforward.
“A conflict would take oil off the market,” Krimmel said. “Reduced supply would translate to higher prices.”
“This would benefit US oil producers through improved revenues and cash flows,” he added.
The medium- to long-term outlook, however, would depend heavily on the political outcome.
A conflict that ultimately leads to meaningful political reform could unlock foreign investment, restore infrastructure, and allow Venezuela to reintegrate more fully into global oil markets.
That scenario could eventually increase supply and weigh on prices. If instead the conflict resolves in a fragile truce with little reform, Krimmel said the future could look much like today’s constrained, inefficient Venezuelan oil sector.
A Market Blind Spot?
With betting markets now signaling a coin-flip probability of military action by early spring, investors are left with an uncomfortable question: Are oil prices ignoring a geopolitical risk that could matter very quickly?
For now, crude remains near multi-year lows, seemingly unconcerned.
But if betting odds prove directionally right, and not just speculative noise, the disconnect between geopolitics and oil pricing may not last much longer.
Now Read:
Image: Shutterstock
Recent Comments