U.S. President Donald Trump on the 3rd (local time) abruptly arrested Venezuelan President Nicolás Maduro. The operation, which mobilized America's top-tier military power, went beyond a simple regime change and showed that sanctions can lead to actual physical enforcement.
In the financial sector and foreign exchange market, the possibility of a reassessment of risks across emerging economies was raised. As a result, the preference for safe assets is expected to become more pronounced. A geopolitical premium was immediately priced into the crude oil futures market. Attention is focused on whether China, which had relied on Venezuela as a key crude supplier, will revise its energy and Vice Minister policies.
◇ U.S. proves sanction effectiveness… financial sector fears tightening of capital flows to emerging markets
Until now, the United States has mainly imposed financial sanctions such as asset freezes or bans on transactions in the international community. This time, it took the extreme step of directly arresting and transferring a head of state. This is a strong warning to countries and corporations that have tried to evade sanctions. Experts said the incident is likely to raise political risk premiums across the global financial settlement network.
Bloomberg predicted the operation would indirectly pressure countries currently under U.S. sanctions, such as Iran or Russia. Financial institutions in third countries like Turkey that help them evade sanctions also face the fear that "we could be next." This tension raises due diligence expenses across finance, sales, legal, and investment environments in international financial transactions. That is because the risk premium—such as insurance and payment costs incurred when conducting a transaction with sanctioned countries—rises.
When the burden of investigations and reviews increases, capital flows to emerging markets shrink significantly. Experts noted that while Venezuela's economy is not large enough to affect the global economy, the rules that drive the world economy have solidified into a clear logic of power. It means the medium-term decision-making environment has completely changed.
El País, the largest Spanish-language outlet, said investors are bracing for the shock to markets. In 1989, when the United States invaded Panama and arrested dictator Manuel Noriega, there was a massive capital outflow in Latin America. Financial risks also surged briefly. Maduro's arrest could have a similar economic ripple effect.
◇ Collapse of the China–Venezuela energy alliance
What stands out in this situation is the relationship between China and Venezuela. Just hours before his arrest, President Maduro met with Qiu Xiaoqi, China's special representative for Latin America and the Caribbean, who visited Venezuela on behalf of President Xi Jinping, to discuss economic cooperation. The meeting became his last official diplomatic event before the arrest.
The United States, as if to make a point, carried out the operation right after the Chinese delegation's visit and secured custody of Maduro. The arrest is seen as inflicting massive losses on China's energy security and external economic strategy. Security outlet Insypress said, "The operation took direct aim at the core of China's energy supply chain."
Since 2020, Venezuela has served as a key crude supplier to China. China provided Vice Minister to Venezuela, and Venezuela repaid the massive debt it owed to China with oil in a "oil-for-debt repayment" arrangement. China is estimated to have provided about $60 billion (about 81 trillion won) in Vice Minister to Venezuela over the past five years.
However, with the Maduro regime that received the Vice Minister collapsing in an instant, the prospects for recovering this liability have become uncertain. Whether intended or not by the United States, China lost one energy supply source. At the same time, it faced the risk of asset losses worth tens of trillions of won. Supplies of Venezuelan heavy crude, essential to operating Chinese refineries, were also cut off. Analysts said this would negatively affect China's economy by increasing fuel refining expenses.
◇ World's largest "oil tank" set to open… short-term volatility to widen
The crude market is watching Venezuela's overwhelming resource base. Venezuela ranks first globally with 303 billion barrels of proven oil reserves. About 17%–20% of the world's reserves are concentrated there. However, years of lax management and U.S.-led international sanctions have pushed production to the bottom.
At a news conference that day, President Trump stressed, "We will deploy America's largest oil companies, invest billions of dollars, restore the badly damaged oil infrastructure, and generate revenue for the nation." He added, "We will reclaim the oil that should have been reclaimed long ago, and enormous money will come out of the ground and compensate us for all the expenses we have spent."
The U.S. refining industry has facilities specialized in processing Venezuelan heavy crude. If U.S. capital and technology boost production, international oil prices could fall in the long run. In the short term, confusion from the regime change and the possibility of facility destruction are likely to add a premium to prices.
Depending on how the United States approaches Venezuela's oil, the direction of the crude market could vary widely. Citing experts, Reuters reported that "the operation is the most forceful example of direct U.S. intervention in Latin America," and that crude market investors are closely watching moves by major oil-related corporations.
◇ Underground economy "shocked" as $33.8 billion drug funding lifeline is cut
Maduro's arrest is also expected to deliver a massive shock to the global underground economy. Venezuela, along with Colombia, has served as a key transshipment point on international narcotics routes. According to the 2025 report by the UN Office on Drugs and Crime (UNODC), global illegal cocaine production reached a record high of 3,708 tons in 2023. Of that, the volume routed through Venezuela amounts to 200–250 tons annually.
Drugs supplied through Venezuela to Europe and North America created a huge flow of funds. The European Union Drugs Agency (EUDA) assessed that, as of 2021, the value of the illicit drug market in Europe was at least 31 billion euros (about 44.68 trillion won). With this funding lifeline—once shielded by the Maduro regime—cut, international illegal money-laundering routes have gone on alert.
In the long term, a contraction of the underground economy increases transparency. In the short term, it could deliver a liquidity shock to emerging market financial systems connected to those funds. Based on this, foreign exchange outlets interpreted Maduro's arrest not as a public safety headline but as an "international illegal economy shock."
◇ Flight to safe assets accelerates; further declines seen in currencies of sanctioned countries
In the foreign exchange market, the key is not Venezuela itself but a reordering of risks across emerging markets. Having witnessed the United States take direct action on economic sanctions, the FX market is expected to reassess the additional risks of conducting a transaction in the currencies of sanctioned countries.
As geopolitical anxiety grows, the preference for the dollar, both a safe asset and the key currency, is expected to become clearer. By contrast, the currencies of sanctioned countries—such as the Iranian rial and the Russian ruble—face additional downward pressure.
The Atlantic Council, a U.S. think tank, warned, citing experts, "If elites within the regime surrender and a democratic transfer of power takes place, Venezuela's economy will recover quickly, but if resistance drags on, the region-wide geopolitical 'tension constant' in South America will grow."