Listen to the full episode, here.
Key Points
- The U.S. military action to remove Nicolás Maduro is described as both surprising in its execution but unsurprising given the prior buildup of U.S. military assets in the Caribbean.
- Maduro’s government likely miscalculated, believing the U.S. was bluffing and that allies like China and Russia might intervene. Internal corruption and self-interest also prevented the government from turning Maduro over.
- The idea that the operation was “all about oil” is challenged. It was noted that Venezuela’s reserves are primarily heavy, sour crude, which is difficult and costly to refine, and its production infrastructure was in a state of collapse due to years of malinvestment by the Chavista regime.
- Rebuilding Venezuela’s oil production capacity would require billions in private investment, which was deemed unlikely to materialize without guarantees of the rule of law and property rights, which were not yet in place.
- The primary significance of the operation is presented as a successful projection of U.S. military power. The efficiency and precision of the mission, contrasted with the messy withdrawal from Afghanistan, were seen as a powerful message to adversaries.
- John and Sam speculate that this event signaled a shift in U.S. foreign policy towards a more forceful, interest-based approach, akin to the Monroe Doctrine, rather than a values-based “Wilsonian” approach.
John Norris (00:29):
Well, hello again, everybody. This is John Norris at Trading Perspectives. As always, we have a good friend, Sam Clement. Sam, how are you doing?
Sam Clement (00:35):
I’m doing great, John. How are you doing?
John Norris (00:36):
I’m doing very well. Thank you for asking. Now, before we get started here today, we’re going to be discussing a topic which some people might think is political in nature. We intend for it not to be. We’re trying to be as objective as possible, but please remember everything that you hear on Trading Perspectives on this podcast is the opinion of Sam Clement and myself, John Norris, and not necessarily that of Oakworth Capital Bank or any of its directors, shareholders, stakeholders—any of that stuff. It’s just us. Cool?
Sam Clement (01:02):
Just us.
John Norris (01:03):
All right now, Sam, clearly here we are—the first week of January 2026. In the big news, what everyone’s been talking about—at least seemingly so—is the recent action that the U.S. military took down to Venezuela to spirit Nicolás Maduro, the president of that country, away from his mansion in Caracas and up to New York.
Sam Clement (01:23):
Yeah. It’s pretty much the topic of the week, and it is completely crowding out everything else. And it’s a surprise, but it’s not a surprise at the same time. I mean, it was surprising to watch the clips and see how it went down, but the fact that this happened is less of a surprise with the buildup of assets in the Caribbean from the United States.
John Norris (01:43):
Well, the thing is, it is also seemingly a little bit of a surprise because I think maybe the average American isn’t used to the United States actually threatening to do something and then following through with the threat. I mean, again, that might seem political in nature, but it does sort of seem that way oftentimes—although we have seen Washington behaving a little bit differently over the last 13, 14 months. But that buildup outside of Caracas, outside of Venezuela—all that stuff—all that buildup in the Caribbean, it’s been there for a while. Washington’s been threatening Maduro: you better come quietly, all that stuff. So why didn’t the government in Caracas just simply give in before now?
Sam Clement (02:26):
It feels at least partially like trying to call a bluff to me. I’ve seen clips of Maduro in the weeks leading up to this, and it felt a little taunting almost—at least in the clips that I saw. So that’s my personal feeling. I mean, I don’t have intel into what their thoughts were, but it feels partially as though they were calling a bluff.
John Norris (02:51):
Well, I think it’s certainly partially calling a bluff. And then also: “Hey, we want you, Maduro. How many people, when being called out, really want to go?” Yeah. So I mean, he’s clearly the one that was in charge down there—the autocrat, the dictator, as it were—going, “Man, nothing good is going to happen to me if I go with these guys.”
So I don’t really care that much about going. So I think that’s probably it. I think another thing is maybe they thought that their buddies might help them out behind the scenes. Maybe they thought about Beijing and Moscow and maybe even Tehran—maybe those guys would help them out. And I think that was misplaced hope in a lot of different ways. But really, I have had some folks ask me, “Why didn’t they just go along with it? Why didn’t the rest of the government do it?” Well, because Maduro’s the dictator and he calls the shots. And from what I understand—and I don’t think anyone fully understands what’s going on down there, maybe even the people in Venezuela themselves—I fully believe that everyone in Venezuela in positions of power had every sort of self-interest to keep Maduro in power because he was ensuring that they were getting greased.
Sam Clement (03:58):
Yeah. I mean, it’s pretty straightforward, right? It’s where the money goes and who the military follows—that is where the power is.
John Norris (04:05):
Right. So as long as Maduro—as long as Chávez—was keeping the military fat and happy with money, there’s no reason for the wheels of government to turn over the dictator. And certainly the dictator himself isn’t going to turn himself over. So yeah, that’s pretty easy. Pretty straightforward.
Now, we have read also a lot that it’s all about Venezuela’s oil. Although Venezuela supposedly has the world’s largest proven oil reserves, Sam, from what I understand, a lot of the stuff that they have is that sticky stuff—that dirty stuff—that kind of sludge out of the Orinoco River Basin, which isn’t necessarily as good, for all intents and purposes, as that light, sweet West Texas Intermediate crude that we have so much of. So if this is what their proven oil reserves are, why in the heck do we want it? And what can we do with it?
Sam Clement (05:04):
Well, there’s definitely—I think you kind of hinted at it—there’s definitely an asterisk to the proven reserves, the word “proven.” And largely—not directly—but it’s largely taking the word of the Chávez regime and Maduro that some of these resources are proven. And reading from petroleum engineers, you’re right: we know it’s heavy sour crude, but the comparison for it is closer to molasses and the thickness of it. And when you shut down these drilling rigs, oftentimes they can’t just unplug it and start back up. They have to re-drill sometimes. And so it is a completely different product than what we produce here in the United States. But I think an important part for people to understand is what we produce and what we refine are not necessarily the same thing.
John Norris (05:49):
The issue.
Sam Clement (05:50):
And so the crude markets—the oil energy markets—are so complex. You have tons of different producers producing different qualities and types of energy—gas, natural gas, crude, what have you—and you’re not necessarily refining what you produce yourself. And that’s been true for the most part, and is still pretty true with the United States.
John Norris (06:12):
Yeah, certainly so in the United States. Interestingly enough, we export our light, sweet West Texas Intermediate because our refining capacity—we produce too much for our refining capacity of that type of crude oil—and we import this sludge from the Yucatán, from Mexico, and from Venezuela—the Orinoco River Basin—
Sam Clement (06:32):
Canada as well.
John Norris (06:32):
—and Canada as well. And as Sam suggests, it’s sludge—it’s molasses—it’s dirty stuff. And to tell you, I’ve actually been to a refinery before. There’s a large vertically integrated company that has a refinery in Pascagoula, Mississippi. And I went down there one time when I was visiting the office down in Mobile and went over there, and it’s fascinating. If you’ve never been to a refinery, if you can get a visit, have at it.
And I asked them—I was asking particulars about it and all that stuff. What we pay for light, sweet West Texas Intermediate—what you see as the spot price of crude oil—all that stuff, Brent, WTI—that’s not the cost of a barrel from the Orinoco or the Yucatán. It’s about, let’s say, half.
Sam Clement (07:18):
I don’t know. Half. I’ve seen a $10 to $20-plus discount.
John Norris (07:21):
It’s much different because it requires a lot more to refine. And that’s what this refinery did. They took stuff from the Yucatán and they refined it. And what was interesting about it, Sam, was they had this large conveyor belt that went through a marsh—went from the refinery through this marsh out to a platform where ships were picking up. Stevedores were taking—
In any event, on this conveyor belt was this sludge—just sludge—black sludge. I mean, like when you get too much buildup on your grill, that’s kind of what it looked like. And so I asked, I said, “What is this stuff?” And he goes, “That’s what’s left over after we refined this stuff out of the Yucatán.” I said, “What are you doing with it?” He goes, “We’re shipping it.” He goes, “We export this stuff.” I said, “Well, who are you exporting it to?” And he goes, “Man, stuff burns like crazy. You wouldn’t believe it.” I said, “Why don’t we use it here?” And he goes, “The EPA won’t let us burn it here, so we’re shipping it off to Ukraine.”
So what was kind of curious about the oil industry—to show you just how much it’s a commodity product—we imported the crude oil from the Yucatán, in this situation from Mexico. We refined it in southern Mississippi, and then we shipped off this sludge to Eastern Europe. So it’s a commodity product. This is the stuff that Venezuela has. This is the type of stuff that we refine. Also, Venezuela produces a lot of stuff for the Chinese as well.
And so that seems to be where a lot of their stuff is going. With China’s Belt and Road Initiative: how are you going to pay me back? Oftentimes, a lot of these resource-rich but capital-poor countries will repay the Chinese—repay Beijing—with natural resources and what have you. And I’m under the belief—I think most people are—that Venezuela was paying China a lot of crude oil in return for technology and just overall assistance. So if this is what the Trump administration has done—gotten Maduro out—what does this mean for China’s ability to continue to get crude oil here at below sort of WTI and Brent prices?
Sam Clement (09:35):
Yeah. I think it impacts China and Taiwan, and the impact that that could have in the forecast and the timeline for that. It impacts Russia as well. It impacts Iran. Really, those kind of questionable energy producers and consumers—or the new axis powers—that is where we’ll see significant change. I think when you have less ability to get this questionable oil into the market—and China obviously being the second-largest economy and the biggest consumer of it—it’s going to be severely impacted.
John Norris (10:08):
Well, the thing about it is—and I’ve read a number of different articles about the geopolitics of all this—about how the United States still controls the Malacca Strait, which a lot of oil from the Middle East has to go through in order to get to China, and how this really could cut off China’s access to fossil fuels if the worst-case scenario were to happen.
And I keep coming back to: oil is a commodity product. And once it gets into a pipeline somewhere, it really doesn’t matter where it originated, and you can’t really tell, for all intents and purposes. So if it does get to that—given the fact that Russia produces a lot of the stuff and they’ve got pipelines with the Chinese—I would imagine they would just, instead of shipping their crude throughout the world, they’d just ship it through to China. I don’t know. I mean, I think that’s an issue.
So I don’t really think that doing this in Venezuela will truly cut off China’s ability to get oil at below market rates, although I have read that elsewhere. Venezuela’s overall production—from what I have read, various sources suggest that they are producing about half what they were a decade or so ago. And while they have the highest proven reserves, they’re having a difficult time because a lot of their infrastructure has become outdated, dilapidated, fallen apart because the Chavista regimes—again, from what I’ve read—treated the oil industry as a cash cow, took money out to curry favor with people and to expand social networks, and did not do the job of reinvesting back into the business. And as a result, Venezuela’s production is a fraction of what it used to be.
Sam Clement (11:52):
Yeah. What is it? PDVSA, the state-run company. And again, this kind of goes hand in hand with how dirty the oil is as well—or heavy and sour the oil is—and the malinvestment in the country with their energy. And it cannot buy—it’s a consensus—you cannot turn this back on overnight. This is a decade-plus, in my opinion, and billions of dollars of investments that will have to happen to maybe get up to what some of those projections are of three million barrels a day.
And it reminds me of some of the Middle East and the expectations that we’d get some of these places up to three million barrels a day. And I think they max out at half a million barrels a day. So it’s a very lofty goal, and maybe a little naive to think that that is a realistic case.
John Norris (12:45):
Well, I think it’s more naive than anything else because in order for Venezuela to get its infrastructure back to where it needs to be in order to produce what it was producing requires, as you mentioned, billions upon billions of dollars in investment. And that money has to come from somewhere.
Sam Clement (13:05):
Yeah.
John Norris (13:06):
Who’s going to do it?
Sam Clement (13:06):
Well, and this is a country that has $100-plus billion of debt—defaulted debt—that is—
John Norris (13:15):
Well, it’s certainly not going to come from Caracas.
Sam Clement (13:16):
Yeah. Well, and the bonds they issued are under New York law. So there is this talk of: well, do we get those defaulted bonds paid back, and the interest, and what have you? And so it’s a really big question mark of where this money comes from. And the answer most likely is from the United States in some regard—
Speaker 3 (13:37):
I mean—
Sam Clement (13:37):
—whether it’s private investors. We’ve already seen Elliott Management and other firms talk about taking trips down there to look at investment opportunities. Chevron’s been down there already. They were the one big one to not leave. And so what this is going to look like is probably some combination of public and private investment from the United States.
John Norris (13:55):
Well, probably so. However, the way that it stands now—as we talk here the first week in January 2026—while Maduro is no longer president, the rest of Maduro’s government is still largely in place. The former vice president of Venezuela is now the president. And while I think her name’s Delcy—while she is going to be a little bit probably more pliant than Maduro was there at the end—I don’t envision that these people, diehard socialists, are going to have a change and become capitalist overnight. And we’re going to have to be relatively consistent with our pressure on them.
I go through all this because if you’re going to make billions of dollars in investments, if you’re a private investor, you want some assurance that your investment’s safe and that you’re going to get your money back. If all we’ve done is cut off one head of the Hydra, if you will, I don’t know if American investors are going to be as eager as everyone thinks they’re going to be going down to Venezuela and investing money if they aren’t convinced of the rule of law and strong individual property rights.
And we’ve talked about that type of stuff here before.
Sam Clement (15:06):
Yeah. There’s been a lot of talk in the days after Maduro was taken up to New York—whether it was Delcy or whoever—but I think we will see some change. And I think the change, even from these people that may ideologically completely align with Maduro, is everyone knows the U.S. is the most powerful military. To me, it’s—
John Norris (15:30):
I imagine there’s some folks in Beijing that might—
Sam Clement (15:32):
I don’t think they’re even close yet. I think they’re years and years away. But the difference: power is only important for geopolitics if you can project it out.
And so that, to me, is the storyline. It’s beyond Maduro. It is that we were able to do this and project power hundreds and thousands of miles away from our home country and capture the leader of a foreign government without injuring or without killing any Americans, without loss of any equipment—so successfully that I think you will almost have to see that from the new leader of Venezuela, and in other countries as well: that we can project our power.
We did it when we bombed the nuclear facilities in Iran. We had sent B-2s across the globe with three refuelings. So we can project our power better than any other country can project power. And that’s the difference between us and China right now.
John Norris (16:30):
Well, listen—USA, USA—everything you just said, I completely agree with. And I think what has happened over the last 13 months has really benefited the United States in that, again—not trying to be political here—but when we left Afghanistan the way that we did, and just really how we botched that up, or at least appeared to have botched it up in the global media—and just kind of what a shambles that was—not casting any aspersions or fingers on why that was, but it wasn’t neat. It wasn’t clean.
To have the United States military do what it did in Iran—whether you agree with it or not—to do what it did in Iran with that type of precision, and to do what it did in Venezuela, going in the middle of the night and taking the president out without suffering any fatalities—that’s pretty impressive as well.
And the ability for the United States to not only project its force throughout the world, but to do it in a terrifyingly efficient manner has to send maybe some kind of shivers up the spine of a President Xi or Vladimir Putin or the folks in Tehran. So, I mean—who wouldn’t it?
Sam Clement (17:57):
I think it starts with Tehran and Moscow, first of all. I think those are the two possible next ones up. We’re already seeing friction in Tehran. Moscow’s obviously been an ongoing issue since really—forever—but especially since the start of 2022. And so I think those are the two areas. I think Beijing—we are still going to try and at least kick the can down the road with them. But I think the focus will continue to be on Iran. I think I could see something picking up relatively soon in the Middle East again.
John Norris (18:29):
Well, I think you’re probably right on that. And I will tell you this: I love to read history books. I read textbooks as kind of fun. And one of the things that I seem to have learned from history—although, Sam, I’m supposed to say we’re all supposed to say in our industry, past performance is not indicative of future results—however, what I’ve learned in history books seems to be that dictators and autocrats tend to understand force, and they tend to understand power more so than words.
And so that is the message I think this is sending across to other leaders around the world—perhaps people who would not be friendly to the United States—is that we’re maybe a little bit more efficient than how we have come across over the last 10 years, and a little bit more deadly than perhaps we have come across.
Sam Clement (19:14):
Yeah. I mean, if you are sitting in the Ayatollah’s chair right now, and you see what’s happened in Venezuela—I get the defenses in Venezuela are probably not as significant as what used to be, at least in Iran before Israel and us took them out—I’d be pretty scared. There’s been talk of plans already of how they would get to Russia if things were to destabilize more with the internal protest, or if Israel or the United States got involved again.
So I think, again, it’s the projection of power more so than power, because if we couldn’t get to Iran like we have shown that we could, U.S. power doesn’t mean as much, too.
John Norris (19:55):
Well, and it doesn’t. And I guess it really just kind of—all this is kind of a sea change in the way Washington has operated, even during the first Trump administration, but a sea change in how we have operated: the fact that we try to use diplomacy a lot as opposed to force. And at least this president, this go-around, seems to want to use the latter a little bit more than the former.
So with all this being said, what do you think the real future is in Venezuela, and our role in shaping that country? Because the way that we’ve left it—and the way that it is now, from my understanding—isn’t going to necessarily be any better. We left the current Chavista apparatus still in place. That organization’s still in place. Don’t see any real change there. So what’s going to happen? What are we going to do?
Sam Clement (20:48):
Well, it’s definitely a longer-term thing to get Venezuela back to democracy, if that really is the goal of this.
John Norris (20:56):
And again, should it be the goal?
Sam Clement (20:59):
Look, I think Trump—hopefully jokingly—called it the Donroe Doctrine now. But the Monroe Doctrine: that we are in control of the Western Hemisphere. It’s hard to argue with, to me, that we don’t want people in our backyard working with Iran and working with Moscow. And so I understand it from that aspect of it. Whether that’s democracy or not, I think it’s less so our problem. We’ve gotten into trouble in the past trying to instill democracy in other countries, and have a proven track record of that not being super successful. So I think the main goal right now is: are they going to shift allegiances—or that may be too strong—but toward the United States, away from Iran and Moscow?
John Norris (21:44):
Well, I think it’s going to be real interesting to see whether or not, after this current administration, this approach to foreign policy maintains. I would argue—and I think a lot of people might agree, although some might disagree—that the U.S. has largely, as much as it might not be in its best interest, pursued more of a Wilsonian sort of approach to foreign policy, and that we try to export our values as opposed to enforce our interests. It might seem like a fine line—a question of semantics to some people—but I would suggest it’s not.
And that perhaps moving forward, instead of sort of the more Wilsonian approach, we are a little bit more Monroe Doctrine: we’re going to project our force to project our country’s interests. And oftentimes, that might be our values, but it’s going to lead with interest first and follow with values, as opposed to the other way around.
And I think it’ll be interesting to see whoever’s in 1600 Pennsylvania Avenue after the next election—whether or not, or how, that plays out is a better way of putting it.
Sam Clement (22:52):
It will not be easy, to put it lightly.
John Norris (22:55):
It will not be easy. These are certainly weird times throughout the world. And listen, no matter what you think about the current president and what happened in Venezuela, you still have to say, “My goodness, that was easier than what anyone thought it would, could, or should be. And let’s just leave it at that.”
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So with that and that plug out of the way, Sam, on this topic—anything else to say?
Sam Clement (24:10):
That’s all I’ve got.
John Norris (24:11):
That’s all I’ve got, too. Y’all take care.
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