Global markets showed little reaction to the US captured oil-rich Venezuela, but investor Michael Burry says investors are seriously underestimating its importance.
In a series of posts on Substack and X, the “Big Short” investor said the weekend’s events indicate a major shift in global power, energy markets, and geopolitics, one that markets have not yet fully absorbed.
“The game just changed,” Burry wrote, calling the US action a “paradigm shift despite the markets yawning.” Benchmark oil prices rose less than 1% on Monday, and US stock futures opened higher, which indicate that little immediate concern among investors.
For Burry, that muted response is exactly the problem.
Why is this America’s power move?
As reported by Business Insider, US captured Venezuelan President Nicolas Maduro over the weekend, after which President Donald Trump said the US would temporarily “run” the country. Venezuela holds the world’s largest proven oil reserves, yet years of mismanagement and sanctions have left its production crippled.
To Burry, the swiftness of the takeover sends a message far beyond Latin America. “This is a paradigm shift,” he wrote, explaining that the implications are mid- to long-term, not something markets will digest overnight.
Why is it a warning to China?
One of Burry’s strongest warnings concerns China. For years, China has poured billions of dollars into Venezuela under its Belt and Road Initiative (BRI), extending loans that were collateralized against future oil production. That oil, Burry explains, is now effectively under US control.
“The seizure was a shot across China’s bow,” he wrote. In other words, Beijing’s overseas investments, particularly those backed by natural resources, may no longer be as secure as assumed.
Burry believes that China must now be reassessing the risks of US intervention in regions it considers strategically important. He added that Chinese leaders may see in Venezuela a “blueprint” for how territorial control could be executed, even as they remain wary of what he described as “Trumpian America’s infuriating gall and decisive power.”
What about Chinese stocks?
The fallout, Burry believes, could show up in markets tied to China. He warned that Chinese stocks are now “somewhat riskier” due to the rising threat of sanctions if geopolitical tensions escalate.
Companies like Alibaba and Baidu, he said, “could be in for some volatility” should China intensify its actions in the South China Sea or move against Taiwan. Investors may not be adequately factoring in geopolitical risk premiums for Chinese assets.
What will happen to Russia’s oil power?
As reported by Business Insider, Burry also pointed to Russia, explaining the Venezuela move weakens Moscow’s long-term leverage. “Putin’s jaw has to be on the floor,” he wrote, claiming that the US accomplished in “practically seconds” what Russia has struggled to achieve in Ukraine over three years.
With Venezuelan oil potentially flowing again under US oversight, Burry argues that Russian crude becomes less strategically important in global markets. That shift could reduce Russia’s export revenues and, by extension, its geopolitical influence.
The investor has also suggested that Canada and Mexico could lose a good amount of leverage in trade negotiations with the US if American refineries begin replacing Canadian crude with Venezuelan oil.
Who are the winners?
Burry believes that US oil-services firms, including Halliburton, Schlumberger, and Baker Hughes as major beneficiaries of this shift. With Venezuela’s infrastructure in disrepair, US contractors are likely to be tapped to repair pipelines, modernise refineries, and revive production.
“These companies should benefit significantly,” Burry wrote, pointing to years of deferred maintenance and underinvestment in the country’s energy system.
Perhaps the most consumer-friendly implication lies at the pump. Burry forecast a long-term tailwind for the US economy as Venezuelan oil boosts supply. Increased availability could push down prices for gasoline, diesel, and jet fuel, lowering transportation and supply-chain costs across industries.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.