Oil markets unshaken by Maduro overthrow

Global oil markets yawned at the US’ attack on Venezuela, with prices remaining more or less stable as markets had already priced in “a conflict with Venezuela that would impact exports,” CNBC says. While a military intervention like the US’ would traditionally trigger a spike in crude prices, Brent fell as much as 1.2% in intraday trading before paring back losses and is now up less than 1%, according to Bloomberg.

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Venezuela may have vast oil reserves, but its actual production has been falling over the past several years, and the majority of the country’s output is exported to China. The International Energy Agency (IEA) is already forecasting a 3.8 mn bbl / d surplus for 2026. With Venezuela currently producing just 500k bbl / d (1% of global output), there isn’t enough “live” production to lose to cause a price shock.

A USD 100 bn (very) long play: A US-led, USD 100 bn plan to revive Venezuela’s oil infrastructure is expected to eventually ramp up the country’s oil production again, but analysts are wary that this will be a “years-long” process, Bloomberg says. The plan hinges on US oil majors, including Exxon Mobil, Chevron, and ConocoPhillips to invest some USD 10 bn per year — a roadmap that the White House seemingly has not yet discussed with these private sector players, and one which would hinge on the companies seeing more stability in Venezuela before pouring in more money. It also remains unclear whether markets will actually want the additional oil output that would result from bringing Venezuela’s production back up to historical levels, analysts tell CNBC.

Meanwhile, traders are flocking to haven assets: Gold and silver prices surged as haven demand following the news of the US’ capture of Venezuelan President Nicolás Maduro. Gold prices rose sharply — rising above the USD 4,400 mark for the first time in history — as investors scrambled for geopolitical hedges, a move mirrored across silver markets.

MARKETS THIS MORNING-

Markets are starting off the new year in the green, with defense stocks pushing up Asia-Pacific markets in early trading. Japan’s Nikkei, South Korea’s Kospi, Hong Kong’s Hang Seng Index, and mainland China’s CSI 300 are all firmly trading up. Wall Street is likely to follow suit when trading begins later today — futures indicate the S&P 500 and Nasdaq are set to open in the green, while Dow Jones futures are trading flat.

THE CLOSING BELL-

The DFM rose 1.1% on Friday on turnover of AED 464.6 mn. The index is up 1.1% YTD.

In the green: Al Salam Sudan (+6.0%), Emaar Development (+3.0%), and Emirates NBD (+2.7%).

In the red: Al Mazaya Holding Company (-5.8%), Dubai Islamic Ins. and Reinsurance Co. (-3.0%), and Aramex (-2.2%).

Over on the ADX, the index remained flat on turnover of AED 532.6 mn. Meanwhile, Nasdaq Dubai was up 0.7%.

!_Subhed_! Corporate actions

SCA approves Salama’s AED 483 mn capital reduction plan: Islamic Arab Ins. Company (Salama) received approval from the Securities and Commodities Authority (SCA) to move forward with a plan to reduce its share capital from AED 939.6 mn to AED 483 mn, according to a DFM disclosure (pdf).

The AED 456.6 mn capital reduction plan will be implemented through two phases, including eliminating AED 443.9 mn in accumulated losses by cancelling 439.7 mn shares, 16.8 mn treasury shares, and by using AED 4.1 mn from its statutory reserve. The last trading date before the reduction and price adjustment will be on Tuesday, 6 January, with trading set to begin again on Friday, 9 January.

REFRESHER- The share reduction plan was scheduled for December, with the company’s board approving the required documents to send to the SCA in November. In October, Salama also approved an AED 175 mn mandatory convertible sukuk issuance to strategic investors to help restore solvency and meet capital requirements.