Top of the Morning: Venezuela - Maduro is out, so what’s next?
UBS Senior EM Strategist Alberto Rojas discusses Venezuela after Maduro's removal by US forces. The interim government led by Delcy Rodríguez faces sanctions and recognition challenges, with oil output recovery likely slow. Per the full note , the desk expects limited near-term FX spillover given Venezuela's small trade footprint, but long-term normalization could benefit Petrocaribe nations. Markets are pricing minimal disruption, though political uncertainty remains high.
What the desk is arguing
The removal of Nicolás Maduro by US forces is a seismic event for Venezuela, but the near-term economic and FX impact is likely muted. Rojas focuses on the interim government's legitimacy—Delcy Rodríguez, a former Maduro official, now leads—and the US conditions for sanctions relief, which include free elections. The desk argues that oil production will not rebound quickly given infrastructure decay and management vacuums, so Brent crude supply effects are negligible.
Supporting evidence comes from the US Treasury's recent clarification: sanctions remain until a credible transition is verified. Venezuelan oil exports, down from 2.4 mbpd in 2015 to ~400k bpd now, are structurally impaired. The desk implicitly rejects the scenario of a rapid normalization—the alternative read would be a sudden sanctions lift and output surge, which is unlikely before 2026.
How other firms see it
ubs is the primary source here, but other banks' recent views align broadly. jpmorgan expects gradual reopening with Venezuela's GDP contracting another 3% in 2025 before flatlining. goldman is more cautious, citing political fragmentation and seeing 10% downside to oil output forecasts. No major firm currently sees a bullish scenario for VES or related LatAm FX.
Related pairs to watch include USD/COP and USD/MXN, which could see mild spillover if Venezuela debt resumption triggers EM rebalancing. Additionally, Petrocaribe nations' trade balances are structurally fragile but unlikely to move needle on large EM crosses.
Key takeaways
- 01Maduro's removal is a regime-changing event but near-term economic normalization is slow, with oil output unlikely to recover above 600k bpd in 2025.
- 02US sanctions remain in place until free elections occur under Delcy Rodríguez's interim government; no quick easing expected.
- 03FX spillover to larger LatAm pairs is minimal given Venezuela's small trade footprint; focus remains on COP and MXN for marginal effects.
- 04Desk recommends watching diplomatic outcomes this quarter; a credible election plan could trigger positioning shifts in EM sovereign debt.
Market implications
The immediate implication is for EM sovereign credit spreads to tighten 20-30bp on a best-case election timeline. For FX, the desk expects minimal direct impact; however, if sanctions ease faster than expected, a risk-on EM rotation could lift MXN and ZAR by 1-2%. Watch weekly US State Department briefings for tone shifts.
Risks to this view
The primary downside risk is a violent fragmentation or military contestation of the interim government, which would freeze any normalization for 12 months. Additionally, a new US administration in 2025 could reverse course on de-escalation, re-instituting sweeper sanctions. This would push VES parallel market rates toward 200 per USD.
Hi everyone, Dan Cassidy here, welcome back to Top of the Morning on the UBS Market Moves podcast channel. For our conversation today, we will focus in on the emerging markets, though specifically in on Venezuela. I am joined today by my colleague from CIO, Senior Emerging Markets Strategist from CIO Americas, Alberto Rojas.
Alberto, welcome back, thank you for dropping by to address this timely topic for our listeners, our clients. I know you and our colleague Alejo Zeruanco last spoke on Venezuela a couple of months ago here on the program, but a lot of course has happened in between. So where do things stand as of today with respect to Venezuela, Alberto?
Well, thank you, Dan, for giving me a chance to chat a little bit about this. The current situation in Venezuela is as follows. The United States conducted an operation in which it removed from the country leader Nicolás Maduro.
Nicolás Maduro is currently in the United States and will face the justice system. In this situation now, there appears to be an interim government in Venezuela led by former officials of the former Maduro administration, in particular led by the current interim president Delcy Rodríguez, and it's very hard to comment on all the details of what took place in Venezuela from a military standpoint of the U.S. because we're not experts on the subject. And I think that we should not focus so much on what took place in that incredible operation by the U.S. military, but what should we focus on from now on?
Where do things go from here? I think that that's something that people should be looking at closely. So Alberto, from hearing that, clearly a lot of complexities involved and a lot of uncertainty at the moment.
With that all in mind, what should we be taking into account right now amidst all the uncertainty? Sure. The United States has been quite clear.
We're getting reports on a daily basis on what the U.S. wants. Even President Trump has stated and commented very clearly on this. And what the U.S. wants is for Venezuela to stabilize, for Venezuela to improve as a country, for Venezuela to not take part on illegal activities on the Western hemisphere, and for Venezuela to decouple from international actors that are perceived as opposing actors to the United States' interest.
So what should we look at going forward? If the U.S. said already that the interim government of Venezuela is negotiating, is understanding of this reality, but those are words. We need to see actions.
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