Japan Pushes for New Rare Earths Supply Chain

The United States and Venezuelan governments confirmed on Friday they are exploring the possibility of restoring diplomatic relations, signaling a potential shift in their historically strained relationship.

This development comes as a surprise, considering the Trump administration had previously stated its intent to influence Venezuela's leadership and control its oil sales following a potential removal of President Nicolas Maduro.

Demonstrators in Caracas rally in support of Venezuelan President Nicolas Maduro, highlighting the country's charged political climate.

US Delegation Arrives in Caracas

A small delegation of US diplomats and diplomatic security officials from the Trump administration arrived in Venezuela on Friday to begin discussions.

According to a statement from the US State Department, the team's primary objective is to conduct a preliminary assessment regarding the potential reopening of the US Embassy in Caracas.

Venezuela Confirms Exploratory Process

Venezuela's government officially acknowledged the US delegation's presence and announced its own intention to send a delegation to the United States, though a specific date was not provided.

In a formal statement, the government of Delcy Rodríguez confirmed it "has decided to initiate an exploratory process of a diplomatic nature with the Government of the United States of America." The stated goal of these talks is "the re-establishment of diplomatic missions in both countries."

Just a week after President Donald Trump spoke of U.S. oil majors "going in and spending billions" to rebuild Venezuela's failing crude industry, his administration is clarifying a crucial detail: who pays. Washington is now signaling that American taxpayers will not directly fund the massive undertaking, even as top energy executives gather at the White House.

The President's initial comments fueled speculation that Washington might offer hefty financial guarantees or underwrite the risks for firms like Chevron, ExxonMobil, and ConocoPhillips to re-enter the politically volatile nation.

However, the administration has since shifted its emphasis, managing expectations about the level of direct government financial involvement.

A Pivot from Public Funding to Private Capital

On Friday, Interior Secretary Doug Burgum, who also heads the White House's National Energy Dominance Council, stated that the administration does not plan to use taxpayer money to underwrite the rebuilding of Venezuela's oil sector. He clarified that the necessary capital, estimated to be in the tens of billions over the next decade, must come from the companies themselves and private capital markets. The U.S. role, he suggested, would be to provide security and a stable operating environment, not direct funding.

Energy Secretary Chris Wright reinforced this position, noting that while institutions like the U.S. Export-Import Bank could offer credit support, companies have not yet requested direct government money.

This adjustment clarifies President Trump's earlier remarks, where he implied the government might backstop investments or allow companies to be reimbursed. The message from senior officials is now unambiguous: private capital is expected to carry the financial load.

Energy Titans Convene at the White House

To discuss this framework, the White House is hosting a high-level meeting with a wide array of global oil industry leaders. The guest list includes major U.S. and international players:

• Chevron

• ExxonMobil

• ConocoPhillips

• Continental Resources

• Halliburton

• HKN Energy

• Valero

• Marathon

• Shell

• Trafigura

• Vitol

• Repsol

• Eni

• Aspect Holdings

• Tallgrass

• Raisa Energy

• Hilcorp

Administration officials participating in the talks include Burgum, Wright, and Secretary of State Marco Rubio.

The Steep Challenges of Reviving Venezuelan Oil

Any potential investment in Venezuela faces significant hurdles. Chevron is currently the only major U.S. producer with ongoing operations in the country, working under a special license. ExxonMobil and ConocoPhillips both left in the 2000s following the nationalization of their assets.

Industry leaders have been clear that a return would require strong legal, political, and financial guarantees from Washington to mitigate the decades of instability and expropriation risk.

Venezuela sits on one of the world's largest proven oil reserves, and a return to former production levels could reshape global crude markets and lower prices. However, the path forward is difficult. Decades of neglect have left the country's oil infrastructure in a state of disrepair. Compounding these operational challenges are significant political risks and geopolitical tensions, underscored by the U.S. seizing sanctioned tankers and controlling Venezuelan crude sales. Furthermore, current oil prices do not provide a strong incentive for the massive capital outlay required.

Ultimately, a genuine revival of Venezuela's oil sector will depend on private investment, supported by whatever assurances Washington can provide. Today's White House meeting is the first real test of whether that model is enough to convince the industry's key players to write the checks.

Source: Yahoo Finance

Modest Growth in a Low-Hiring Market

Richmond Fed President Tom Barkin characterized the latest employment data as a continuation of modest jobs growth within a low-hiring environment.

His comments followed a Bureau of Labor Statistics report showing that employers added 50,000 jobs last month, with the unemployment rate edging down to 4.4%.

"This fine balance between a modest job growth environment with a modest labor-supply growth environment seems to be continuing, and that was encouraging," Barkin told reporters on Friday.

Business Uncertainty and Productivity Gains

According to the Richmond Fed chief, the current state of the jobs market is a reflection of two key factors: prevailing uncertainty among businesses and productivity gains that allow companies to operate with fewer new hires.

This landscape helps explain the restrained pace of hiring despite a relatively low unemployment rate.

The Fed's Dual Mandate Dilemma

Barkin emphasized that Federal Reserve policymakers must remain focused on the twin risks of rising unemployment and persistent inflation. The central bank cut its benchmark interest rate for the third consecutive time last month, but officials have signaled uncertainty about further reductions amid internal divisions over the economic outlook.

The challenge lies in balancing two conflicting trends.

On one hand, inflation remains a key concern. "Inflation has been above our target now for almost five years," Barkin noted. "It's in a lot better shape than it was two or three years ago, but it's certainly not all the way there."

On the other hand, the labor market is showing signs of cooling. "The unemployment rate has ticked up in the last year, and job growth is modest," he said.

This delicate situation requires careful monitoring from the central bank. "So I think you've got to watch both of them," Barkin concluded.

U.S. employment growth slowed more than anticipated in December, with notable job losses in construction, retail, and manufacturing. However, a surprising dip in the unemployment rate to 4.4% suggests the labor market isn't collapsing, creating a mixed picture for the economy.

The latest employment report also revealed solid wage growth, reinforcing expectations that the Federal Reserve will likely hold interest rates steady at its upcoming meeting on January 27-28.

December Payrolls Miss Expectations

Nonfarm payrolls rose by only 50,000 jobs last month, falling short of the 60,000 gain economists had forecast. This comes after November's figure was revised downward to a 56,000 increase.

The data for previous months shows a weakening trend. Job losses in October were revised to 173,000, the largest drop in nearly five years, primarily due to federal government buyouts. Over the last three months, the economy has lost an average of 22,000 jobs per month, highlighting a significant loss of momentum.

Figure 1: The monthly change in U.S. nonfarm payrolls in 2025 shows a sharp deceleration, culminating in a significant job loss in October before a modest gain in December.

The full-year data paints a stark picture. In 2025, only 584,000 jobs were created, averaging just 49,000 per month. This is less than a third of the 2 million jobs added in 2024, which saw an average monthly gain of 168,000. Economists describe the current environment as a "low-hire, low-fire" labor market.

A Closer Look: Where Jobs Were Won and Lost

Job growth in December was concentrated in a few key areas, with the share of industries reporting hiring falling from 55.6% to 50.8%.

Gaining Sectors:

• Restaurants and Bars: +27,000 jobs

• Healthcare: +21,000 jobs

• Social Assistance: +17,000 jobs

• Federal Government: +2,000 jobs

Losing Sectors:

• Retail: -25,000 jobs

• Construction: -11,000 jobs

• Manufacturing: -8,000 jobs

Manufacturing employment fell by 68,000 over the past year, a decline some economists link to the Trump administration's tariffs. The retail sector's losses were driven by weak holiday season hiring. Job losses were also recorded in mining, wholesale, transportation and warehousing, and professional and business services.

Why is Hiring So Slow?

Economists point to several factors driving the slowdown. President Donald Trump's trade and immigration policies are seen as reducing both the demand for and supply of workers. At the same time, businesses are investing heavily in artificial intelligence, making them uncertain about future staffing needs and cautious about hiring.

This has led to a "jobless expansion," where economic growth and worker productivity surge—as seen in the third quarter—without a corresponding increase in employment. Lydia Boussour, a senior economist at EY-Parthenon, noted that "persistent policy headwinds weighed on business sentiment and curtailed hiring."

Strong Wage Growth Complicates Fed's Next Move

Despite the hiring slowdown, businesses are not cutting pay. Wages increased 3.8% year-over-year in December, up from 3.6% in November. This solid wage growth is seen as a sign of worker shortages in certain industries.

This dynamic makes the Federal Reserve's job more complex. The combination of a low unemployment rate and rising wages gives the central bank little reason to cut its benchmark interest rate, which currently stands at a 3.50%-3.75% range after a quarter-point cut in December. Financial markets now expect the Fed to remain on hold beyond this month's meeting, as rate cuts may be less effective at stimulating job growth if the underlying issues are structural rather than cyclical.

Following the report, U.S. stocks traded higher, the dollar strengthened, and longer-term Treasury yields fell.

Data Revisions Could Reveal a Weaker Labor Market

The labor market may be even more fragile than current figures suggest. The Bureau of Labor Statistics (BLS) is set to publish its annual payrolls benchmark revision next month. The agency has already estimated that about 911,000 fewer jobs were created in the 12 months through March 2025 than initially reported.

This overcounting has been blamed on the BLS's "birth-death" model, which estimates job creation from new and closed businesses. The BLS plans to change this model starting in January to incorporate more current data.

Figure 2: The U.S. unemployment rate fell from over 6% in 2021 to a low below 4% before ticking up in 2025, with December's rate revised to 4.4%.

Alongside the December report, the BLS published revisions to household survey data, from which the unemployment rate is calculated. November's unemployment rate was revised down to 4.5% from 4.6%. The dip to 4.4% in December was due to a drop in the labor force combined with a rise in household employment.

However, some underlying details show weakness. The number of people experiencing long-term unemployment increased, and the median duration of joblessness jumped to a four-year high of 11.4 weeks. Oscar Munoz, chief U.S. macro strategist at TD Securities, expects these dynamics will "continue to push the unemployment rate higher through the first quarter of 2026."

Oil prices climbed on Friday, pushing crude benchmarks toward a weekly gain fueled by growing concerns over global supply. Escalating civil unrest in Iran and intensified attacks in the Russia-Ukraine war are putting traders on edge.

By 12:41 p.m. ET, Brent futures were up $1.58, or 2.55%, trading at $63.57 per barrel. U.S. West Texas Intermediate (WTI) crude saw a similar rise of $1.60, or 2.77%, to reach $59.36.

Both benchmarks had already jumped over 3% on Thursday, reversing two consecutive days of losses. For the week, Brent is on pace to gain 4.6%, while WTI is tracking a 3.5% increase.

Geopolitical Risks Rattle the Market

Two major geopolitical flashpoints are driving fears of potential supply disruptions.

Intensifying Unrest in Iran

The market is closely watching an "uprising in Iran," according to Phil Flynn, a senior analyst with the Price Futures Group. Protests over economic hardship have spread across the country, including in Tehran, Mashhad, and Isfahan.

Ole Hansen, head of commodity analysis at Saxo Bank, noted that the protests "seem to be gathering momentum, leading the market to worry about disruptions." The situation escalated on Thursday when internet monitoring group NetBlocks reported a nationwide internet blackout.

These concerns are backed by data. A recent survey showed that the Organization of the Petroleum Exporting Countries (OPEC) pumped 28.40 million barrels per day (bpd) last month, a decrease of 100,000 bpd from November. Iran and Venezuela posted the largest production declines.

Russia-Ukraine War Escalation

Adding to supply anxiety, Russia’s military announced Friday that it had fired its hypersonic Oreshnik missile at targets in Ukraine. The Russian defense ministry specified that the strikes targeted energy infrastructure that supports Ukraine's military-industrial complex.

US Moves on Venezuelan Oil After Maduro's Capture

In a separate development, the White House is scheduled to meet with oil companies and trading houses Friday afternoon to negotiate Venezuelan export deals. The meeting follows the capture of Venezuelan President Nicolas Maduro on Saturday.

U.S. President Donald Trump has demanded that Washington be given full access to Venezuela's oil sector. U.S. officials have stated their intention to control the country's oil sales and revenue indefinitely.

Oil major Chevron Corp, along with global trading firms Vitol and Trafigura, are among those competing for government deals. The contracts concern the marketing of up to 50 million barrels of oil that state-run company PDVSA accumulated in inventories during a severe embargo.

"The market will focus on the outcome in the coming days for how the Venezuelan oil in storage will be sold and delivered," said Tina Teng, a market strategist at Moomoo ANZ.

Rising Inventories Could Limit Price Gains

Despite the bullish geopolitical news, some analysts urge caution. According to Haitong Futures, global oil inventories are rising, and a potential oversupply could cap further price increases.

The firm suggests that unless the risks surrounding Iran escalate significantly, the current rebound in oil prices is likely to be limited and may struggle to be sustained.