Trump Reopens Venezuela Airspace for US Travelers

Venezuela is advancing a revised oil reform bill designed to slash fiscal burdens on energy companies, a strategic move aimed at attracting private capital back to its crippled oil industry. A new draft, set for discussion and a potential final vote this week, grants officials significant flexibility to adjust taxes and royalties.

The government's proposal comes as it navigates intense pressure from Washington and seeks to reopen its energy sector to foreign oil firms.

Overhauling the Tax and Royalty System

The draft legislation introduces major changes to how Venezuela taxes oil production, moving away from a rigid system to a more adaptive framework.

Key fiscal adjustments in the bill include:

• A New Hydrocarbons Tax: The existing extraction tax would be replaced by an "integral" hydrocarbons tax of up to 15% on gross production, with no deductions permitted.

• Flexible Royalty Rates: Royalties would be capped at 30% but are no longer fixed by law. This change empowers the Oil Ministry to modify the rates based on a project's specific economic conditions, capital intensity, and development phase.

• Potential Income Tax Cuts: The bill proposes allowing the ministry to lower the hydrocarbons income tax rate to ensure projects remain profitable. However, some legal experts note this could conflict with constitutional limits on tax authority.

Venezuela's Oil Ministry did not immediately respond to requests for comment on the bill's details.

Addressing Key Investor Risks

Beyond fiscal incentives, the revised bill aims to ease legal and commercial restrictions that have previously deterred investors.

The new draft removes language that had confined dispute resolution to "independent" arbitration, potentially opening the door for more widely accepted arbitration mechanisms outside Venezuela.

Furthermore, the legislation would permit private companies to sell their share of crude oil output at market prices, provided their sales plans receive ministry approval.

The Political and Sanctions Backdrop

The reform effort is being championed by acting President Delcy Rodríguez but faces criticism from multiple sides. Some of her political allies in Venezuela view the plan as a betrayal of nationalist principles. Meanwhile, international legal experts argue that earlier drafts failed to provide sufficient safeguards for investors.

The entire initiative is unfolding under the shadow of US sanctions. The Trump administration continues to impose oil sanctions on Venezuela, creating a high-risk environment for international firms.

Currently, Chevron Corp. is the only company with a US connection that holds a license from the Treasury Department to produce oil in the country. Many other companies are waiting for authorization to either resume their previous work or launch new upstream operations.

A first draft of the bill was approved on January 22, with a second and final vote potentially occurring as soon as Thursday.

Bitcoin experienced a sharp drop during the U.S. trading session, falling below the $84,300 mark. The downturn mirrored a broader sell-off in precious metals, with both silver and gold declining by 8% to 12%. Against this backdrop of market volatility, key statements from President Trump and Treasury Secretary Bessent offered a glimpse into the economic strategies shaping the financial landscape.

Trump Signals New Economic Initiatives

President Trump unveiled several significant economic developments, focusing on energy, domestic industry, and monetary policy.

Venezuelan Oil and U.S. Industry

A major announcement involved U.S. oil companies expanding into Venezuela, a move Trump stated would generate wealth for both nations. He also noted that diplomatic dialogues successfully prevented the closure of Venezuelan airspace.

On the domestic front, Trump highlighted the strong performance of American automotive giants Ford and GM. He also celebrated a milestone in industrial output, stating that the U.S. now produces more steel than Japan. While hinting at the possibility of future tariff increases, he emphasized that the U.S. is approaching such measures with caution.

Pressure on the Federal Reserve

Trump voiced a clear desire for lower interest rates, calling for cuts of two or three percentage points. He added that an announcement for a new Federal Reserve chair is expected soon.

This comes as the Fed maintains its pause on rate reductions for the second consecutive time, following a halt in cuts during the final quarter of last year. With no changes anticipated in upcoming meetings, market watchers are also noting that current Fed Chair Powell’s term concludes by June.

Bessent Offers a Positive Economic Outlook

Treasury Secretary Bessent provided an optimistic counterpoint, forecasting a positive economic trajectory. He pointed to a downward trend in inflation indicators and projected that 2026 will be a pivotal year.

Bessent argued that the expected rise in Venezuelan oil production will directly benefit American consumers by lowering gasoline prices, providing a boost to the economy. He assured that the revenue from these oil sales would be directed to Venezuelan citizens.

While affirming the Federal Reserve's independence, Bessent stressed the importance of accountability in managing economic strategies. He also confirmed that the IRS has contingency plans ready in the event of any government shutdowns.

As these high-level discussions unfolded, the sharp decline in Bitcoin's price began to slow, suggesting a potential for temporary stability in a turbulent market. The intersection of cryptocurrency volatility and major U.S. economic policy shifts continues to define the key challenges and opportunities facing investors today.

Source: Yahoo Finance

Israeli Prime Minister Benjamin Netanyahu has estimated his country could withstand over 700 missile strikes from Iran. But this confidence belies a critical reality: Iran commands the largest ballistic missile stockpile in the Middle East, an arsenal that far exceeds that number and includes weapons for which there are no proven defenses.

As the United States maintains a significant naval presence off the Iranian coast, the prospect of a direct confrontation looms. While Netanyahu's tough stance may resonate publicly, it overlooks the true scale of the threat facing Israel and U.S. bases across the region.

The Scale of Iran's Offensive Power

Iran's missile arsenal is not just large; it is sophisticated and diverse. Many of its ballistic missiles have ranges exceeding 1,000 kilometers, allowing them to strike deep into Israeli territory directly from Iranian soil. This capability is enhanced by a growing inventory of advanced weaponry.

The arsenal includes:

• Hypersonic Weapons: These missiles fly at extreme speeds and on unpredictable trajectories, making them nearly impossible for current defense systems to intercept.

• Maneuverable Ballistic Missiles: Systems like the Kheibar Shekan and Fattah-1 are medium-range ballistic missiles (MRBMs) designed to evade regional air defenses on their way to a target.

This combination of sheer volume and technological sophistication presents a formidable challenge to any defensive network.

Israel's Multi-Layered but Strained Shield

Israel protects itself with a multi-layered air defense network developed over decades, incorporating U.S.-supplied systems. This includes the well-known Iron Dome, David's Sling, and the Patriot/Arrow systems.

During the recent 12-Day War, Israeli officials acknowledged an interception rate of 80-90%. However, this success rate comes with critical caveats. First, no system is perfect, meaning a percentage of incoming threats will always get through.

More importantly, Israel’s air defense network is not fully replenished following the last conflict. This vulnerability, combined with Iran's capacity to launch a massive, coordinated attack involving missile salvos, drone swarms, and hypersonic weapons, means Israel's defenses could be overwhelmed. A successful saturation attack could shut down the Israeli economy and inflict lasting damage at a moment of critical national vulnerability.

Tehran's Strategy of Deterrence and Escalation

Following the 12-Day War, Iran's Defense Minister, Brig. Gen. Aziz Nassirzadeh, issued a clear warning. He claimed that the missiles used in that conflict were older models and that Iran had since developed systems with "far greater capabilities."

Nassirzadeh emphasized that if Israel were to launch another attack, Tehran would not hesitate to unleash its newer, more advanced missiles. This rhetoric is backed by action. Reports indicate Iran has ramped up missile production since last June, upgrading guidance and lethality based on lessons learned from the recent conflict.

This is a deliberate strategy. Tehran is signaling to both Jerusalem and Washington that any future military action against Iran will trigger massive retaliation, carrying risks far greater than in previous encounters. The message is that Iran believes its arsenal is now numerous and capable enough to saturate the region's air defenses.

The High Stakes of a Regional Miscalculation

The strategic landscape is further complicated by the stance of neighboring Arab countries. While wary of Tehran, these nations are also concerned about Israeli military actions. They have reportedly informed the U.S. and Israel that they will neither permit their territory to be used for strikes against Iran nor participate in defending Israel from an Iranian counter-attack.

This political reality means an Israeli-American conflict with Iran would not be a short, surgical campaign. Instead, it would become a systemic stress test of Israel's national resilience and America's waning regional power. Tehran is signaling its preparedness to absorb damage while inflicting devastation on an unprecedented scale.

If Washington and Jerusalem continue to believe that precision strikes and layered defenses alone can neutralize a missile superpower, they risk a profound miscalculation. Such an assumption could lead them into a war where the costs far exceed any promised gains.

Spot gold surged to a new record high near $5,600 an ounce on Thursday before reversing course to trade sharply lower in a volatile session driven by geopolitical news.

The initial spike was fueled by intense safe-haven demand after a report emerged that U.S. President Donald Trump was considering a new military strike on Iran. Spot silver followed a similar trajectory, hitting its own all-time high before plummeting into negative territory.

A Rollercoaster Day for Precious Metals

The price action for gold and silver was dramatic. After hitting a record peak of $5,595.44, spot gold fell 4.6% to trade at $5,166.98 per ounce by 10:34 ET. April gold futures saw a similar reversal, sliding 3.1% to $5,171.14 after touching a high of $5,625.89.

Silver’s moves were even more pronounced. Spot silver crashed 6.5% to $100.02 an ounce after setting a new record of $121.65 earlier in the day.

The recent rally in precious metals has been fueled by a combination of factors, including elevated global geopolitical risk, a weak U.S. dollar, and general policy uncertainty.

Iran Tensions Drive Safe-Haven Frenzy

The primary catalyst for Thursday's market whiplash was a CNN report stating that President Trump is considering a "major new strike" on Iran following stalled negotiations over the country's nuclear program and missile production.

This development heightened fears of a broader conflict in the Middle East. The report follows the recent deployment of several U.S. ships to the region and earlier threats of military action from Trump, which he framed as potential support for protests within Iran.

The president had previously urged Iran via social media to secure a "fair and equitable" deal with Washington and cease its nuclear activities. He also warned that any future U.S. attack would be far more severe than the one on Iran's nuclear sites in mid-2025. According to CNN, Trump is now weighing airstrikes against Iranian leaders and security officials, as well as additional attacks on nuclear facilities.

Any further U.S. military action is expected to be met with retaliation from Iran, escalating regional instability. This backdrop of geopolitical tension, which includes a recent U.S. incursion in Venezuela and Trump's demands concerning Greenland, has been a significant driver for safe-haven assets like gold.

Analyst Warns Gold Rally is Overextended

Despite the bullish geopolitical narrative, some analysts see signs of exhaustion. Keith Lerner of Truist downgraded gold to neutral, citing a less favorable near-term risk-to-reward profile following the metal's exceptional performance.

"Gold now sits more than 40% above the 200-day moving average – a historic extreme," Lerner noted. He acknowledged that momentum could push prices higher but warned that the sharp rally "leaves gold increasingly vulnerable."

Adding to the complex economic picture, the U.S. Federal Reserve decided to leave interest rates unchanged, as widely expected, while presenting an upbeat outlook on the economy. However, Fed Chair Jerome Powell declined to answer questions regarding the central bank's independence in light of an ongoing Department of Justice investigation.

Copper Bucks the Trend, Hits New Peak

The sharp downturn in gold prices had a spillover effect on other metals. Spot platinum, for instance, fell 3.7% to $2,521.80 per ounce.

Copper, however, proved to be a notable exception. The industrial metal held onto its gains, with benchmark copper futures on the London Metal Exchange rallying over 9% to a record high of $14,356 a tonne.

Copper's strength was attributed to reports of additional policy support for China's beleaguered property market. As the world's largest importer of copper, China's real estate sector is a critical component of global demand.

View of the facade as construction continues on the Federal Reserve Board building in Washington, D.C., U.S., September 17, 2025. REUTERS/Ken Cedeno/File Photo

WASHINGTON, Jan 29 (Reuters) - President Trump said he intends to announce his pick to replace Federal Reserve Chair Jerome Powell next week, ending weeks of speculation over who will lead the U.S. central bank after Powell's term expires in May 2026.

Source: Reuters