US Seizes Sixth Oil Tanker in Venezuela Crackdown

Catherine Richards

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Summary:

US forces seized a Venezuelan oil tanker, escalating sanctions enforcement amid post-Maduro political shifts.

The Trump administration's campaign to control Venezuela's oil industry has escalated, with the US military seizing another oil tanker at sea as part of its ongoing sanctions enforcement.

US military officials confirmed on Thursday that forces had boarded the crude oil tanker Veronica, which marine records indicate sails under a Guyanese flag. The pre-dawn operation marks the latest move by the United States to clamp down on Venezuelan oil shipments following the capture of President Nicolás Maduro earlier this month.

US Forces Board Tanker 'Veronica' at Sea

The US Southern Command announced the seizure on social media, stating that marines and sailors boarded the vessel in a "flawlessly executed operation." The post included black-and-white aerial footage that appeared to show personnel descending from a helicopter onto the tanker's deck.

Kristi Noem, the homeland security secretary, confirmed the action and described the vessel as part of a "ghost fleet" of foreign-flagged tankers operating in defiance of a US "quarantine" on sanctioned vessels in the Caribbean.

The operation was a joint effort involving the US Coast Guard, the Department of Homeland Security, and the Department of Justice. According to the Southern Command, forces launched from the aircraft carrier USS Gerald R Ford and seized the Veronica without incident.

While officials did not specify the exact location of the seizure, marine traffic data shows the 815-foot vessel's last known position 12 days ago was off the coast of Venezuela. Shipping documents indicate the tanker left Venezuelan waters empty in early January and had not returned.

A Pattern of Seizures: Operation Southern Spear

The capture of the Veronica is the sixth known seizure of a foreign-flagged oil tanker by the US military since it began tightening its grip on Venezuela's oil sector. This series of interdictions falls under a broader initiative named Operation Southern Spear.

Just last Friday, the Southern Command announced the boarding of another vessel, the Olina, near Trinidad, also launched from the USS Gerald R Ford. This follows the high-profile seizure of the Russian-flagged tanker Marinera on January 7, which was pursued across the Atlantic for over two weeks while being shadowed by a Russian submarine. The UK's Ministry of Defence confirmed it assisted in that operation.

In its announcement, the Southern Command stated, "The Department of War is unwavering in its mission to crush illicit activity in the Western Hemisphere." The US has accused Venezuela of using false-flag tankers or vessels with cancelled registrations to circumvent sanctions.

Washington's Political Play in Post-Maduro Venezuela

These military actions coincide with significant political maneuvering in Washington. The announcement of the Veronica's seizure came just before President Trump's scheduled meeting with María Corina Machado, the Venezuelan opposition leader and 2025 Nobel Peace Prize winner, to discuss the country's future.

However, the Trump administration has politically recognized Maduro's former vice-president, Delcy Rodríguez, as Venezuela's interim leader, effectively sidelining Machado. On the day of Maduro's capture, Trump called Machado a "nice woman" but claimed she lacked the "respect" to govern.

As part of its strategy, the Trump administration has moved to control the global distribution of Venezuelan oil. The president announced an agreement with the country's interim leaders to provide up to 50 million barrels of crude oil to the United States and signed an executive order to "safeguard" Venezuelan oil revenues in US-controlled accounts.

Félix Plasencia, Venezuela's ambassador to the UK and an ally of Rodríguez, was also expected in Washington on Thursday to discuss the next steps for the nation's future with administration officials.

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Economic

Record Outflows Mark A Shift In Market Signaling

Several exchange traded funds heavily associated with China’s so called national team recorded unprecedented outflows, aligning with broader signals that authorities are seeking to moderate the pace of the stock market rally. The Huatai Pinebridge CSI 300 ETF experienced outflows of 20.2 billion yuan, equivalent to $2.9 billion, on Thursday, the largest single day withdrawal since the fund was launched in 2012. Other major products, including the E Fund CSI 300 ETF and the ChinaAMC CSI 300 ETF, also posted record levels of net selling.

Bloomberg Intelligence estimates that the national team, a group of state backed institutional investors often viewed as a stabilizing force in Chinese markets, sold roughly $10 billion worth of ETFs in a single session. The scale and concentration of these trades mark a notable departure from the group’s typical role as a buyer during periods of stress.

Cooling A Rally Driven By Speculation

The timing of the ETF sales coincides with signs that policymakers are becoming uncomfortable with the speed and character of the recent rally. Chinese equities have been buoyed by enthusiasm around artificial intelligence themes and optimism over corporate earnings. The national team’s selling activity appears aligned with regulatory efforts to curb excessive speculation rather than with deteriorating fundamentals.

This interpretation is reinforced by the fact that the ETF outflows followed an unexpected tightening of margin financing rules by regulators a day earlier. While investors largely dismissed that move as a targeted measure aimed at speculative activity in certain technology stocks, the subsequent ETF sales suggest a broader intent to cool sentiment. The relationship between regulatory tightening and ETF selling reflects coordination in signaling rather than a mechanical chain reaction.

Market Reaction Shows Controlled Adjustment

Trading activity underscored the significance of the national team’s actions. Turnover in a basket of eight ETFs associated with state backed investors surged to 40 billion yuan in the first hour of trading on Friday, more than double the average full day turnover over the past year. The benchmark CSI 300 Index initially rose as much as 0.9 percent before paring gains, indicating that the selling pressure tempered upside momentum without triggering a sharp reversal.

Jiang Liangqing, managing director at Zhuhai Greenbamboo Private Fund Management, said the selling appeared designed to cool the market rather than disrupt it. He noted that while speculative trading had become excessive in some segments, ETF sales offered a way to moderate activity without creating conflicts of interest. This suggests a deliberate approach where liquidity is withdrawn gradually instead of abruptly.

Broader Implications For Market Stability

The national team’s largest ETF exposures track the CSI 500 and CSI 1000 indexes, segments of the market that can generate immediate price reactions due to their sensitivity and liquidity profile. Bloomberg Intelligence analyst Rebecca Sin said the decision to sell ETFs signals that more such activity could unfold this year as authorities seek to manage equity market conditions.

The episode highlights how China’s state backed investors are being used as a policy instrument to influence market dynamics. Rather than responding to falling prices, the national team’s actions this time appear aimed at preventing overheating. This reflects a strategic shift from crisis stabilization to preemptive risk management, where official participation shapes market behavior through calibrated signals rather than blunt intervention.

Source: Bloomberg

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Political

A Diplomatic Warning Over Sovereignty

France’s finance minister Roland Lescure has warned US Treasury Secretary Scott Bessent that any attempt by the United States to seize Greenland would represent a serious breach of international norms. Speaking to the Financial Times, Lescure described Greenland as a sovereign territory belonging to a sovereign country within the European Union, stressing that its status should not be challenged.

This statement reflects growing concern in European capitals that rhetoric or action targeting Greenland could escalate beyond political signaling. The warning frames sovereignty as a foundational issue, where any violation would reshape the context of EU US relations rather than remain an isolated diplomatic dispute.

Implications For EU US Economic Relations

Lescure indicated that such a move would endanger Europe’s broader economic relationship with Washington. This risk is not presented as a coincidental overlap of politics and trade, but as a direct linkage where geopolitical confrontation would materially alter the framework governing commercial ties. The suggestion implies that trust and stability underpinning transatlantic trade could erode if territorial norms are challenged.

While Lescure did not spell out specific economic consequences, his comments suggest that trade relations depend on adherence to shared principles. A breakdown in those principles would require European policymakers to reassess how they engage economically with the United States.

Retaliation Left Deliberately Open

When asked whether the European Union should respond with economic sanctions if US President Donald Trump were to invade Greenland, Lescure declined to outline a concrete response. He said that such a scenario would place Europe in an entirely new environment, requiring adaptation rather than predefined measures.

This response signals caution rather than passivity. By avoiding explicit commitments, France leaves room for collective EU decision making while emphasizing that the consequences would be far reaching. The absence of immediate threats reflects uncertainty about the path such a crisis would take, not a lack of resolve.

A Shift From Hypothetical To Strategic Risk

The remarks highlight how Greenland has moved from being a hypothetical geopolitical talking point to a potential strategic risk with economic dimensions. If tensions were to escalate, the resulting impact on EU US trade would stem from a clear chain of events linking political action to economic response, rather than from short term market reactions.

France’s intervention therefore serves as an early signal that Europe views the issue not only through a security lens but also as a matter that could redefine the foundations of its economic partnership with the United States.

Source: Reuters

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Nathaniel Wright

Data Interpretation

Economic

Political

Despite a surge in tariff collections, the U.S. federal government continues to operate with a massive budget deficit. The shortfall in December hit a record $144.75 billion for the month, a 68% increase compared to December 2024.

While calendar effects and delayed payments can distort a single month's data, a wider view of the first three months of fiscal year 2026 reveals the underlying trend. Over this quarter, the budget gap did narrow by about 15% compared to the same period last year, thanks in part to higher tariff receipts.

However, this improvement offers little comfort. The deficit for the last three months still stands at an enormous $602.38 billion.

Has Tariff Revenue Already Peaked?

Over the first quarter of fiscal 2026, the U.S. Treasury collected $90 billion in tariffs—a substantial jump from the $20.8 billion collected during the same period in fiscal 2025. Yet, recent data suggests this revenue stream may have already hit its ceiling.

Customs receipts have shown a declining trend over the quarter:

• October: $31.4 billion (record high)

• November: $30.76 billion

• December: $27.9 billion

While total government revenue has increased, reaching $1.23 trillion in the first three months of fiscal '26 (a 13% rise), the plateauing tariff income undermines any political promises that this revenue could fund dividends for taxpayers or pay down the national debt. The math simply doesn't support these claims while the government runs such a large deficit.

The Real Issue: Uncontrolled Government Spending

The increase in tariff revenue has helped mask the fundamental problem: the federal government's spending continues to grow.

In December alone, government outlays reached $629.13 billion. This brought the total spending for the first three months of the fiscal year to $1.83 trillion, an increase of about 2% from the previous year.

Figure 1: A breakdown of U.S. government outlays shows Social Security and Net Interest on debt as dominant federal expenditures for both December 2025 and the first quarter of fiscal year 2026.

This rise in spending occurred even as data began to reflect budget cuts at the EPA and the Department of Education. Despite some rhetoric about fiscal responsibility from the Trump administration and President Biden’s debt ceiling deal (the Fiscal Responsibility Act), meaningful reductions have not materialized.

So-called "cuts," like those in the Big Beautiful Bill, were often reductions from projected future spending increases, meaning actual expenditures still rise, just at a slower pace. The government spent over $7 trillion last year, averaging $19.2 billion per day, and there appears to be little political will to address this trajectory.

The Spiraling Cost of Servicing US Debt

The consequences of this spending are clear in the national debt, which surged past $38 trillion on October 21 and now stands at $38.4 trillion.

Servicing this debt has become one of the government's largest expenses, second only to Social Security. In December, interest payments alone cost the Treasury $153.92 billion, bringing the quarterly total to $354.58 billion. For fiscal year 2025, the interest on the national debt cost taxpayers $1.2 trillion.

To put this in perspective, December's spending on interest surpassed outlays for other critical areas:

• Interest on Debt: $153.92 billion

• Social Security: $134 billion

• National Defense: $102 billion

• Medicare: $78 billion

This problem is set to worsen. Much of the existing government debt was financed at low interest rates. As these bonds mature, they must be replaced with new debt at today's much higher rates, locking in greater interest costs for the foreseeable future. Even with the Federal Reserve cutting rates, Treasury yields have pushed higher as demand for U.S. debt weakens, making it even more expensive for Uncle Sam to borrow.

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Intervention Signals Lift The Yen

The Japanese yen rallied against the US dollar after Finance Minister Satsuki Katayama indicated that authorities are prepared to consider all available measures to address the currency’s recent slide. Her comments came after the yen had fallen to a one and a half year low earlier in the week, intensifying market focus on the risk of official intervention.

Katayama said she would not rule out any options to stem yen weakness and pointed to a joint statement signed with the United States last September that explicitly referenced intervention. Following her remarks, the dollar yen rate dropped about 0.4 percent to just below the 158 level, with the yen later trading around 158.22 per dollar. Despite the rebound, the currency was still set for a modest weekly decline of about 0.2 percent.

Political And Policy Uncertainty In Focus

Markets in Japan are entering a sensitive period as Prime Minister Sanae Takaichi prepares to dissolve parliament ahead of a snap election expected early next month, while the Bank of Japan is also due to hold a policy meeting. The prospect of expanded fiscal stimulus under a dovish government has weighed on the yen, reflecting investor concern that looser fiscal policy could undermine currency stability.

At the same time, some Bank of Japan policymakers see room to raise interest rates sooner than markets currently anticipate in response to yen weakness. While economists surveyed by Reuters expect the BOJ to wait until July before its next rate hike, sources say some officials do not exclude the possibility of action as early as April. This divergence between market pricing and internal debate has contributed to heightened volatility rather than a clear directional trend.

US Data Keeps Dollar Firm

The yen’s rebound occurred against a backdrop of continued strength in the US dollar. Positive US economic data has pushed expectations for Federal Reserve rate cuts further into the future, supporting the greenback. Initial claims for unemployment benefits fell by 9,000 to 198,000 in the week ended January 10, well below the Reuters forecast of 215,000.

As a result, futures markets have delayed expectations for the next Fed rate cut to June. Analysts note that stronger employment indicators and persistent inflation concerns have reduced the likelihood of near term easing. This environment has kept the dollar broadly supported, with the dollar index holding near 99.31 and on track for a weekly gain of around 0.2 percent.

Intervention Thresholds And Market Sensitivity

Currency strategists observe that official rhetoric often intensifies as exchange rates approach levels seen as politically or economically sensitive. Felix Ryan of ANZ noted that comments from finance ministry officials tend to appear when dollar yen moves close to intervention territory, with both the absolute level and the speed of daily movements playing a role.

Tony Sycamore of IG added that the yen’s recent slide toward the 160 level has brought Japan significantly closer to actual intervention. He linked the currency’s weakness and a concurrent selloff in Japanese government bonds to fears of aggressive fiscal expansion tied to the upcoming election.

Global Policy Context And Other Markets

Beyond Japan, broader monetary policy signals continue to influence currency markets. European Central Bank chief economist Philip Lane reiterated that the ECB is not considering near term rate changes if the economy stays on track, while cautioning that unexpected shocks could alter the outlook. The ECB has kept rates steady since ending a rapid easing cycle in June.

Elsewhere, the Australian dollar rose about 0.1 percent to 0.6702 against the US dollar, while the New Zealand dollar advanced 0.2 percent to 0.5752. In digital assets, bitcoin edged down 0.1 percent to 95,476.51, while ether rose slightly to 3,302.48.

Overall, the yen’s rally underscores how verbal intervention and geopolitical coordination can temporarily shift market dynamics. Yet with US monetary policy remaining firm and domestic political uncertainty unresolved, the currency’s broader trajectory remains closely tied to policy developments rather than short term price moves alone.

Source: Reuters

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Benjamin Carter

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Global markets showed signs of strength as the artificial intelligence trade found new momentum, but the main focus for investors has shifted to the Japanese yen and the growing possibility of government intervention.

Tokyo on High Alert as Yen Slides

Japanese Finance Minister Satsuki Katayama intensified market speculation on Friday, stating that Tokyo "won't rule out any options" to address the yen's ongoing weakness. This statement is the latest in a series of verbal warnings from Japanese authorities this week aimed at slowing the currency's decline, which has already fallen about 1% this year.

The yen did see a brief rally on Friday, partly boosted by a Reuters report suggesting some Bank of Japan policymakers believe an interest rate hike could happen sooner than markets anticipate. Despite this, the currency remains near the critical 160-per-dollar level after hitting an 18-month low earlier in the week, reviving talk that direct intervention could be imminent.

Recent pressure on the yen stems from the prospect of a snap election in Japan next month. Investors anticipate that Prime Minister Sanae Takaichi could secure a stronger mandate to implement additional economic stimulus. However, officials must weigh the benefits of a weaker yen against the rising cost of imported fuel, food, and raw materials, which could drive up consumer prices.

Figure 1: The Japanese yen has depreciated against the U.S. dollar since October 2025, intensifying pressure on policymakers as it approaches key psychological levels.

Oil Slides and Safe Havens Cool

In other markets, oil prices continued their steep decline from the previous session. The rally in safe-haven assets like gold and silver also paused after U.S. President Donald Trump adopted a more measured stance on the unrest in Iran.

Trump commented that he was told the killings in Iran's crackdown on protests were subsiding and that he did not believe there was a current plan for large-scale executions. His wait-and-see posture eased immediate geopolitical tensions that had previously driven investors toward safer assets.

Figure 2: A map detailing the widespread locations of protests across Iran as of January 11, 2026, a key factor in recent market sentiment and risk assessment.

Dollar Strengthens as Fed Rate Cut Bets Fade

The U.S. dollar maintained its position near a six-week high as a string of positive economic data on Thursday led investors to scale back their expectations for Federal Reserve rate cuts this year.

According to the CME FedWatch tool, markets are now pricing in a 67% probability that the Fed will hold rates steady in April, a significant increase from 37% a month ago. The odds of rates remaining unchanged in June have also risen to 37.5%, up from 17% last month.

Key Market Movers to Watch

Traders will be monitoring several key developments that could influence markets on Friday:

• Speeches from Federal Reserve officials Collins, Bowman, and Jefferson.

• The release of U.S. industrial production data for December.

• The National Association of Home Builders' (NAHB) housing market index for January.

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Commodity

Prices Ease After Earlier Geopolitical Spike

Oil prices declined further in Asian trading on Friday, adding to losses from the previous session as market concerns about supply disruptions diminished. Brent crude fell by 21 cents, or 0.3 percent, to $63.55 per barrel, while US West Texas Intermediate dropped 15 cents, also 0.3 percent, to $59.04 per barrel at 0418 GMT.

Earlier in the week, both benchmarks had climbed to multi month highs following protests in Iran and comments from US President Donald Trump that raised the possibility of military action. Even after the latest decline, Brent remained on track for a fourth consecutive weekly gain, underscoring how elevated prices had been supported by geopolitical tension rather than shifts in physical supply.

Reduced Strike Risk Calms Markets

The latest easing in prices followed remarks from Trump late on Thursday, when he said that Tehran’s crackdown on protesters appeared to be easing. This statement helped cool fears of imminent US military strikes on Iran that could have disrupted oil flows from the region.

According to BMI analysts, Brent prices have retreated from earlier highs but remain above levels seen a week ago. The pullback was linked to Trump’s indication that he would hold off on military action, highlighting how price movements were responding to changes in perceived risk rather than alterations in actual output. Analysts noted that political uncertainty in Iran could still generate volatility as markets continue to assess the potential for supply disruptions.

Supply Outlook Keeps Bearish Bias Intact

Despite the recent geopolitical flare up, analysts remain cautious about the medium term price outlook due to expectations of ample supply. Market sentiment has been heavily influenced by headlines, but the underlying balance between supply and demand has shown little sign of tightening.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said that while sentiment has been driving short term price movements, the impact of such news tends to fade quickly when fundamentals remain comfortable. She added that unless there is a clear rebound in Chinese demand or a significant bottleneck in physical oil flows, prices are likely to stay range bound. In this context, Brent is expected to trade broadly between $57 and $67 per barrel.

Industry And OPEC Signals On Longer Term Balance

OPEC said on Wednesday that global oil supply and demand are expected to remain balanced in 2026, with demand growth in 2027 projected to be similar to the pace anticipated for this year. This assessment supports the view that near term market conditions are not pointing to a structural shortage.

Meanwhile, Shell released its 2026 Energy Security Scenarios on Thursday, presenting a more bullish long term outlook. The company estimated that primary energy demand by 2050 could be 25 percent higher than last year. While this projection highlights potential growth over decades, it does not alter the near term picture of sufficient supply that continues to anchor current oil prices.