Venezuela's Oil Pivot Sends Tanker Rates Skyrocketing

Catherine Richards

Political

Commodity

Remarks of Officials

Economic

Energy

Summary:

Washington's Venezuela intervention redraws global oil routes, spiking mid-sized tanker rates and reshaping Atlantic trade.

Washington's intervention in Venezuela is sending shockwaves through the global shipping market, causing regional oil tanker rates to surge to their highest levels in almost two years. The prospect of more Venezuelan crude heading to the United States is fundamentally redrawing key trade routes and squeezing the availability of mid-sized tankers.

The global oil industry is adapting to the new reality after U.S. forces seized Nicolás Maduro and Washington asserted control over the nation's energy sector. This move means more crude from the OPEC member will now flow to American refiners, primarily on mid-sized vessels.

For shipowners, the redirection of oil translates directly to higher profits on specific routes. Before the U.S. action, which included a naval blockade, the majority of Venezuela's crude exports were shipped to China using vessels from the so-called "dark fleet." Now, with Washington easing sanctions, that oil is set to cross the Caribbean instead of the Pacific.

A Structural Shift in Atlantic Oil Flows

The rerouting of Venezuelan oil is creating a new dynamic in the Atlantic basin. As Venezuelan crude flows north to the U.S. Gulf Coast, it is displacing some American-produced West Texas Intermediate (WTI) crude, which in turn is being pushed toward European markets. This two-way traffic is creating a bottleneck for the Aframax tankers used on these routes.

"The imminent re-direction of Venezuelan crude-oil flows from China to US Gulf seems to be causing a structural change in the Aframax segment," said Georgios Sakellariou, a chartering analyst at Signal Maritime. He noted that these mid-sized vessels, which carry around 700,000 barrels, are at the center of the market upheaval. "This is a typical trend that underscores how geopolitical developments become shipping reality."

Key Tanker Routes See Record Rates

The sudden demand for tankers in the Americas has sent freight costs soaring. Data from the Baltic Exchange reveals sharp increases across several key routes:

• Caribbean to U.S. Gulf (TD9): Rates on this route hit $78,795 per day on Wednesday, the highest price since early 2024.

• U.S. Gulf to Europe (TD25): The cost to ship oil to the Amsterdam-Rotterdam-Antwerp hub rose for five straight days, reaching $64,404.

• East Mexico to U.S. Gulf (TD26): Rates on this route spiked 21% in a single day, climbing to $90,681 on Wednesday.

At stake are significant volumes. In November, just before the confrontation, Venezuela exported 586,000 barrels of crude per day, a 37% increase from the prior month but still 12% lower than the previous year.

Global Fleet Responds to Market Signals

The lucrative new rates are attracting tankers from other parts of the world. Shipowners are now willing to sail vessels empty—a practice known as ballasting—across entire oceans to capitalize on the demand.

Brokers have pointed to specific examples of this trend. The tanker Front Siena is currently sailing empty from Spain across the Atlantic, heading toward Guyana, near Venezuela, while it awaits orders. Similarly, the Mare Siculum is also traversing the Atlantic without cargo and has been booked for a future route from the east coast of Mexico to Europe.

Uncertainty Clouds Venezuela's Production Outlook

Shortly after the operation, President Trump announced that Venezuela would relinquish up to 50 million barrels of oil to the United States. He stated the proceeds from the sale would benefit both nations and convened a meeting with industry executives to encourage investment in rehabilitating Venezuela's neglected energy infrastructure.

Despite this push, the future of the country's oil supply remains uncertain. The head of Exxon Mobil Corp. described Venezuela as currently "uninvestable," highlighting the significant challenges in reviving production. In contrast, consulting firm Enverus has projected that the nation's crude output could surge by approximately 50% over the next decade, suggesting a potential for recovery if stability returns.

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Henry Thompson

Remarks of Officials

Economic

Political

Top U.S. banking executives are pushing back against President Donald Trump's proposal to cap credit card interest rates at 10%, warning the policy would severely restrict credit access for millions of Americans and damage the broader economy.

Leaders from Citigroup, JPMorgan Chase, and Bank of America have all publicly criticized the proposed cap, arguing it would prevent them from lending to anyone but the wealthiest customers.

Citigroup: Rate Cap Would Trigger Economic Slowdown

Citigroup CFO Mark Mason stated that while the bank wants to work with the administration on affordability, an interest rate cap is a red line. "A cap would likely result in a significant slowdown in the economy," Mason said on a call with reporters. He added that "an interest rate cap is not something that we would, or could, support, frankly."

The pushback follows President Trump's announcement of a 10% cap on card interest rates with a January 20 deadline, along with a call for lawmakers to target interchange fees.

Citigroup CEO Jane Fraser expanded on the potential consequences, explaining that the policy would backfire on the very people it aims to help.

"Studies in the US have shown a vast majority of consumers and businesses would lose access to credit cards," Fraser told analysts. "They would be forced to pursue more predatory alternatives, and you would only be left with the wealthy having access to credit cards. And nobody wants that."

Industry-Wide Pushback from Wall Street

The concerns raised by Citigroup are shared across Wall Street. Banking industry groups argue that a 10% rate limit would make it impossible to offer credit to customers with subprime scores.

JPMorgan Chase & Co. CFO Jeremy Barnum said a 10% limit would demand "significant" changes to the bank's credit card operations.

Brian Moynihan, CEO of Bank of America Corp, echoed these warnings. He argued that under such a cap, consumers would need a FICO score "well into the 700s" to qualify for a credit card—a standard that a small portion of the U.S. population meets.

Moynihan added that this would force many people to seek credit from payday lenders and other sources outside the regulated banking system.

A Threat to Bank Revenue and Economic Stability

A rate cap would also deliver a major blow to a key revenue stream for the U.S. banking sector. Citigroup, one of the largest card issuers, reported that its branded cards unit generated US$2.95 billion in revenue in the fourth quarter, a 5% increase from the previous year.

Fraser warned of wider economic damage beyond the banking sector. "We would also see some of the domino effects ricocheting through retail, travel, hospitality sectors and much broader impact on gross domestic product," she said.

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Gerik

Economic

Commodity

Energy And Safe Havens Lose Momentum

Oil prices fell from multi-month highs in Thursday’s Asian session as investors reassessed geopolitical risk following comments from President Trump indicating that violence linked to Iran’s protests was subsiding. Brent crude declined 2.4 percent to 64.94 dollars a barrel, while US benchmark Nymex crude dropped by the same margin to 60.51 dollars, reversing gains from the prior session when prices had reached 66.82 and 62.36 dollars respectively.

Gold also eased after touching record territory a day earlier. Spot prices slipped 0.5 percent to around 4,598 dollars an ounce, retreating from the all-time high of 4,642.72 dollars set on Wednesday. The pullback suggests that some of the recent demand for defensive assets was closely tied to immediate escalation concerns rather than a shift in longer-term inflation or monetary expectations.

Trump’s Iran Remarks Calm Market Anxiety

The adjustment across commodities followed Trump’s statement that he had been informed killings associated with Iran’s nationwide protests were slowing and that there were no current plans for large-scale executions. These remarks softened earlier rhetoric around possible US intervention, prompting markets to dial back short-term risk assumptions.

While tensions in the region remain elevated, the market reaction highlights how quickly pricing can adjust when perceived tail risks change. The easing in oil and gold reflects a reassessment of near-term disruption scenarios rather than a broader revaluation of supply-demand fundamentals.

Technology Shares Extend Global Selloff

Equity markets across Asia delivered mixed performance, with technology stocks bearing the brunt of renewed selling pressure. The retreat followed further declines on Wall Street, where investors continued to trim exposure to high-growth chip and artificial intelligence names in favor of other sectors.

In Japan, the tech-heavy Nikkei fell 0.9 percent after reaching a record high in the previous session, while the broader Topix index rose 0.4 percent to extend its own record run. Elsewhere, Taiwan’s TAIEX slipped 0.5 percent and Hong Kong’s Hang Seng declined 0.4 percent, both weighed down by technology shares. Mainland Chinese blue chips were flat, and South Korea’s KOSPI gained 0.3 percent to a fresh record high after the Bank of Korea left interest rates unchanged and signaled an end to its easing cycle.

According to market analysts, the weakness in headline indices masks a healthier internal rotation. Strength in cyclical sectors, supported by a relatively positive outlook for the US economy, has helped cushion broader market sentiment even as technology stocks consolidate.

Yen Stabilizes After Sharp Swings

Currency markets paused after a volatile session for the Japanese yen. The currency had fallen to its weakest level since July 2024 against the US dollar before rebounding sharply amid repeated warnings from Japanese officials about excessive foreign exchange movements. By Thursday, the dollar eased slightly to 158.32 yen after touching 159.45 the previous day.

Japan’s Finance Minister Satsuki Katayama reiterated that authorities stand ready to take appropriate action without ruling out any options, language that has helped temper speculative pressure. The yen’s recent swings have been closely associated with political developments rather than shifts in interest rate differentials alone.

Fiscal Expectations Weigh On Japanese Assets

Japanese government bonds also reflected the changing political landscape. Yields eased from record highs after earlier spikes driven by speculation, later confirmed, that Prime Minister Sanae Takaichi plans to dissolve the lower house and call a snap election as early as February 8. Expectations of expanded fiscal stimulus following a renewed mandate had prompted investors to sell both the yen and longer-dated bonds.

The 20-year Japanese government bond yield slipped 2 basis points to 3.14 percent after reaching an unprecedented 3.165 percent in the previous session. This modest retreat suggests some stabilization after markets digested the implications of a potential election and its impact on fiscal policy.

Overall, Thursday’s market moves illustrate a coordinated recalibration across commodities, currencies, and equities. With immediate geopolitical fears easing and investors continuing to rotate away from crowded technology trades, asset prices are increasingly reflecting relative growth prospects and policy expectations rather than outright risk aversion. How durable these shifts prove to be will depend on whether political developments and economic data reinforce or challenge the calmer tone that has emerged.

Source: Reuters

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Winkelmann

Stocks

Taiwan Semiconductor Manufacturing Co. logged a record annual profit in 2025, marking the second straight year of blockbuster earnings thanks to the AI chip boom.

The world's top chip manufacturer, serving the likes of Nvidia, Apple and Google, reported a net profit of 1.71 trillion New Taiwan dollars ($55.22 billion) on Thursday, up 46.4%from the previous year, on record annual revenue of NT$3.809 trillion, which rose 31.6% from 2024.

The company's fourth-quarter net profit rose 35% on the year to a record NT$505.74 billion on revenue of NT$1.046 trillion, up 20.4% from a year earlier, thanks to high demand for its cutting-edge chip production for AI computing and premium processors.

TSMC has steadily ramped up capital spending over the past several years to meet surging demand. Since 2020, it has invested more than $180 billion as it embarks on its most aggressive overseas production expansion ever. Industry executives and analysts expect the Taiwanese chipmaker to continue boosting capital expenditure, with spending projected to be around $50 billion in 2026.

The company's U.S. expansion is on track, as the chipmaker plans to begin installing production equipment this summer at its second Arizona plant, which is designed to manufacture more advanced semiconductors, Nikkei Asia first reported. Many of the company's suppliers are also exploring new business opportunities in the U.S., as TSMC has indicated it will continue to accelerate its U.S. push and acquire additional land for future expansion.

By contrast, TSMC's expansion in Japan has slowed as demand becomes increasingly concentrated in AI computing chips, a market dominated by its U.S.-based chip designer clients like Nvidia, Google and AMD. TSMC is now evaluating whether to upgrade its second plant in Kumamoto to increase production of advanced process nodes more in line with the rising AI chip demand, Nikkei Asia reported earlier.

Analysts say TSMC is well-positioned to capitalize on the AI boom. Gokul Hariharan, co-head of Asia-Pacific technology, media and telecom equity research at JPMorgan, said TSMC is likely to deliver good revenue growth in 2026, with increasing momentum likely to extend into 2027. However, he cautioned that downside risks include any signs of weakening demand for AI computing chips, as well as potential disruptions in the consumer electronics and smartphone markets stemming from component shortages, including memory chips.

Source: Asia_Nikkei

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Gerik

Economic

Political

Temporary Airspace Closure Amid Escalating Tensions

Iran temporarily closed much of its airspace late Wednesday as geopolitical tensions with the United States intensified, according to a notice issued by the US Federal Aviation Administration. The restriction initially took effect from 10:15 p.m. UTC to 12:30 a.m. UTC and was later extended from 1:14 a.m. to 3:30 a.m. UTC, signaling heightened caution rather than a prolonged shutdown.

Flight tracking data showed commercial aircraft actively avoiding Iranian airspace during the closure period, with carriers redirecting routes across neighboring countries. The order allowed limited exemptions for international flights to and from Tehran, provided they had prior authorization from Iran’s civil aviation authority, underscoring that the measure was targeted rather than absolute.

Airspace Controls Reflect Security Risk Perception

The airspace restriction followed rising concerns after President Donald Trump warned of possible US intervention in response to a violent crackdown on anti-government protests in Iran. Although Trump later softened his tone, stating that he had been assured the killings had stopped and that he would monitor developments before taking further action, the earlier rhetoric had already elevated regional risk perceptions.

The relationship between political signaling and aviation restrictions in this case is causal in structure. Heightened military and diplomatic tension directly increases perceived threats to civil aviation, prompting authorities to limit exposure even in the absence of confirmed incidents affecting air traffic.

Military Posture And Regional Precautionary Moves

Alongside the airspace closure, the United States withdrew some personnel from its military bases in the Middle East after Iran issued threats to strike American facilities if Washington launched an attack. These steps reinforced the perception of elevated confrontation risk, contributing to airlines’ decisions to avoid Iranian airspace independently of formal restrictions.

Such military repositioning does not automatically imply imminent conflict, but it materially alters risk assessments for civilian operations. Airlines typically respond to these signals by prioritizing crew safety and insurance compliance, leading to preemptive route changes.

Airlines Reroute And Suspend Services

Multiple international carriers adjusted operations in response to the evolving situation. India’s largest airline, IndiGo, confirmed that some of its international flights would be affected by the airspace closure. Germany had earlier warned its airlines against entering Iranian airspace, and the Lufthansa Group announced it would continue bypassing both Iranian and Iraqi airspace until further notice, canceling some services as a result.

The US has also barred all American commercial flights from overflying Iran, further constraining available air corridors. Major Middle Eastern and regional airlines, including Emirates, Qatar Airways, and Turkish Airlines, have canceled several flights to Iran over the past week, reflecting a broad reassessment of operational risk across the aviation sector.

Short-Term Disruption With Wider Implications

While Iran’s airspace closure was temporary, its impact extended beyond the narrow time window of the restriction. Flight diversions increase fuel costs, lengthen travel times, and place additional strain on alternative air corridors, effects that tend to persist as long as geopolitical uncertainty remains elevated.

More broadly, the episode illustrates how quickly political tensions can translate into operational disruption for global transportation networks. Even brief closures signal instability to airlines and passengers alike, reinforcing a cycle in which precautionary behavior continues until diplomatic clarity improves.

Source: CNBC

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Gerik

Economic

Healthcare Spending Outpaces Economic Growth

US healthcare expenditure rose 7.2 percent in 2024 to $5.3 trillion, up from $4.9 trillion in 2023, according to data from the Centers for Medicare and Medicaid Services. Healthcare spending accounted for 18 percent of gross domestic product, increasing from 17.7 percent a year earlier and expanding faster than overall economic growth. This shift indicates that healthcare costs are absorbing a growing share of national output rather than simply rising in line with income or population growth.

CMS, which administers Medicare for seniors and people with disabilities and Medicaid for low income Americans, attributed much of the increase to broader insurance coverage and higher demand for medical services, particularly within private health insurance plans. The relationship here reflects a direct link between expanded coverage and higher utilization, as insured individuals tend to access healthcare services more frequently.

Administrative Costs Drive The Fastest Growth

Spending on government administration, including activities linked to Medicaid and Medicare, recorded the largest increase among major categories. Administrative spending rose 14.7 percent in 2024, compared with a 7.8 percent increase in 2023. CMS highlighted changes in Medicaid coverage following the end of pandemic era policies as a major factor, with Medicaid related administrative costs alone rising 19.8 percent after a 9.2 percent increase the previous year.

These figures suggest that policy driven enrollment changes translated directly into higher administrative workloads and expenses. The growth in administrative spending moves in step with program restructuring rather than with medical price inflation, indicating a structural rather than cyclical source of cost pressure.

Service Utilization Expands Beyond Traditional Care

Beyond administration, spending growth was also notable in services provided by non medical or dental professionals, which increased 10.8 percent, and in home healthcare, which rose 10.2 percent. These categories point to a continued shift in how care is delivered, with greater emphasis on outpatient and home based services.

This pattern shows a close association between demographic trends, chronic care needs, and spending growth. While not all of the increase can be traced to a single policy decision, utilization and spending in these areas tend to move together as coverage expands and patients seek alternatives to hospital based treatment.

Hospital Costs Remain A Major Contributor

Hospital pricing increased 3.4 percent in 2024, the fastest pace since 2007, adding to overall cost pressures. Total spending on hospital care reached $1.6 trillion, rising 8.9 percent. Although this represented a slowdown from the 10.6 percent growth recorded in 2023, hospitals remained the single largest component of healthcare expenditure.

The increase in hospital spending reflects a combination of higher prices and sustained service use. These two factors reinforce each other, as price increases amplify the financial impact of steady or rising patient volumes.

Insurance Enrollment Expands Rapidly

Insurance coverage growth played a central role in the spending surge. Enrollment under the Affordable Care Act jumped more than 30 percent in 2024, rising to 21.1 million people from 16.2 million in 2023. Overall private health insurance enrollment, including ACA plans, increased 3.5 percent to 214.3 million people from 207 million the previous year.

CMS noted that a special enrollment period in 2024 allowed individuals removed from Medicaid rolls to sign up for ACA plans, further boosting participation. This policy adjustment directly translated into higher private insurance enrollment, which in turn supported increased spending as newly insured individuals accessed care.

The 2024 data underline a broader transformation in the US healthcare system. Spending growth is being shaped by expanded coverage, policy driven enrollment changes, and evolving care delivery models rather than by temporary price shocks alone. As healthcare continues to claim a larger share of GDP, the figures raise longer term questions about cost sustainability, efficiency, and the balance between public and private financing in the US healthcare economy.

Source: Reuters

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Commodity

Geopolitical Tensions Reignite Safe-Haven Flows

Gold and silver prices moved sharply higher amid a complex mix of geopolitical developments involving the United States, Europe, and the Middle East. A high-level meeting between officials from Greenland, Denmark, and the US ended without agreement on Washington’s controversial push to assert control over Greenland, highlighting what Denmark’s foreign minister described as a fundamental disagreement with President Donald Trump. Public statements from both Greenland’s leadership and Trump himself underscored that positions were firmly entrenched even before talks began.

This standoff added to broader geopolitical unease already present in global markets. At the same time, Trump signaled a more restrained stance toward Iran, suggesting the US might hold off on military action after receiving assurances that violence against protesters had ceased. These mixed signals reduced immediate supply risk in energy markets but did little to calm broader political uncertainty, a backdrop that continues to support demand for precious metals.

Diverging Moves Across Commodities

Oil prices fell roughly 1.5 percent during US trading following Trump’s comments on Iran, as investors reassessed the likelihood of near-term disruptions to Iranian production or key shipping routes. In contrast, gold and silver continued to attract inflows as hedges against geopolitical instability and policy unpredictability. Silver has already risen 26.6 percent within the first two weeks of 2026, building on a powerful rally that carried through much of last year.

The contrasting performance reflects how different commodities respond to shifts in perceived risk. Reduced expectations of conflict directly ease pressure on oil prices, while persistent uncertainty across multiple geopolitical fronts tends to sustain interest in metals that are viewed as stores of value. This divergence illustrates a causal response in oil linked to specific supply risks, alongside a broader correlational rise in precious metals tied to global instability.

Equity Markets And Policy Signals Add To Volatility

US equity markets moved lower, weighed down by weakness in semiconductor stocks. Shares of major chipmakers declined as investors awaited earnings from Taiwan Semiconductor Manufacturing Co., whose outlook is seen as a bellwether for the sector. Although optimism around guidance could spark a rebound, the immediate tone in markets remained cautious.

At the same time, Trump’s broader policy actions added another layer of uncertainty. His administration formally cleared the sale of Nvidia’s H200 chips to China, with the US government set to take 25 percent of the proceeds, a move that reflects a more transactional approach to technology controls. Elsewhere, Trump’s comments and actions touching on the Federal Reserve’s independence have unsettled some investors, reinforcing concerns about institutional stability. These factors together have strengthened the appeal of gold and silver as assets perceived to be insulated from political interference.

Global Markets Show Mixed Reactions

While US indexes declined, European markets displayed relative resilience. The pan-European Stoxx 600 rose 0.18 percent to a record high, suggesting regional differences in how investors are processing global risks. In the UK, BP shares gained despite warnings of potential impairment charges of 4 billion to 5 billion dollars, highlighting that company-specific factors can still drive performance even amid broader uncertainty.

In contrast, the momentum behind precious metals appears more uniform across regions. The rally reflects not a single event, but an accumulation of geopolitical disputes, shifting alliances, and policy experimentation that together elevate the perceived value of defensive assets.

A Broader Strategic Undercurrent

Underlying many of these developments is a strategic recalibration centered on China and critical resources. Trump’s recent actions, ranging from aggressive rhetoric on Greenland to tariffs linked to Iran and moves affecting Venezuela’s energy sector, share a common thread of challenging China’s access to strategic commodities and trade routes. This broader context reinforces why investors see current geopolitical risks as structural rather than temporary.

As long as global politics remain unsettled and policy signals continue to shift, gold and silver are likely to remain well supported. Their ongoing rally suggests that markets are not merely reacting to headlines, but adjusting portfolios to reflect a world where geopolitical risk and institutional uncertainty are increasingly central considerations.