2026 Starts with a Series of Bangs

I've written numerous times about the six Ds of the 21^st century, in their three pairs: deglobalisation and de-dollarisation; decarbonisation and digitalisation; demographics and defence.  The last of these have come to the fore in Ukraine and Venezuela.  Mr Trump has opened the curtain on a new era of imperialism in the name of defence ("national security").   

When Donald Trump said in his press conference after the seizure of Maduro that “the future will be determined by the ability to protect commerce and territory and resources that are core to national security,” one can be sure that by "protect" he means "control, by force if I want to." Not even, "by force, if necessary."  He went further, effectively ending the Pax Americana of the last 70 years: “These are the iron laws that have always determined global power, and we’re going to keep it that way.”

Despite the No Kings protests in the US last year, the world now faces another disturbing gear change from the US as Trump takes his country further along the road to authoritarianism. The rest of the west has spent the last 12 months coming to terms with the fact that the international order that the US implemented and policed after WW2 has not only been dismantled, but it has also been replaced by a return to 19^th century mercantilist spheres of influence and imperialism. Now the world must come to terms with the fact that the US president, by illegally bypassing Congress on several occasions in the last year, has in effect assumed the powers of a king or dictator. The latest illegal act is to kidnap the leader (however legitimate or otherwise he, you or I consider that leader to be) of a foreign country and, in pursuing military  - not police - action, Mr Trump has effectively gone to war on a false premise at his own whim.

Apparently the US regime has acted with little forward planning or regard for the electoral process in Venezuela. Trump dismissed the pro-democracy candidate Edmundo Gonzales, standing in for Maria Corina Machado who was banned from standing. Gonzales is internationally agreed to have won the 2024 election, but Trump has ignored him and opined of Machado, “it’d be very tough for her to be the leader, she doesn’t have the support. She doesn’t have the respect.” He didn’t say who does not respect her. Trump instead turned to Maduro’s vice leader, Delcy Rodriguez, saying she would accede to his plans to cooperate. Two hours later, Rodriguez denounced Trump and the US imperialist action. Next day, Trump threatened her with “a very big price, probably bigger than Maduro.” Rodriguez has fallen into line for now, perhaps accepting that to be in a leadership position is better than not to be, regardless of the US axe hanging over her.

Caracas is relatively quiet but the US State Department has advised Americans to leave Venezuela. This is not over. At the weekend, Mr Trump shared an image of himself depicted as "Acting President of Venezuela." In one respect he is bang-on: he is behaving like the tin pot dictator of what he would call a third-world country. Threatening Jerome Powell, having his underlings call Nicole Good, the woman shot by ICE, a "domestic terrorist" - these are just episodes in the accelerating lurch to authoritarianism in the US.

The no-more-wars president has in the first year of his second term in office attacked Iran, Iraq, Nigeria, Syria, Somalia and Venezuela. He has threatened Brazil, Canada, Colombia, Cuba, Greenland, Mexico, Panama. His MAGA movement bankrolls western Canadian separatists and right-wing political parties in Europe, while the US National Security doctrine published in December insulted the US's European allies, one and all. The US's Asian allies are also now in no doubt that they can no longer rely on Washington. They face a choice of coming to an arrangement with Beijing which accepts China's dominance in the western Pacific, or the expensive route of defending themselves severally or together. 

What truly makes the US's former allies in Europe and Asia heads spin is that Trump is very probably going to do the same thing again elsewhere. Moreover, the US attack on Venezuela legitimises the Russian attack on Ukraine, as Putin gave much the same reasons for his invasion. It probably legitimises China's longed-for Anschluss with its erstwhile island province of Taiwan, for which there is a far stronger precedent as the two nations were once one, divided by WW2 and its aftermath, much as Germany was before its reunification in 1989.

It is becoming apparent that decades of the 21^st century will now be wasted in rearmament, armed conflict, and gunboat diplomacy when the world faces shared challenges in environmental degradation, a population spike and rapid fall in the second half of this century, and the necessity of the energy transition.

Perhaps some will defend US actions as Trump just telling it like it is, that Mr Trump is just being explicit about his America First programme. After all, he is not the first US president to roll into a Latin American country, guns blazing, to protect US interests. But the US's former allies have a strong feeling of betrayal. After 70 years of being told, "do it like this" they are now being told that doing it like that was their own conspiracy to undermine the US. They have to sit back and watch the restoration of the kind of imperialism that Europeans especially know leads to disastrous wars and deaths in the millions. 

At least Mr Trump and Marco Rubio were honest that the US's designs on Venezuela were about oil. Venezuela's output is less than one million barrels per day, most of which goes to China, but could be processed by US Gulf Coast refiners. Venezuelan oil exports are reported to have fallen by half in December compared to November’s 950 k bpd. Venezuela has shipped 32% of its output (=181 Mn bbl) to China since 2016, compared to 24% (135 Mn bbl) going to the US. Another 15% (85 Mn bbl) of Venezuelan output has gone to India. Total output from the Bolivarian republic in 2025 is likely to have been 50 Mn T / 1 Mn bpd.

As Javier Blas of the IEA has pointed out, the US wants to add to its nearly 14 Mn bpd of light and medium crudes the heavy crude oils from Canada and Venezuela. The latter's output could be restored to 3.0 Mn bpd or increased to 6 Mn bpd with enough investment. In addition, there is the 1 Mn bpd of output the US effectively controls in Guyana via US oil companies which own the production licenses. Venezuela has long claimed half of Ecuador as its own, including its offshore oilfields. That in itself could have been enough of a reason for the US to move on Caracas and Maduro. Put these five countries' potential output together and the US no longer need import oil from anywhere else, while controlling around a fifth of global oil production. 

If Americans are feeling triumphant about the weekend's adventurism, US performance in the Middle East might give pause for thought in the coming weeks and months. It took Iraq nearly two decades to restore oil production to pre-GW Bush levels. By the time the US oil industry has rebuilt Venezuela's output, the world may have finally reached peak oil demand. Certainly, the Chinese will have largely electrified road and rail transport plus a good portion of their coastal shipping (this has been underway for years). The EU may also be way down the line of electrification, being in too deep to pull back now. A disdain for US oil and US debt may be two of the few levers open to an EU already fearful that Trump will destroy NATO by moving on Greenland – a circumstance that would delight Mr Putin.

Be in no doubt: there will be ramifications for shipping. In recent weeks, the US has intercepted oil tankers and destroyed private boats in international waters with disregard for legal process. Washington DC has begun the year by sanctioning four ship owners operating four VLCCs. The Office for Foreign Assets Control named Aries Global Investment, Corniola, Krape Myrtle and Winky International as the owners of the ships Nord Star, Rosalind, Della and Valiant, on 30 December. Lloyds List reports that in the last month “17 shadow fleet tankers left fraudulent registers and joined the Russian flag directly” as the flag-of-convenience system strains under sanctions and lawfare.

The US may turn its attention to targets considered to be more legitimate (there is clearly these days a spectrum of legitimacy). Global trade is already being reconfigured by US tariffs. The souped-up revival of the Monroe Doctrine with the Trump Corollary, aka the Donroe Doctrine, will immediately give investors in central and South America pause for thought, while the largest investor in most countries south of the US, China, may consider its national interest to be imperilled by the change of doctrine in Washington. Whether China doubles down on its investments or winds them down in a recognition of spheres of influence, there will be changes to trade and ocean shipping volumes in energy, commodities and manufactured goods.