The timeline of the conflict between the United States and Venezuela points to a long-term strategy centered on securing supplies of heavy crude for US Gulf Coast refineries. These refineries are configured to process high-sulfur heavy grades and benefit from Venezuela’s ability to deliver oil within short timeframes. Such a shift would reduce US dependence on high-sulfur fuel oil from the Middle East. Venezuelan oil exports are expected to gradually recover toward the United States, Europe, and India, putting China at a disadvantage, while the OPEC+ alliance remains on the defensive.

US Gulf Coast refineries process about 1.45 million barrels per day of imported crude out of total average throughput of around 9 million barrels per day. With a projected addition of 400,000 to 500,000 barrels per day of Venezuelan oil, particularly Merey crude, nearly 5% of West Texas Intermediate feedstock could be replaced with Venezuelan Merey. Linear programming models from AVEVA were applied to several Gulf Coast refineries equipped with coking, fluid catalytic cracking, and hydrocracking units to estimate changes in product yields and heavy-oil unit utilization rates. The results point to an average 2% increase in diesel output, driven mainly by higher bottom-of-the-barrel utilization, as heavy conversion unit run rates rise by about 2% to 3%.

Over the longer term, as Venezuelan crude production exceeds 900,000 barrels per day in 2025 and as US capital inflows and associated demand materialize, Rystad Energy expects Venezuela’s refining sector, which has nameplate capacity of 1.2 million barrels per day, to begin lifting utilization rates over an 18-to-24-month period. Current run rates are constrained by recurring power outages, unplanned shutdowns, and poor maintenance. We estimate that an effective utilization rate of around 60% could be achieved by mid-next year.

China remains the biggest loser in this shifting structure. Losing access to heavily discounted Venezuelan oil undermines the economics of independent “teapot” refineries and puts nearly $12 billion in oil-backed loans at risk. While some high-sulfur fuel oil and heavy crudes from the Middle East may be redirected toward Asia, Chinese refiners would face higher feedstock costs, longer shipping distances, and greater geopolitical risk compared with the Venezuelan crude they previously imported. By contrast, India emerges as a structural winner, given its complex refineries suited to processing high-sulfur heavy crudes and a renewed opportunity to absorb Venezuelan oil as sanctions ease.

Venezuelan oil has accounted for roughly 500,000 barrels per day of China’s total refinery throughput of about 15 million barrels per day since around 2019, the year when US opposition to Venezuela’s energy sector intensified. Chinese refineries that process heavy crudes are typically integrated facilities with advanced bottom-of-the-barrel units. As a result, the loss of Venezuelan heavy crude is unlikely to have a material impact on overall product yields in China, given total throughput of around 15 million barrels per day. While some individual refineries that relied on this crude will need to adjust their crude slates, these changes are not expected to materially affect China’s aggregate product yields.

Copper spreads in London retreated sharply after Tuesday’s surge, as analysts said fresh deliveries of the metal could soon enter exchange warehouses, easing supply constraints.

Contracts expiring tomorrow closed at a premium of $2 a tonne over those expiring a day later, after the closely watched daily spread briefly jumped to an unusually large $100-a-tonne premium on Tuesday and remained elevated through much of Wednesday morning.

Premiums on nearby contracts — known as backwardation — signal that demand for metal within the London Metal Exchange warehouse system exceeds available supply. However, the pullback in the so-called tom/next spread and the emergence of discounts further along the curve suggest the tightness may be short-lived.

Backwardation can inflict heavy losses on traders rolling short positions forward, while simultaneously creating incentives to deliver metal into the LME warehouse network. Exchange data show sizable privately held inventories that can be transferred relatively easily into warehouses in Asia, the United States and Europe.

Analysts said the unwinding of spreads points to such flows materialising. Copper inventories tracked by the London Metal Exchange rose 3.8% to 112,575 tonnes on Wednesday, marking a sixth consecutive daily increase.

Al Munro, head of base metals strategy at Marex, said by phone: “We’ve already seen some deliveries, and in reality there’s probably more stock that will be delivered to take advantage of the backwardation.” He added: “Some people think moving inventory between exchanges is straightforward, but it can be cumbersome, and short sellers sometimes face delays delivering metal against their positions.”

Disruptions in LME spreads have had little impact on outright copper prices. The three-month benchmark contract rose as much as 1.6% on Wednesday, approaching $13,000 a tonne, as global equity markets stabilised after Tuesday’s selloff. At the same time, Goldman Sachs said it expects copper flows into the United States to continue — a key driver behind the recent surge in prices.

The industrial metal has posted a string of record highs since late last year, amid mine supply disruptions and rising shipments to the United States ahead of potential tariffs, tightening availability elsewhere. Investors also see demand strengthening sharply as the fast-growing artificial intelligence sector expands.

Flows into the United States

A rare trading opportunity — shipping record volumes of copper to the United States — has fuelled price gains there. Although the latest rally on the LME has pushed nearby US contracts into discount, Goldman Sachs expects flows to persist, as arbitrage opportunities remain open further out on the curve.

“Our current view is that inventory build-ups will continue, even with today’s price differentials between COMEX and the LME,” analyst Eoin Dinsmore said during a briefing on Wednesday.

Goldman Sachs forecasts US copper inventories will rise by about 600,000 tonnes this year, including 200,000 tonnes in the first quarter. The pace is expected to slow in the second and third quarters before accelerating again toward year-end.

Other industrial metals also rallied alongside gold — which climbed to a fresh record — amid the Greenland crisis and turmoil in the Japanese government bond market, boosting demand for safe havens. Frenzied investment flows into several metals have underpinned gains in recent weeks, while so-called “debasement trades,” as investors move away from traditional financial assets, have provided further support.

Copper was last up 1.3% at $12,920 a tonne on the London Metal Exchange at 1:57 p.m. local time. Aluminium rose 0.6% to $3,126 a tonne, while tin surged as much as 6.9% to $52,810 a tonne.

Bitcoin fell below key levels on Wednesday as geopolitical concerns stemming from the dispute between the United States and Greenland intensified, alongside rising worries over Japan’s fiscal outlook, weighing on investor appetite for high-risk assets.

The world’s largest cryptocurrency slipped 1.2% to $89,801.1 by 01:10 a.m. US Eastern Time (06:10 GMT), hovering near its lowest levels of the year.

Bitcoin has had a sluggish start to 2026, failing to hold onto any meaningful gains amid a broad global pullback in risk appetite. Momentum was also dampened by the delay of a major US bill aimed at regulating the cryptocurrency sector.

Other cryptocurrencies broadly declined, tracking Bitcoin’s losses during Wednesday’s session.

Bitcoin pressured by Greenland tensions and fiscal risks

Weakness in Bitcoin and the wider crypto market was driven primarily by growing concern over demands by US President Donald Trump regarding Greenland.

Trump has threatened to impose tariffs on eight European countries until an agreement is reached, and has also said he would not rule out the use of military force to take control of the Danish territory.

Trump is scheduled to attend the World Economic Forum in Davos on Wednesday, where he said he would speak with “various parties” about Greenland.

At the same time, rising concerns over fiscal fragility in advanced economies have weighed on risk sentiment. Global bond yields jumped this week, with the move led by Japan, where investors are increasingly uneasy about the country’s public debt burden — the largest among developed economies.

Fears over Japan’s fiscal position intensified after Prime Minister Sanae Takaichi called for early elections in early February. Investors have questioned how Tokyo will fund Takaichi’s plans, which include large stimulus packages and further tax cuts.

These geopolitical and fiscal concerns have fueled a broad risk-off mood in markets, pushing investors away from speculative assets such as cryptocurrencies and toward safe havens, most notably gold, which has posted a string of fresh record highs this week.

Strategy buys $2.1 billion worth of Bitcoin

Bitcoin prices received little support from an announcement by Strategy Inc (Nasdaq: MSTR), the largest institutional holder of Bitcoin, which disclosed the purchase of about 22,305 bitcoins between January 12 and January 19 for a total of $2.13 billion.

Following the purchase, Strategy’s total Bitcoin holdings rose to 709,715 coins, reinforcing its position as the world’s largest corporate holder of Bitcoin.

However, the company’s shares fell 7% after the announcement, while Bitcoin itself saw little immediate benefit.

Investors have largely lost confidence over the past year in the company’s Bitcoin-centric treasury strategy, amid prolonged weakness in crypto markets that has resulted in substantial paper losses.

Earlier in January, Strategy reported an unrealized loss of $17.44 billion on its digital assets in the fourth quarter, raising further investor concerns about the long-term viability of its aggressive Bitcoin acquisition strategy, which is largely funded through debt and equity issuance.

Strategy’s shares fell by nearly 50% during 2025.

Cryptocurrency prices today: altcoins follow Bitcoin lower

Other cryptocurrencies fell broadly. Ethereum, the world’s second-largest cryptocurrency, dropped 4.8% to $2,984.21, its lowest level since late December.

XRP and BNB declined by 1.5% and 3.8%, respectively, while Solana and Cardano each fell by about 2%.

Oil prices fell on Wednesday as investors assessed expectations of rising US crude inventories, alongside the temporary shutdown of production at two major oil fields in Kazakhstan and renewed geopolitical tensions linked to US tariff threats tied to its push to take control of Greenland.

Brent crude futures slipped 12 cents, or 0.2%, to $64.80 per barrel by 11:25 GMT. US West Texas Intermediate crude fell 11 cents, also 0.2%, to $60.25 per barrel.

Both benchmarks had settled about 1.5% higher in the previous session after Kazakhstan, a member of the OPEC+ alliance, halted production at the Tengiz and Korolev oil fields on Sunday due to problems with power distribution systems. Strong economic data from China also helped support prices.

Three industry sources told Reuters that oil output at the two Kazakh fields could remain offline for another seven to ten days.

Tony Sycamore, a market analyst at IG, said on Wednesday that the production stoppage at Tengiz — one of the world’s largest oil fields — along with Korolev, was temporary. He added that downside pressure from expectations of higher US crude inventories, combined with geopolitical tensions, would likely persist.

US President Donald Trump said on Tuesday there would be “no backing down” from his goal of taking control of Greenland. He had pledged last week to impose escalating tariffs on European allies until the United States is allowed to purchase the Arctic island.

Giovanni Staunovo, an analyst at UBS, said that rising geopolitical tensions are adding pressure to oil markets, as tariffs could slow economic growth and reinforce broader risk aversion.

A preliminary Reuters poll conducted on Tuesday showed that US crude oil and gasoline inventories are expected to have risen last week, while distillate stockpiles are likely to have declined.

Six analysts surveyed by Reuters estimated that crude inventories rose by an average of 1.7 million barrels in the week ended January 16.

Weekly inventory data from the American Petroleum Institute are due at 4:30 p.m. US Eastern Time (21:30 GMT) on Wednesday, while figures from the US Energy Information Administration, the statistical arm of the Department of Energy, are scheduled for release at 12:00 p.m. Eastern Time (17:00 GMT) on Thursday. The releases are delayed by one day due to a US federal holiday on Monday.

Although such an increase in inventories is typically negative for oil prices, Gregory Brew, senior analyst at Eurasia Group, said the risk of renewed escalation in tensions between the United States and Iran could provide some price support.

Trump had earlier threatened to strike Iran over its violent crackdown on anti-government protests earlier this month.