ALTERNATIVE MARKETS UPDATE – MID JANUARY 2026

​The opening weeks of 2026 have already delivered one of the most explosive geopolitical shocks in recent memory, with the United States mounting a military operation that captured Venezuelan President Nicolás Maduro and transported him to the US to face federal charges, effectively removing him from power and handing de-facto control of Caracas to interim authorities. The US administration has signalled it will “run” Venezuela through a transition period while leveraging newly accessible state oil resources, including the planned transfer of 30–50 million barrels of previously sanctioned crude to US markets. The strategic motive for this bold action extends beyond regime change. Venezuela holds the largest proven oil reserves in the world, particularly heavy crude concentrated in the Orinoco Belt, whose grades are unattractive to many refiners but essential for certain US refineries. Regaining control over this crude not only offers a potential boost to US energy security, it also explicitly aims to curtail the flow of subsidised Venezuelan oil to geopolitical competitors, most notably China (which has been a major buyer and financier) and Cuba, whose power grids and economy have entirely depended on Venezuelan shipments.

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RESEARCH PERSPECTIVE VOL. 267 January 2026 Alternative Markets Update The opening weeks of 2026 have already delivered one of the most explosive geopolitical shocks in recent memory, with the United States mounting a military operation that captured Venezuelan President Nicolás Maduro and transported him to the US to face federal charges, effectively removing him from power and handing de-facto control of Caracas to interim authorities. The US administration has signalled it will “run” Venezuela through a transition period while leveraging newly accessible state oil resources, including the planned transfer of 30–50 million barrels of previously sanctioned crude to US markets. The strategic motive for this bold action extends beyond regime change. Venezuela holds the largest proven oil reserves in the world, particularly heavy crude concentrated in the Orinoco Belt, whose grades are unattractive to many refiners but essential for certain US refineries. Regaining control over this crude not only offers a potential boost to US energy security, it also explicitly aims to curtail the flow of subsidised Venezuelan oil to geopolitical competitors, most notably China (which has been a major buyer and financier) and Cuba, whose power grids and economy have entirely depended on Venezuelan shipments. Venezuela illustrates the Donroe Doctrine in action: a willingness to deploy hard power to secure energy assets and curtail Chinese and allied influence in the Western Hemisphere. Within this Donroe Doctrine framework, Greenland represents the Arctic analogue to Venezuela’s energy relevance: a territory whose value is defined less by near-term cash flows and more by geostrategic positioning. Greenland sits astride the North Atlantic–Arctic corridor, anchoring early-warning systems, missile defence architecture, and emerging Arctic shipping and air routes that are becoming increasingly relevant as ice coverage recedes. Control, access, and alignment in Greenland therefore matter disproportionately for US and NATO security planning, particularly as Russia militarises the High North and China frames itself as a “near-Arctic” power. Beyond geography, Greenland’s critical mineral endowment, including rare earth elements and other inputs relevant for defence, electrification, and advanced manufacturing, adds a second strategic layer, even if economic feasibility remains highly uncertain. Harsh climatic conditions, limited infrastructure, environmental constraints, and high capital intensity mean that many projects are currently marginal or uneconomic at prevailing prices, making Greenland more of a strategic option value than an imminent mining hub. These dynamics inevitably strain alliance and sovereignty relationships. Greenland’s autonomous government has repeatedly pushed back against any notion of external control, while Denmark and NATO partners remain sensitive to US rhetoric that blurs the line between security cooperation and strategic assertiveness. Iran enters 2026 amid renewed internal strain, as economic hardship and political discontent have triggered fresh unrest, adding another layer of uncertainty to an already fragile regional backdrop. Among these newly emerging geopolitical disputes, tensions between the US and China remain elevated, while the conflict between Russia and Ukraine is also far from resolved, reinforcing a global environment defined by persistent strategic friction rather than rapid stabilisation. Hedge funds tend to thrive in volatile and dislocated market environments, and the current geopolitical backdrop is reinforcing precisely the type of ecosystem in which these strategies have historically performed best. Their intrinsic hedging capabilities and tactical flexibility make them particularly attractive to investors seeking downside protection and opportunistic exposure amid elevated macro and political uncertainty. At the same time, heightened geopolitical stress creates significant market dispersion across asset classes and regions, allowing hedge funds to move quickly into mispriced securities. A prime example being Venezuelan defaulted sovereign debt, where regime change expectations, legal outcomes, and recovery values can diverge sharply and be actively traded. Private equity and private debt are, by design, less immediately sensitive to day-to-day geopolitical developments than public markets, and - short of extreme scenarios such as a direct military takeover of Greenland or a broader systemic shock - recent events are unlikely to materially alter their trajectory. These asset classes are driven primarily by underlying fundamentals, including interest rate dynamics, economic growth, corporate earnings, and conditions in public equity and credit markets, rather than short-term geopolitical headlines. This relative insulation is precisely what continues to make private equity and private debt appealing in the current environment, as they tend to absorb external shocks more effectively and reprice more gradually. Unless a portfolio company is directly exposed, the impact of geopolitical flare-ups should remain limited, with effects only becoming pronounced in cases of direct operational disruption or a broad macroeconomic downturn. STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Tallinn in Estonia and Dubai and Umm Al Quwain in United Arab Emirates. 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