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🛢️ China–Venezuela Oil Reckoning

PLUS: Breaking China’s Rare Grip

Author

Ruchirr Sharma
January 06, 2026

 

Good morning.

Fun fact for you this AM: On January 6, 1912, New Mexico became the 47th U.S. state - proving that even late additions can make a big impact 🤩 

Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

GEOPOLITICS

This deal was born of desperation. China needed oil to fuel its economic boom. Venezuela needed cash to keep its economy afloat. So Beijing wrote big cheques, and Caracas paid them back in crude.

That bargain powered a decade-long partnership. Starting in the early 2000s, China promised over $100 billion in loans to Venezuela, secured against future oil shipments. Instead of cash repayments, oil flowed east. The money built railways and power plants. China locked in energy supply. Everyone got what they needed, until they didn’t.

Fast forward to now, and the equation has flipped. Venezuela’s economy collapsed under mismanagement, falling oil prices, and US sanctions. Oil output plunged. Debt piled up. By 2017, Venezuela owed China tens of billions and struggled to ship enough crude to pay it back. New Chinese loans stopped. The relationship went into slow, awkward maintenance mode.

Then came the shock. Venezuela’s leader Nicolás Maduro was ousted and arrested. The US tightened its grip, seizing tankers and openly signalling a takeover of Venezuela’s oil sector. Suddenly, Washington controls the valves.

For China, this is a turning point. It still wants its money back, roughly $10 billion by current estimates, but it no longer depends on Venezuelan oil the way it once did. Beijing is electrifying its economy, betting big on EVs and renewables, and reducing exposure to risky oil-for-loans deals.

Zooming out, this is bigger than one broken partnership. It shows how geopolitics can rewrite energy alliances overnight. China’s once-bold resource strategy is ageing. The US is reasserting control in its backyard. And Venezuela, sitting on the world’s largest oil reserves, is once again the prize everyone is circling, just under very different rules.

RARE METALS

For decades, China has quietly owned one of the world’s most strategic choke points: rare earths. These obscure-sounding metals power everything from electric vehicles and smartphones to missiles and MRI machines. The US once led this industry. Then it blinked. China didn’t.

By the mid-1990s, Beijing’s industrial policy, cheap capital, and loose environmental rules helped Chinese firms dominate rare-earth processing. Today, China refines over 90% of global supply. Everyone else either shut shop or moved on.

Enter Phoenix Tailings.

Tucked inside an office park in New Hampshire, this Boston-area startup is trying to claw back a slice of that monopoly. Its plant turns dusty mineral powder into usable metal for EV motors and defence systems, using a cleaner, closed-loop process that avoids the toxic emissions common in China’s methods.

The problem? Rare earths are brutally hard to make money on. Volumes are small. Processing is expensive. Prices swing wildly. Big miners stay away. That leaves scrappy startups and government backing to do the heavy lifting.

Phoenix Tailings nearly went bankrupt in 2024. Then geopolitics intervened. As US-China trade tensions flared and Beijing restricted exports, investors and customers suddenly cared a lot more. Federal funding followed. Orders picked up. Survival turned into momentum.

Zoom out, and this is bigger than one startup. The US is waking up to the risks of outsourcing critical materials. Washington is now pouring billions into rebuilding the supply chain, from mines to magnets.

Still, the path is steep. China can undercut prices at will. Subsidies may fade. Markets remain murky.

But for the first time in years, America is back in the rare-earth game, furnace by furnace, betting that strategic security matters more than cheap metal.

GENERAL OVERVIEW

🗞️ Bite-sized summaries

đź“Š Inflation Target Stays - India is likely to stick with its 4% inflation target for the Reserve Bank of India, signalling continuity in monetary policy as the framework comes up for renewal in March. The flexible regime requires inflation to stay within a 2% to 6% band and has been in place since 2016. Officials see it as effective, with inflation remaining within the band for most of the past decade, barring pandemic volatility. The RBI is expected to back the status quo for a third straight term, reinforcing policy stability as price pressures ease but remain closely watched.

💰️ Welfare Makers, Not Takers - Indian-Americans stand out as major contributors to the US economy, not welfare dependents. A chart shared by Donald Trump on immigrant welfare usage notably excluded India, reflecting data that Indian-Americans are among the highest earners and least likely to rely on public assistance. High education levels, skill-based immigration, and concentration in professional fields mean they pay more in taxes than they receive in benefits. Beyond this, Indian-Americans are significant job creators, especially in technology, healthcare, and small businesses. The data challenges anti-immigrant narratives and shows Indian-Americans as net economic assets to the United States.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

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