Energy stocks rise on hopes Trump will tap Venezuela's vast oil reserves
Energy stocks climbed Monday, fueled by hopes that President Donald Trump’s plan to tap Venezuela’s sprawling oil reserves will be carried out, following the capture of deposed leader Nicolás Maduro by U.S. forces.
Shares of Chevron surged as much as 10% at one point in pre-market trading, before ending the day 5.1% higher. Chevron is the only U.S. oil company currently operating in and exporting oil from Venezuela.
The price of oil seesawed overnight, but as of 4 p.m. ET Monday, it was trading about 1.8% higher. The price of both U.S. crude oil, known as West Texas Intermediate or WTI, and internationally based Brent crude rose more than $1.
More broadly, investors did not react to the upheaval in Venezuela by selling stocks, as they have in previous times of geopolitical uncertainty.
On the contrary, the S&P 500 and the Nasdaq Composite wrapped up the trading session up 0.6%.
The Dow Jones Industrial Average outperformed both, soaring more than 594 points, or 1.2%.
Chevron was by far the best-performing stock in the 30-stock Dow index.
Energy was the best-performing S&P sector Monday, but the financials and consumer discretionary sectors also rallied.
Internationally, markets climbed as traders likely breathed a sigh of relief that the situation in Venezuela had not deteriorated further. Indexes in Germany, the U.K., Italy, Australia, Japan and Hong Kong all rose in the first trading session since the administration’s move in Venezuela.
Monday’s the first substantial trading session after the holidays.
The future potential for U.S. companies to be able to return to Venezuela’s oil fields for the first time in decades boosted the share prices of Exxon Mobil and ConocoPhillips by around 3%.
Shares of firms that supply services to oil giants also jumped. Baker Hughes rose 4.1%, SLB rose 8.9%, and Halliburton closed the day up 7.8%.
Venezuela sits on the largest oil reserves in the world, surpassing even those of major oil producing nations like Saudi Arabia, Iraq, the United Arab Emirates and Russia.
“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure and start making money for the country,” Trump said Saturday at a news conference.
But experts warn that accomplishing anything near a return to full capacity oil production in Venezuela will likely take years.
“Venezuela’s current oil exports are small in the global context, and any effort to develop Venezuela’s world-leading oil reserves at scale will necessarily be a long-term story due to poor infrastructure,” Evercore ISI analyst Matthew Aks wrote in a note to clients over the weekend.
Venezuela has been “pumping almost nothing by comparison to what they could have been,” Trump said in his Saturday remarks.
U.S. sanctions have contributed to the years long decline of Venezuela’s oil infrastructure and the nation’s output. It was unclear Monday whether the Trump administration’s plans to revitalize the oil industry include lifting longstanding sanctions and Trump’s blockade of oil tankers leaving the country.
The geopolitical uncertainty Monday boosted the value of precious metals, known as “safe havens” for investors. Gold rose 2.6% and silver traded higher by more than 5.2%.