Shares of major American oil corporations experienced a significant surge in pre-market trading on Monday, 5 January, fueled by geopolitical developments in Venezuela. The rally was triggered by comments from US President Donald Trump, who indicated plans for the United States to "run" Venezuela following the political ousting of its leader, Nicolás Maduro, over the weekend.
Wall Street Bets Big on US Oil Majors
Leading the charge was Exxon Mobil, whose shares climbed a notable 5% to reach $126.33 each before the opening bell on the New York Stock Exchange. It was not alone. Other energy giants, including Chevron, SLB, Halliburton, Valero Energy, and ConocoPhillips, also saw robust gains of up to 9% in pre-market activity. This collective jump reflected a spike in investor demand for US oil companies on Wall Street, anticipating potential new opportunities.
The positive sentiment in the energy sector spilled over to the broader market. Futures for the three key US stock benchmarks were all trading higher, pointing to a firm opening for Monday's session. Dow Jones Industrial Average futures were up 14 points, while S&P 500 futures gained 0.3%, and Nasdaq-100 futures advanced by 0.7%.
Venezuela's Oil Potential and Past Nationalisation
The catalyst was President Trump's statement during a Saturday press conference. He suggested that US oil firms could invest billions to repair Venezuela's "broken" oil infrastructure, thereby extracting a "tremendous amount of wealth out of the ground." Venezuela, a founding OPEC member, once boasted a production peak of 3.5 million barrels per day in the 1970s. However, output has drastically declined, averaging just 1.1 million barrels per day last year, or about 1% of global supply.
In immediate reaction to the US moves, Brent and WTI crude oil futures initially fell over 1% but managed to recover, trading marginally higher by 0.40% and 0.30%, respectively. Analysts noted the limited immediate impact on global oil prices, given Venezuela's current diminished production levels, despite it holding the world's largest proven crude reserves.
Chevron and Exxon's Cautious Stance
Among the companies, Chevron is seen as particularly well-positioned to benefit from any increased US involvement. According to a Bloomberg report, Chevron maintained a presence in Venezuela even after the nationalisation of foreign oil assets around the turn of the century. The report also highlighted outstanding financial claims from that era: ConocoPhillips is owed more than $8 billion by Venezuela, while Exxon is still owed about $1 billion, as ruled by international arbitrators.
Exxon Mobil's CEO, Darren Woods, struck a note of caution in a November interview cited in the report. He stated that while Exxon would consider any potential opportunities in Venezuela, it would proceed carefully, given the history of its assets being expropriated in the early 2000s.
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