The US energy sector is abuzz with anticipation after President Trump’s pledge to unlock Venezuela’s vast crude oil reserves following the capture of President Nicolás Maduro. Shares in major oil companies like Chevron, Exxon Mobil, and Halliburton surged on Monday, briefly pushing the Dow Jones index above 49,000 for the first time.
Oil prices also climbed, with Brent crude rising 1.5% to $61.76 a barrel and West Texas Intermediate up 1.4% to $58.32. Experts, however, caution that reviving Venezuela’s battered oil industry will be a long and arduous process.
Venezuela, which holds around 17% of global crude oil reserves, has seen its production plummet to just 1% of global output due to years of underinvestment, US trade sanctions, and a naval blockade. Trump has promised that US oil companies will “go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.”
Yet, so far, none of the major US oil firms have publicly confirmed plans to invest billions in Venezuela. However, a former top Chevron executive, Ali Moshiri, has said he is raising $2 billion (£1.49 billion) for Venezuelan oil projects through his Amos Global Energy Management fund.
Kathleen Brooks, research director at XTB, warned that any increase in Venezuelan oil production could have a “short-lived” impact on prices, as it would take significant time and investment to upgrade ageing infrastructure, drill new wells, and build more refineries to process the country’s heavy crude.
“Optimising resource-rich Venezuela to generate the income needed to turn the country around could take until 2030 and beyond,” Brooks said.
John Browne, a former chief executive of BP, echoed this sentiment, telling BBC Radio 4’s Today programme that reviving Venezuela’s oil production would be “a very long-term project” requiring “a tremendous amount of skill, investment and time.”
The political upheaval has also prompted a rally in the Venezuelan bond market, with some bonds trading well above their face value as investors anticipate a regime change. However, China’s top financial regulator has asked its policy banks and other major lenders to report their exposure to Venezuela, as the Chinese banking sector braces for potential shocks.
Despite the geopolitical turmoil, the OPEC+ group, which includes Russia, Saudi Arabia, and the United Arab Emirates, has agreed to maintain its pause on production increases until at least April. Meanwhile, the price of gold and bitcoin have risen on the back of the uncertainty, reaching new record highs.
