U.S. oil stocks surged as Trump eyed Venezuela’s oil reserves. Chevron rose 6.5%. ConocoPhillips & Exxon Mobil could reclaim assets. Venezuelan production fell to 1.1M bpd

Shares of U.S. oil companies surged on Monday as investors reacted to the possibility of accessing Venezuela’s substantial oil reserves, following President Donald Trump’s statement that the U.S. would assume control of the South American nation after its president was detained.

Venezuela, home to the world’s largest oil reserves, has seen its production decline significantly in recent decades due to mismanagement, limited foreign investment after the nationalization of its oil industry, and sanctions.

Trump informed reporters on Air Force One Sunday that he had discussed investment plans with U.S. oil companies both before and after American forces apprehended Venezuelan President Nicolas Maduro in Caracas. “They are eager to invest,” Trump stated, adding, “The major oil companies will rebuild the infrastructure and invest capital. We will not be investing anything.”

Reuters reported that the Trump administration had recently communicated to U.S. oil executives the necessity of a swift return to Venezuela with substantial capital investment to revitalize its struggling oil industry, as a prerequisite for potential compensation for assets expropriated two decades prior.

Chevron, the sole U.S. major currently operating in Venezuelan oil fields, saw its shares increase by 6.5% in premarket trading. Refiners such as Marathon Petroleum, Phillips 66, Valero Energy, and PBF Energy experienced gains between 4% and 11%.

Despite the uncertainty surrounding Venezuelan oil flows, oil prices remained relatively stable on Monday, influenced by ample global supplies. Trump indicated that the embargo on Venezuelan oil exports would remain in effect for the time being.

Venezuelan crude is a heavy, sour variety with high sulfur content, making it suitable for producing diesel and heavier fuels, although at lower profit margins compared to other grades, particularly those from the Middle East. According to Ahmad Assiri, a research strategist at Pepperstone, this crude type aligns well with the configuration of U.S. Gulf Coast refineries, which were historically designed to process similar grades.

Chevron’s existing presence in Venezuela, facilitated by a U.S. waiver, positions it as a potential early beneficiary of any policy changes, while refiners stand to benefit from increased access to heavy crude closer to home.

Analysts at J.P. Morgan suggested that the U.S. action could also facilitate the return of assets seized by Venezuela in 2007 under the leadership of Hugo Chavez. They noted that ConocoPhillips and Exxon Mobil have significant arbitration awards pending, increasing their chances of recovery. ConocoPhillips has outstanding claims nearing $10 billion, while Exxon’s outstanding damages are estimated at around $2 billion against original claims exceeding $15 billion.

Share prices reflected this optimism, with ConocoPhillips rising 5.5% and Exxon up 3%. Shares of oilfield services firms, including Baker Hughes, Halliburton, and SLB, also rose between 6.6% and 9%, as their technology would be essential for boosting Venezuela’s crude production.

However, analysts cautioned that any significant recovery would likely be prolonged due to political instability, infrastructure deterioration, and years of underinvestment. Venezuela’s oil production, which peaked at 3.5 million barrels per day (bpd) in the 1970s, accounting for over 7% of global output, had fallen below 2 million bpd in the 2010s and averaged approximately 1.1 million bpd last year, representing about 1% of global supply.