Shares of major U.S. companies in the energy sector are sharply higher Monday after President Donald Trump announced plans to take control of Venezuela’s oil industry and said American companies would revitalize it after capturing President Nicolás Maduro.
While the U.S. action is unlikely to have an immediate impact on crude prices given the current glut in the market, it could upend energy markets.
Venezuela’s oil industry is in disrepair after years of neglect and international sanctions. Some oil industry analysts believe that Venezuela could double or triple its current output of about 1.1 million barrels of oil a day and return the nation to historic production levels relatively quickly, others see a much longer road ahead.
“While the Trump administration has suggested large U.S. oil companies will go into Venezuela and spend billions to fix infrastructure, we believe political and other risks along with current relatively low oil prices could prevent this from happening anytime soon,” wrote Neal Dingmann of William Blair. Material change to Venezuelan production will take a lot of time and millions of dollars of infrastructure improvement, he said.
Any investment in Venezuelan energy infrastructure right now would take place in a weakened global energy market. Crude prices in the U.S. are down 20% compared with last year. The price for a barrel of benchmark U.S. crude hasn’t been above $70 since June, and hasn’t touched $80 per barrel since the summer of 2024.
JPMorgan foresees a brief, sharp dip in Venezuelan production, but said recovery is expected to be swift. Production could reach 1.3 million to 1.4 million barrels per day within two years of a political transition.
“With new investments and major institutional reforms, output could potentially expand to 2.5 mbd over the next decade,” JPMorgan wrote.
There’s several factors that could impact Venezuelan production, including how quickly a government transition can take hold and how fast and willing multinational oil companies are to reenter the country, wrote John Freeman of Raymond James.
At the opening bell, shares in the energy sector moved broadly higher, particularly companies with large refinery operations.
Venezuela produces the kind of heavy crude oil that’s needed for diesel fuel, asphalt and other fuels for heavy equipment. Diesel is in short supply around the world because of the sanctions on oil from Venezuela and Russia and because America’s lighter crude oil can’t easily replace it.
Big refiners like Valero, Marathon Petroleum and Phillips 66 rose between 5% and 6% at the opening bell.
Oilfield service companies, those that actually go into the field and do the drilling and upkeep, rose even more sharply. SLB and Halliburton rose between 7% and 8%.
Major oil exploratory companies including ExxonMobil, Chevron and ConocoPhillips rose between 2% and 4%.
