US energy stocks rise as Trump vows to unlock Venezuela oil | Oil

U.S. energy stocks rose in premarket trading Monday as Donald Trump vowed to release Venezuela’s vast crude oil reserves after the U.S. captured Venezuelan President Nicolás Maduro.

Shares of Chevron, which currently operates in Venezuela under a special license granted by the Trump administration, rose 7% in premarket trading. Exxon Mobil increased by 3.7%, while Halliburton, which provides products and services to the oil and gas industry, increased by 9%.

Oil prices rose slightly on Monday after recovering from a brief decline. International oil benchmark Brent crude oil traded at $61.16 per barrel. West Texas Intermediate remained roughly steady at $57.72.

Venezuela produces only 1 percent of global oil production after years of underinvestment, U.S. trade sanctions and a naval blockade. But the country holds about 17% of global crude oil reserves, according to the U.S. Energy Information Administration.

Trump’s intervention could deepen the supply glut in the market, as the president has promised that US oil companies will “come in, spend billions of dollars, fix the badly broken infrastructure, oil infrastructure, and start making money for the country.”

So far, none of the largest US oil companies have spoken out about the president’s claim that they are ready to spend billions of dollars to rebuild Venezuela’s oil industry. But Ali Moshiri, a former senior executive at Chevron, said it had raised $2bn (£1.49bn) for Venezuelan oil projects.

Moshiri, former head of Chevron’s Latin American operations he told the Financial Times Amos said the Global Energy Management fund has identified Venezuelan assets and is preparing to invest. “We have been waiting for this breakthrough for some time and our $2 billion private placement agreement is ready for implementation with various investment targets identified,” he said.

XTB research director Kathleen Brooks said the drop in oil prices could be “short-lived” as investors evaluate how long it will take for extra Venezuelan oil to hit the global market. He said: “The types of investments required include improving old and decaying infrastructure, drilling new oil wells and building more refineries to process Venezuela’s heavy crude oil.

“Optimizing resource-rich Venezuela to generate the revenue needed to turn the country around could take until 2030 and beyond.”

Brooks noted that the country pumped about 3.5 million barrels per day at its peak in 1998, a figure that now far exceeds 1 million barrels per day.

John Browne, the former chief executive of BP, told BBC Radio 4’s Today program that it would take a “tremendous amount of skill, investment and time” to revive Venezuela’s oil production. “It’s a very long-term project,” he said. “Some production may increase quickly, but it may equally go backwards as people reorganize.”

Political disruption also led to a rise in the Venezuelan bond market. The country’s debt, which has traded well below nominal value since default in 2017, has been rising in recent weeks as some traders anticipate a regime change.

According to data from Deutsche Börse, the price of Venezuelan government bonds, which will mature in 2027, increased from 31.5 pence to over 40 pence in dollar terms. The second bond, which must be repaid in 2022, increased from 31.5 pence to 34 pence.

As China’s banking sector braces for potential shocks, the National Financial Regulatory Administration, China’s top financial regulator, has asked policy banks and other major lenders to report their exposure to Venezuela, Bloomberg reported.

Despite geopolitical turmoil over the weekend, the Opec+ oil group signaled no change in strategy in its scheduled update on Sunday. The group, which also includes Russia, Saudi Arabia and the United Arab Emirates, agreed to continue their pause in production increases until at least April.

The gold price rose 2 percent to $4,430.27 per ounce on Monday. The metal is considered a traditional safe-haven asset and often rises during times of uncertainty. Silver also rose as much as 3.9% to $75.42 per ounce. Both metals reached record high prices last year, driven by global economic and political uncertainty as well as expectations for interest rate cuts and large bullion purchases by central banks.

Bitcoin price also rose due to geopolitical uncertainty, rising 1.7% to $93,085 on Monday.

Asian markets were buoyant and had their strongest start to the year since 2012. South Korea’s Kospi index reached a new record with an increase of 3%. London’s FTSE 100 reopened above the 10,000 level after breaking through for the first time last week, then traded 0.2% higher.