Venezuela once ranked among the world’s most important oil producers, pumping as much as 3.5 million barrels per day in the 1970s, or more than 7 percent of global output. That figure steadily declined over the decades as state control, weak management, limited foreign investment and international sanctions took their toll. Output fell below 2 million barrels per day in the 2010s and averaged about 1.1 million barrels per day last year, representing roughly 1 percent of global supply.
Despite holding the largest proven oil reserves globally, the country’s industry remains constrained by aging infrastructure and years of underinvestment. Analysts warn that even under more favorable conditions, a meaningful recovery would take time due to political uncertainty and the scale of capital required to restore production.
Oilfield services companies stand to play a central role if production ramps up. Shares of Baker Hughes, Halliburton and SLB rose between 4 percent and 9 percent, reflecting expectations that their technology and expertise would be critical to reviving Venezuela’s output.
Attention has also turned to long running disputes over assets seized by Venezuela in 2007 under former president Hugo Chavez. Analysts at J.P. Morgan said recent U.S. actions could improve the odds of asset recovery for major energy firms. They noted that ConocoPhillips and Exxon Mobil hold sizable arbitration awards with a higher likelihood of repayment. “In total, ConocoPhillips has outstanding claims approaching $10 billion, while Exxon’s outstanding damages appear to be in the $2 billion range against their original claims that exceeded $15 billion,” the analysts said. Shares of both Exxon Mobil and ConocoPhillips gained more than 2 percent.
Venezuelan crude is classified as heavy and sour, with high sulfur content. While it typically delivers lower margins than lighter grades, it remains attractive for certain refiners. “This type of crude aligns well with the configuration of U.S. Gulf Coast refineries which were historically designed to process such grades,” said Ahmad Assiri, research strategist at Pepperstone.
Refiners with exposure to those facilities moved higher, with Marathon Petroleum, Phillips 66, PBF Energy and Valero Energy posting gains ranging from 3.4 percent to 9.3 percent. Chevron, the only major U.S. oil company currently operating in Venezuela under a U.S. waiver, climbed 5 percent, positioning itself as a potential early beneficiary of any policy shift.
Oil prices settled up about $1 a barrel, although analysts said the global market remains well supplied and that any additional disruption to Venezuelan exports would have limited near term impact. President Donald Trump has said the embargo on all Venezuelan oil exports will remain fully in place for now.
Behind the market moves are renewed political signals from Washington. The Trump administration plans to meet with executives from U.S. oil companies later this week to discuss ways to increase Venezuelan oil production, according to a source familiar with the matter. Officials have told industry leaders that a rapid return and substantial investment would be required if companies want compensation for assets taken nearly two decades ago.
Those discussions follow Trump’s remarks that the United States would take control of Venezuela after the arrest of President Nicolas Maduro, a statement that fueled investor optimism about potential access to the country’s vast reserves. U.S. oil company shares closed higher on Monday as markets weighed the prospect of renewed American involvement in one of the world’s most resource rich energy producers.
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