US Oil Stocks Jump After Maduro Seized in Venezuela

Shares in US energy firms saw a sharp increase as investors bet that the US seizure of Venezuelan President Nicolas Maduro would open opportunities to tap the country’s oil reserves, as reported by the BBC.

The report, published yesterday, January 5, said that shares in Chevron opened more than 4% higher, after going up more than 7% in pre-market trading. Other companies, including Exxon and ConocoPhillips, also gained.

Considerable gains were also seen in precious metal prices and shares in defence stocks, after the intervention boosted investor concerns regarding geopolitical risks.

Silver, Gold, and Energy Stocks Soared As Well

Apart from oil stocks, gold also went up by 1.9%, reaching the price of $4,412 an ounce, while silver surged 3.6% as money was moved into so-called “safe haven” assets. This is not unusual, as prices of precious metals often go up in times of uncertainty, as they are generally perceived as safer assets to hold – ones that are not as likely to lose value.

The gold price saw its best annual performance since 1979 just last year, when it skyrocketed over 60% and reached an all-time high of $4,549.71 on December 26. The gains were driven by multiple factors, including expectations of additional interest rate cuts, major purchases of bullion by central banks, as well as investor concerns regarding the economic uncertainty and global tensions.

Oil prices fluctuated because investors weighed whether Washington’s intervention in Venezuela would impact crude supplies. So far, Brent crude has gone up by around 1% to $61.50 per barrel, which is still under the highs seen over the last several years. 

Meanwhile, Chevron remains the only US company currently operating in Venezuela, and its shares went up 4%, while Spanish energy company Repsol gained 2%, following a similar pattern as a few other Western energy firms that maintain a presence in the country.

A major increase was also noticed in oil services firms such as Halliburton, which saw a 7% increase. Trump also signaled that the US might tap into Venezuela’s massive oil reserves after seizing Maduro, and said that the US will run the country until such a time comes when it can set up a safe, proper, and judicious transition.

With that said, some industry analysts have commented that the move is unlikely to have an immediate impact on how much people and companies pay for energy. Experts also said that Venezuela’s oil infrastructure has been declining since the early 2000s, and it would cost billions of dollars to have it fixed.