Oilfield service companies, the companies that actually go into the field and do the drilling and maintenance, rose even more sharply. SLB and Halliburton rose between 7% and 8%.Major oil exploration companies, including ExxonMobil, Chevron and ConocoPhillips, rose between 2% and 4%.
Venezuela’s oil industry is in decline after years of neglect and international sanctions. While some oil industry analysts believe Venezuela could double or triple its current output of about 1.1 million barrels of oil per day and return the country to historic production levels relatively quickly, others see a much longer road ahead.
“While the Trump administration has suggested that major US oil companies will invade Venezuela and spend billions to repair its infrastructure, we believe political and other risks, along with current relatively low oil prices, could prevent this in the near term,” wrote Neal Dingmann of William Blair. Material changes in Venezuelan manufacturing will take a lot of time and millions of dollars in infrastructure improvements, he said.
Any investment in Venezuelan energy infrastructure at this time would take place in a weakened global energy market. US crude oil prices are down 20% compared to last year. The price for a barrel of U.S. crude oil has not been above $70 since June and has not reached $80 per barrel since the summer of 2024. JPMorgan foresees a short, sharp dip in Venezuelan production, but expects the recovery to be rapid. Production could reach 1.3 to 1.4 million barrels per day within two years of a political transition.
“With new investments and major institutional reforms, production could potentially increase to 2.5 million barrels per day over the next decade,” JPMorgan wrote.
There are several factors that could affect Venezuelan production, including how quickly a government transition can take hold and how quick and willing multinational oil companies are to reenter the country, wrote John Freeman of Raymond James.
At the opening bell, energy sector stocks were broadly higher, especially companies with large refinery operations.
Venezuela produces the kind of heavy crude oil needed for diesel fuel, asphalt and other fuels for heavy equipment. There is a worldwide shortage of diesel because of sanctions on oil from Venezuela and Russia and because America’s lighter crude cannot easily replace it.
Major refiners like Valero, Marathon Petroleum and Phillips 66 were up between 5% and 6% at the opening bell.
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