"The price of oil (as measured by Brent crude) fell nearly 2% overnight as traders digested the U.S. invasion of Venezuela and the capture of its dictator, Nicolás Maduro. Perhaps counterintuitively, they concluded that this would not have much effect on the price of oil-at least in the short term.U.S. oil company stocks jumped up sharply in overnight trading. Chevron was up 7.82% premarket, Halliburton was up 8.45%, ConocoPhillips rose 7.54%, and ExxonMobil climbed 3.95%."
"The reality is that although Venezuela has vast reserves-about 17% of the entire planet's oil is under Venezuelan soil-its production is feeble. Production declined by 75% between 2013 and 2020, according to the Financial Times, after successive Chavismo regimes nationalized the oil companies there, kicked out foreign oil drilling expertise, and triggered a flight of its own drilling specialists. It now supplies less than 1% of daily global oil supply."
"In order to tap the full potential of Venezuelan oil, U.S companies would need cast-iron guarantees that their assets there would not be renationalized; that they would be allowed to commercialize what they find; and that they would be free to explore Venezuela's Orinoco oil belt for wells. The logistics are formidable and would require billions in investment and years of building to complete."
Brent crude fell nearly 2% as traders concluded the U.S. invasion of Venezuela and the capture of Nicolás Maduro would likely have little short-term impact on oil prices. U.S. oil company stocks surged in premarket trading, with Chevron, Halliburton, ConocoPhillips and ExxonMobil posting notable gains. Venezuela holds roughly 17% of global oil reserves, but production collapsed—down about 75% from 2013 to 2020—after nationalizations and the expulsion of foreign expertise, leaving it responsible for under 1% of daily global supply. Unlocking Venezuela's potential would require legal guarantees, massive investment, and years of work. Global markets moved risk-on, lifting equities and Bitcoin.
Read at Fortune
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