Shares of Exxon Mobil were trading higher in pre-market trade on the NYSE on Monday, 5 January, surging 5% to $126.33 apiece as demand for US oil companies on Wall Street spiked after US President Donald Trump said the United States plans to “run” Venezuela following the ousting of Nicolás Maduro over the weekend.
Along with Exxon Mobil, other major oil companies such as Chevron, SLB, Halliburton, Valero Energy, and ConocoPhillips were trading with gains of up to 9% before the opening bell.
Tracking gains in oil stocks, the US stock market is also expected to open Monday’s session on a firm note, with all three key benchmarks trading in the green. Dow Jones Industrial Average futures were up 14 points, S&P 500 futures rose 0.3%, and Nasdaq-100 futures advanced 0.7%.
During a press conference on Saturday, Donald Trump said that US oil companies will spend billions fixing Venezuela’s “broken” oil infrastructure, “taking a tremendous amount of wealth out of the ground”.
Venezuela, a founding member of OPEC, produced as much as 3.5 million barrels per day in the 1970s, which at the time represented over 7% of global oil output. Production fell below 2 million bpd during the 2010s and averaged around 1.1 million bpd last year, or just 1% of global production.
In reaction to the US attacks on Venezuela, both Brent and WTI crude futures initially fell over 1% but recovered from intraday losses to trade higher by 0.40% and 0.30%, respectively.
Although Venezuela holds the world’s largest proven crude oil reserves, the impact on global oil prices was limited, as the country’s production has fallen below 1 million barrels per day—less than 1% of global supply.
Chevron set to gain as US oil majors eye Venezuelan reserves
A Bloomberg report said that Chevron is best positioned among global oil giants to benefit from bigger US control of the world’s largest crude reserves, as it remained in Venezuela after the nationalisation of foreign oil assets at the turn of the century.
The report also added that ConocoPhillips is owed more than $8 billion by Venezuela and Exxon is still owed about $1 billion stemming from the nationalisation of their Venezuelan assets in the early 2000s, as ruled by international arbitrators.
Exxon would consider any potential opportunities in Venezuela but would proceed cautiously, as its assets there have been expropriated in the past, Chief Executive Officer Darren Woods said in a November interview, as per the same report.
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