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%.
That, again, was something of a surprise, given that the potential for extra supply from Venezuela—assuming President Donald Trump gets the cooperation he wants from Maduro’s successor—would presumably be more likely to suppress U.S. oil prices than raise them.
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.
