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Oil markets shrug off Venezuela raid amid supply glut
Oil prices dipped Monday despite the U.S. military operation that nabbed Venezuelan President Nicolás Maduro over the weekend, as traders weighed potential supply hits against a global market already awash in crude. Brent futures slid 0.6 percent to $60.38 per barrel, West Texas Intermediate easing 0.7 percent to $56.92, reflecting investor doubt over any near-term jolt from the oil-rich nation.
Energy stocks told a different tale. Chevron surged as much as 10 percent in premarket trading Monday, Exxon Mobil up about 4 percent. Oilfield services firms saw sharper gains, SLB leaping nearly 9 percent and Halliburton rising 7 percent, with bets on drilling contracts ahead.
President Donald Trump said Saturday major U.S. oil companies would spend "billions of dollars" to rebuild Venezuela's "severely damaged" infrastructure, claiming America would temporarily "run" the country. Analysts, however, flag steep hurdles, Goldman Sachs holding 2026 oil price forecasts steady at $56 per barrel for Brent and $52 for WTI.
Venezuela holds roughly 303 billion barrels in proven reserves about 17 percent of the world total, topping Saudi Arabia but pumps just 900,000 to 1 million barrels daily, under 1 percent of global output. That's a plunge from 3.5 million barrels per day in the 1970s. Years of underinvestment, corruption, and sanctions have wrecked the oil setup: many pipelines exceed 50 years old, port gear now takes five days to load supertankers versus one seven years ago. State oil firm PDVSA estimates at least $8 billion just for pipelines to restore 1990s production levels.
Francisco Monaldi, Latin American energy policy director at Rice University's Baker Institute, says regaining 1970s peaks would demand firms like Chevron, Exxon Mobil, and ConocoPhillips pour in about $10 billion yearly over the next decade. "A faster rebound would need even more investment," Monaldi noted.
Goldman Sachs analysts led by Daan Struyven point out any output recovery "will likely be gradual and partial, as infrastructure has deteriorated and will require strong incentives for major investments." The bank keeps its 2026 Venezuelan production forecast at 900,000 barrels per day.
Trump's bold vision clashes with market realities. Global oil supplies stay ample, prices hovering near five-year lows. "Ultimately, there's still too much oil on the market, and that's why oil prices won't spike," Arne Lohmann Rasmussen, chief analyst at Global Risk Management, told CNBC. Chevron, the sole major U.S. oil player in Venezuela producing around 250,000 barrels daily under special licenses, says it focuses on employee safety and asset integrity while "fully complying with all applicable laws and regulations."
