Energy stocks rose on Monday, boosted by hopes that President Donald Trump’s plan to develop Venezuela’s vast oil reserves will be implemented after ousted President Nicolas Maduro was captured by the U.S. military.
Chevron shares rose as much as 10% at one point, but were trading up about 5% in the morning. Chevron is the only U.S. oil company currently operating in and exporting oil from Venezuela.
Oil prices sawawed overnight but were trading up nearly 2% as of Monday morning. The price of U.S. crude oil, known as West Texas Intermediate (WTI), and international Brent crude oil both rose by more than $1.
More broadly, investors did not react to the Venezuelan turmoil by selling stocks, unlike in previous periods of geopolitical uncertainty.
Conversely, by mid-morning, the S&P 500 was up 0.7% and the Nasdaq Composite was up 1%.
Energy was the best performing S&P sector so far on the day, but financials and consumer discretionary sectors also rose.
Internationally, markets rose as traders appeared to breathe a sigh of relief that the situation in Venezuela had not worsened further. Indexes in Germany, the United Kingdom, Italy, Australia, Japan and Hong Kong all rose in their first session since the transition to power in Venezuela.
Monday was the first real trading day since traders and investors returned from vacation.
The prospect of a U.S. company returning to Venezuela’s oil fields for the first time in decades also pushed up the stock prices of ExxonMobil and ConocoPhillips by about 3%.
Stock prices of companies that serve oil giants also rose. Baker Hughes rose 5%, SLB rose 12% and Halliburton soared 10%.
Venezuela currently has the world’s largest oil reserves, surpassing even major oil producing countries such as Saudi Arabia, Iraq, the United Arab Emirates, and Russia.
“We’re going to get a very large American oil company, the largest in the world, to come in and spend billions of dollars to fix our badly broken infrastructure and start making money for our country,” Trump said at a press conference on Saturday.
But experts warn that it will likely take years to bring Venezuela’s oil production back to full capacity.
“Venezuela’s current oil exports are small by global standards. Any effort to develop Venezuela’s world-class oil reserves on a large scale will necessarily be a long-term proposition due to poor infrastructure,” Evercore ISI analyst Matthew Ax said in a note to clients over the weekend.
President Trump said in a speech Saturday that Venezuela “has accomplished almost nothing compared to what it should have been.”
U.S. sanctions have contributed to a decline in Venezuela’s oil infrastructure and the country’s production over the years. It was unclear Monday whether the Trump administration’s plan to revitalize the oil industry would include lifting long-standing sanctions or blocking Trump’s outbound oil tankers.
Geopolitical uncertainty on Monday drove up the value of precious metals, known as a “safe haven” for investors. Gold rose 2% and silver rose more than 4%.
The US dollar also appreciated on the back of the Venezuelan regime’s actions, gaining about 0.4%.
