Wall Street cheers the prospect of conflict in Venezuela ...

What’s Happening

Okay so Counterintuitively, the capture of Maduro will not have much of an effect on the price of oil—at least in the short term.

The price of oil (as measured by Brent crude ) fell nearly 2% overnight as traders digested the U. Invasion of Venezuela and the capture of its dictator, Nicolás Maduro. (let that sink in)

Perhaps counterintuitively, they concluded that this would not have much effect on the price of oil—at least in the short term.

The Details

Oil company stocks jumped up sharply in overnight trading. 82% premarket, Halliburton was up 8.

54%, and ExxonMobil climbed 3. 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.

Why This Matters

Recommended Video 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.

The business implications here could be significant in the coming months.

Key Takeaways

Com to tap the full potential of Venezuelan oil, U.
The logistics are formidable and would require billions in investment and years of building to complete.
In that context, traders were in a decidedly risk-on mood this morning.