Oil prices fell during Tuesday’s Asian trading with the United States government pushing major oil companies to invest in Venezuela’s oil industry after the Saturday strike on the country.
Brent crude dropped 0.4% to US$61.51 per barrel by 2:25 pm AEDT while West Texas Intermediate was down 0.5% to $58.02.
During U.S. trading, Brent crude prices rose 1.5% and the S&P 500’s energy index was up 2.7% as shares in U.S. oil companies increased.
Shares in Chevron, the only U.S. oil major operating in Venezuela, were up 5.1%. ExxonMobil shares also rose 2.2% and ConocoPhillips shares grew by 2.6%.
U.S. President Donald Trump’s administration plans to meet with U.S. oil company executives this week to discuss investment to increase Venezuelan oil output, per Reuters.
Chevron, ExxonMobil, and ConocoPhillips have reportedly not yet spoken with the administration about the Saturday strike on Venezuela and capture of its president. The White House has claimed that oil majors “are ready and willing to make big investments in Venezuela that will rebuild their oil infrastructure”.
“Although Venezuela produced ~3mb/d (million barrels per day) at its peak in the mid-2000s and holds the world’s largest proven oil reserves, we believe that any recovery in production would likely be gradual and partial as the infrastructure is degraded and would require strong incentives for substantial upstream investment,” Goldman Sachs analysts wrote.
“Higher recovery rates of heavy Venezuela oil will likely require financial and time investments in oil-processing upgraders and improvements in operational efficiencies, power availability, and oil transporting infrastructure.”
