To The Moon

$Halliburton(HAL)$  

$Trump Media & Technology(DJT)$ Bullish

All of the oil-services sector players gained due to Venezualan Maduro's capture. 

Shares of oil-services companies SLB Ltd and Halliburton also rose. Analysts said those companies could benefit as a result of investment in the country and an increase in Venezuela's oil output.

"Even the attempt to restart Venezuela is service-intensive - broken fields, broken pipes, broken facilities. That's why the first trade can be bullish for oil services and infrastructure names (the guys who get paid to rebuild the machine), even if you're bearish long-term oil prices," said Matthew Tuttle, chief executive of Tuttle Capital Management.

Shares of refiners Marathon Petroleum and Valero jumped and led the S&P's energy sector alongside Phillips 66's stock. Venezuela's heavy crude is more difficult and expensive to process than U.S. light crude and tends to sell at a discount to the lighter version.

"The immediate impact in the oil market will likely be where [Venezuelan barrels of oil] are sold and the impact on the light/heavy differential," said a Jefferies team led by analyst Lloyd Byrne.

The Jefferies analysts said that a large share of Venezuelan oil has been sold to China at hefty discounts due to sanctions. However, Gulf Coast refiners are big customers of the heavy sour blend, which since 2018 has largely been sourced by Canadian companies.

"We anticipate that light/heavy spreads will widen if more oil targets U.S. shores," they said, adding that large complex refiners on the U.S. Gulf Coast such as Valero, Marathon, Phillips 66, Exxon and Chevron would benefit.

"The initial market pressure will be on non-integrated Canadian heavy oil producers as [Western Canada Select] prices would face downward pressure should more Venezuelan barrels come to market," the Jefferies analysts said. Among those producers, shares of Canadian Natural, Imperial and Enbridge retreated on Monday.

Further down the road, they said that, apart from ConocoPhillips - which is owed money by Venezuela - Chevron will be a beneficiary, given that it still has operations there. Additionally, Exxon "will always be an important player going forward." SLB, Halliburton and Baker Hughes remained Jefferies's top names to help grow and stabilize production.

"[Chevron's] existing footprint in the country could mean it is best positioned to benefit from more opportunity as they have maintained a license from the U.S. Office of Foreign Assets Control to produce and export crude from existing [Venezuelan] assets since [the fourth quarter of 2022]," said a team of TD Cowen analysts that included Menno Hulshof and Marc Bianchi.

Chevron produces 200,000 barrels a day from its joint venture in Venezuela, the Cowen analysts said.

The read-through for one big name in particular - ConocoPhillips - stood out for analysts at Citi, who had 8% upside for shares if Venezuela pays up on that long-overdue debt.