These Oil Stocks Sharply Declined After US Military Action In Venezuela

After removal of Venezuela’s President Nicolas Maduro, instability along the Red Sea, and amid rising uncertainty around Iran, Indian oil and energy firms have declined nearly 3% on Tuesday, January 6, including IOC, and HPL in contrast to Monday's gains.

Meanwhile, oil prices fell today after markets expected a rise in Venezuelan crude production with US President Donald Trump announced plans to take control of Venezuela’s oil industry.

Venezuela’s oil industry, which has only been able to utilise 1% of its 18% oil reserves due to neglect and US embargo, could witness a surge in output post US intervention to nearly 1.1 million barrels of oil a day, according to analysts. 

JPMorgan foresees a brief, sharp dip in Venezuelan production, but said recovery is expected to be swift. Production could reach 1.3 million to 1.4 million barrels per day within two years of a political transition.

Also Read: Are Oil Markets Insulated From US Strikes in Venezuela? Ex CEA Weighs In

“With new investments and major institutional reforms, output could potentially expand to 2.5 mbd over the next decade,” JPMorgan noted.

Among the key factors that could impact Venezuelan production, including how quickly a government transition can take hold and when multinational oil companies are able to begin operations in the country.

During early trade on Tuesday, the shares of Hindustan Petroleum Ltd (HP) declined as much as 3.64%, Bharat Petroleum Ltd (BP) fell 3.69%, and Indian Oil Corporation Ltd (IOC) was trading 2.60% lower around 12:15 PM.

On the other hand, major oil exploration firms like ExxonMobil, Chevron and ConocoPhillips rose between 2% and 4%.

Shares in the energy sector moved broadly higher, particularly companies with large refinery operations.

Top refiners such as Valero, Marathon Petroleum and Phillips 66 increased between 5% and 6% at the opening bell.

On the other hand, Oilfield service entities recorded a sharp rise with both SLB and Halliburton rose between 7% and 8%.