In a move that shocked many, the United States recently arrested Venezuela's leader, Nicolas Maduro. Installed in his place was his vice president, with the United States openly stating it would have a large say in how the country moved forward.
The big story on Wall Street is Venezuela's oil, which could be an investment opportunity for you.
Venezuela needs oil help
Venezuela has one of the largest oil reserves in the world, but under Nicolas Maduro's leadership, its oil production floundered. The United States wants to see Venezuela's energy sector grow again, but the country likely can't achieve that alone. This is why U.S. President Donald Trump is pushing global oil companies like Chevron (CVX +2.40%) and ExxonMobil (XOM +2.04%) to get heavily involved in the rebuilding process.
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Chevron is a cautious yes. It already has assets in the country. In fact, Maduro's arrest is good news for Chevron because it is likely to turn its Venezuelan assets from a Wall Street negative to a positive.
Indeed, Chevron's exposure to Venezuela has long been a contentious issue because of sanctions against the country. If the country can start selling oil to the world without such constraints, Chevron is likely to be an early winner. The company believes it can increase production by as much as 50% in the country relatively quickly. However, Chevron's leadership did caution that it wants to see more political stability before it would be willing to invest more in the country.
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ExxonMobil is less certain about the value of operating in Venezuela. At this point, ExxonMobil is more pointedly saying it wants to see more political stability before it would be willing to invest anything in the country. It is far from clear if Trump can persuade/coerse ExxonMobil into helping.
While both companies are being cautious at this point, ExxonMobil is taking a much more conservative approach; many oil companies will likely follow ExxonMobil's lead even as the country starts to take important steps to open up its oil industry.
Venezuela isn't really the biggest story in oil
At the end of the day, Chevron is positioned to benefit early from any positive change in Venezuela's oil industry. More conservative companies like ExxonMobil could benefit sometime in the future. But at this point, it is still just a small part of most oil companies' businesses.
Venezuela will likely remain just a fringe issue for most oil companies' revenues and earnings for years to come, even if they get involved early on in the recovery process. That remains true despite what has been a headline-grabbing event, though Chevron is likely to be among the first to benefit because of its existing presence in the country.
