These stocks stand to gain as the U.S. tightens its grip on Venezuelan oil

By Larry Jeddeloh If the U.S. can exert control over Venezuela's leadership and energy sector, the long-term implications could be substantial Venezuela's El Palito refinery is shown in this image. The country's oil production needs upgrading, and U.S. companies will do much of this rebuilding. If the U.S. can drive oil prices down to $50 or $40 a barrel, the U.S. economy will boom. Russia's economy will be squeezed hard. President Donald Trump on Saturday said Venezuela has stolen, in his view, U.S. companies' assets that built that country's oil industry. Those assets were nationalized years ago. They are apparently going to be returned in some form. Big oil in the U.S. wins. This is one of the reasons I added Exxon Mobil (XOM) to our Unconventional Model several weeks ago - but it happened sooner than expected. There are three main areas of strategic importance: -- Oil pricing and global supplies -- Trade routes -- Impacts on several regions: South America, Iran and Taiwan Trump also said that Venezuela's energy infrastructure has rotted - he is correct - and that it will be rebuilt with U.S. companies doing much of that rebuilding. I added SLB (SLB) to the Unconventional Model recently, based on that premise. I mentioned it multiple times, but it was not the main reason to hold SLB. The stock's 13x PE was low and the company has been using AI to improve margins for some time. Pick-and-shovel companies like SLB may be the biggest winners of all. Strategically, control of Venezuela's oil makes the U.S. the global oil superpower. America's ability to withstand an oil shock is much improved, and even a war in the Mideast (Iran?) would carry less risk. Somaliland and South Yemen, once created, will control oil flows from the Red Sea. Gradually, China's supply chain is becoming less resilient. Venezuelan oil will be sold in whatever currency the U.S. decides. Economic risk to the U.S. would be reduced by rerouting oil flows from Caracas to the U.S., possibly cutting the price of gasoline and feedstocks to U.S. manufacturers. This is very important. But the other major implication is that the petrodollar system just got a big boost. Venezuelan oil will be sold in whatever currency the U.S. decides. It could be U.S. dollars DXY, or it could be Treasurys, or even some form of Treasurys backed by crypto, gold (GC00) and oil (CL00). Read: What analysts are saying about big oil companies after Maduro's capture. U.S. becomes the world's oil superpower Regionally, U.S. oil companies are already active in massive oil discoveries in nearby Guyana. Operating on an accelerated scale in the northern part of South America will change asset values and trade routes in that region. Investment exposure to the region just improved, perhaps significantly. Boeing (BA) was put in the Unconventional Model in the fourth quarter of 2024. Exxon, Halliburton (HAL), Schlumberger (SLB) and Valero (VLO) could all benefit from access to Venezuela's oil volumes and/or the rebuild of the energy industry, which, in Trump's words, had rotted and even become dangerous. Risks to the plan As you may have already read, a Chinese delegation was in the building with captured President Nicolás Maduro just hours before U.S. forces ran their operation. Whatever else we might think about this, the execution of this operation should impress everyone from Tehran to Pyongyang to Beijing to Moscow. There is a plan. As the U.S. plan unfolds, I would think about it this way: If the U.S. can drive oil prices down to $50 or $40 a barrel, the U.S. economy will boom. Russia's economy will be squeezed hard. Perhaps China will help with Moscow's finances, but wars are expensive to run. Trump's global strategy includes a heavy dose of economic pressure - sanctions, tariffs, contracts, etc. What will Russia do if the U.S. drives the price of oil low and sustains that price? No less important is how the Saudis will respond. The other risk is what China will do in response. Stop the export of silver (SI00) totally, hoping they can break a U.S. bank? Pull other strategic metals off the export list? Move on Taiwan? Finally, it strikes me that the lack of response from these two countries should send a chill down the backs of leaders in some of China's and Russia's client states. Trump's actions scream reassertion of the Monroe Doctrine. And they send a clear signal that, unlike many American leaders, Trump is willing to use the power America has but has too long been ignored or forgotten. That may be his greatest strength - and the greatest risk to America's enemies. Larry Jeddeloh is the editor of The Institutional Strategist and founder of TIS Group, an independent global macro research service covering global stocks and other financial markets. Also read: Why Trump's takedown of Venezuela's dictator could inject 'Chuck Norris' price premium into oil market More: How Trump's Venezuela raid could worsen America's affordability crisis -Larry Jeddeloh This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 01-05-26 1018ET