Top energy stocks to buy amid Venezuela chaos

If I’ve learned anything over the past 30 years of professionally tracking the stock market, it’s that stocks have a knack for predicting news before it happens.

The reality is that stock prices fluctuate based on expectations rather than historical events. Since they represent the aggregate of every investor’s opinion, they often identify trends long before any individual investor.

That predictive power appears to have been in play in December, given energy stocks’ recent rally ahead of President Donald Trump’s surprise raid and capture of Venezuela’s President Nicolás Maduro Moros.

Related: Fund manager lays out surprisingly bullish S&P 500 target for 2026

I’ve analyzed data to track stock market sector trends since I entered the business in 1997. My first job was as a research assistant for an independent research firm that provided sector and industry money flow research to mutual and hedge fund managers.

Eventually, I became a partner before leaving to create my own stocks and sector ranking system in 2003.

For years, money managers used my research to identify new stock ideas and inform decisions on whether to overweight or underweight sectors, industries, and stocks. My model, which is still available at Limelight Alpha, is still at work analyzing data, and interestingly, it noted a shift toward energy stocks in December, despite ongoing weakness in crude oil prices.

In fact, last week, the energy sector moved to the top of my large-cap sector ranking based on Friday’s close, before the U.S. officially took action against Venezuela, which put hundreds of billions of barrels of crude oil reserves in play.

The move higher in energy stocks is particularly intriguing when you dig into the data to see what specific industries and stocks were responsible for the sector climbing the ranking.

Limelight Alpha Sector Ranking (January 3, 2026):

Venezuela reshapes oil bets for 2026

Venezuela should be an oil market powerhouse. It boasts the world’s largest reserves (roughly 303 billion barrels, equivalent to 17% of global reserves, according to the U.S. Energy Information Administration, or EIA), yet oil production has declined significantly over the years due to underinvestment.

The Venezuelan government officially nationalized its oil industry on January 1, 1976, under the Presidency of Carlos Andrés Pérez. It established the state-owned company PDVSA (Petróleos de Venezuela, S.A.) to manage oil operations. In 2007, under former President Hugo Chávez, the state took majority control of the remaining foreign joint ventures.

Venezuela takes 40% to 45% of PDVSA’s profit. Over the years, underinvestment, combined with the negative impacts of an oil industry “brain drain” and U.S. sanctions, has resulted in Venezuela’s total energy production decreasing at an annual average rate of 8.2% from 2011 to 2021. 

Venezuela produced 742,000 b/d of crude oil in 2023, down 70% from 2013, according to the EIA.

“Venezuela currently produces ~900 kb/d of oil (~1% of global supply) and exported ~800 kb/d in 2025,” wrote Morgan Stanley analysts in a research note shared with TheStreet.

“China was the largest destination for this oil over the past year, taking ~510 kb/d, while ~140 kb/d came to the U.S. The country’s production peaked around 3.5 mb/d in the late 1990s.”

The country’s oil is mostly extra-heavy crude, a thick, gooey oil that’s difficult to transport and process, requiring specially designed refineries. The reserves are mainly found in the Orinoco Belt in the southern strip of the eastern Orinoco River Basin.

The nature of Venezuela’s crude oil reserves and U.S. sanctions has led to increased cooperation with Iran and China, including Iranian shipments of diluents necessary for transporting and processing extra-heavy crude oil, as well as technical assistance from China National Petroleum Corporation (CNPC).

Those countries have also assisted PDVSA’s five refineries, which have a total nameplate processing capacity of 1.46 million b/d as of 2022. Venezuela’s refinery throughput is below 300,000 b/d, or roughly one-fifth of its nameplate capacity, according to IPD Latin America estimates reported by the EIA.

Overall, Venezuela possesses huge reserves that are largely hamstrung by decades of underinvestment, suggesting a massive opportunity across oil companies, from major integrated players like ExxonMobil, which already operates next door in Guyana, to Chevron, which still maintains an interest in Venezuela.

“CVX is the one U.S. operator that has retained a presence in Venezuela and is arguably best positioned to scale up production if conditions warrant, while COP and XOM both have unpaid arbitration awards for asset expropriation by the Venezuelan Government (most material for COP),” wrote Morgan Stanley.

It’s not just the big exploration and production companies that could benefit from a Venezuelan oil renaissance, though.

Ranking data reveals energy stock winners

The sector model I developed aggregates individual scores on 1,600 stocks by industry and sector, and then ranks sectors by average score. The scores incorporate a range of fundamental and technical analysis data points, with a hefty focus on earnings and short and long-term momentum.

Those factors have increasingly been working in energy’s favor, despite what appear to be major headwinds from falling oil prices amid production increases in Saudi Arabia, the world’s second-largest producer behind the United States, which has seen production soar alongside fracking in Texas’ Permian Basin.

Select energy stocks owed money from Venezuela

• ConocoPhilips: $10.5 billion ($793 paid)
• ExxonMobil: $1.6 billion
• Halliburton: $754 million
• Schlumberger: $469 million
• Baker Hughes: $87 million
  Source: Morgan Stanley
• Helmerich & Payne: ~$90 million, plus 11 rigs, according to U.S. Court of Appeals

Specifically, over the past month, stocks in various energy industries have been climbing in my ranking, especially among large-cap stocks.

For example, the top-scoring large-cap energy industry at the end of last week was equipment & services, a basket of stocks that could see significant demand tailwinds if major producers (XOM, CVX, COP) return to Venezuela and plow billions into modernizing its infrastructure.

The highest-scoring large-cap equipment & services stocks include Schlumberger (SLB) and Halliburton (HAL), two global giants that are helping E&P companies extract oil almost everywhere on the planet.

Schlumberger has past experience in Venezuela with reservoir mapping and well technology, while Halliburton has experience in repairing aging and shut-in wells, and markets artificial lifts useful for extracting heavy oil from shallow sandy formations such as the Orinoco Belt.

Another top large-cap stock investors have been buying recently is refiner Valero, which has significant refining operations along the U.S. Gulf coast geared toward the same heavy crude that Venezuela has in reserve.

Mid- and small-cap energy stocks have also been climbing higher in recent weeks. Among mid-cap stocks, top equipment & services stocks include Technip FMC(FTI) and Core Laboratories N.V. (CLB).

TechnipFMC markets reformers and technology that removes sulfur and can crack heavy molecules into lighter fuels, which is particularly important given Venezuela’s heavy-crude reserves.

Core Labs could see demand for its scientific analysis surge as E&P companies look to determine the best path forward for upgrades, including where to drill, how much steam to use for extraction, and the amount of diluents, such as naphtha, to add.

Drillers are also seeing tailwinds, led by Transocean (RIG), which specializes in offshore rigs that could benefit from increased activity off Venezuela’s coast. Venezuela has among the most significant offshore natural gas reserves, particularly in the Mariscal Sucre and Plataforma Deltana regions.

Helmerich & Payne (HP) was one of the largest drilling contractors in Venezuela until 2010. It has over $100 million in unpaid invoices, plus 11 of its rigs were seized by Hugo Chavez. Its FlexRigs could see strong demand if a major push is made to ramp Venezuela production, assuming it’s even willing to risk working there again.

In small-cap stocks, Patterson Energy (PTEN), Oil States International (OIS), and Oceaneering International (OII) are top-rated in my ranking.

Oceaneering could participate nicely in any reboot of offshore production, given its subsea Remotely Operated Vehicles (ROVs) ability to evaluate and repair underwater infrastructure.

Patterson is an HP rival with significant experience in horizontal land rigs. At the same time, Oil States International could see demand rise for its specialized connectors, including the FlexJoint and high-pressure valves, like its Piper Valves.

Oil renaissance in Venezuela won’t happen overnight

After the weekend raid capturing and extraditing Maduro to the U.S. to face narco-terrorism charges, oil stocks are rallying sharply higher again on January 5.

While the sector has been somewhat overlooked over the past year as crude prices have declined, investors should be aware that any tailwinds from Venezuela will likely take some time to materialize.

In addition to outdated production and refineries, the country’s pipelines are old and deteriorating, requiring modernization.

“PDVSA estimates that updating pipeline infrastructure alone would require around $8 billion in investment to return oil production to late 1990s levels. Although PDVSA no longer reports spills, the head of Venezuela’s Unitary Federation of Petroleum and Gas Workers estimates that oil spills occur almost daily in some states,” reports the EIA.

The systematic failure of the entire oil & gas industry in Venezuela could require $100 billion or more of investment, and that investment will only happen if exploration & production majors feel confident that they won’t be tossing good money after bad again.

“Facilitating meaningful new investment probably takes more than just an easing of sanctions. U.S. producers (CVX, COP, XOM, or others) would likely need to see a viable path to recouping any outstanding payments or arbitration awards, have confidence in the stability of the (new) government, and be comfortable with the fiscal terms before allocating any large amounts of capital to the country — something that might take time,” wrote Morgan Stanley.

What’s next for oil prices

A big rise in Venezuela’s oil production would add more pressure to global oil prices. The global oil market is already oversupplied with more oil than it needs, following OPEC’s decisions to increase production and regain market share against U.S. shale producers, ostensibly a move designed to slow U.S. production by cutting profits in the Permian Basin.

According to the Dallas Federal Reserve, the break-even costs of the Permian Basin total $61 per barrel. Direct production costs in Saudi Arabia are estimated below $25 per barrel.

The “flood the streets” oil policy employed by OPEC has currently taken per-barrel prices down to about $60 from $115 in 2022.

Morgan Stanley strategist Martijn Rats expects the surplus to worsen before it improves, peaking in 1H26 at ~2.7 mb/d.

Given the drop and the fact that rebooting Venezuela’s production would further bolster the supply, crude oil prices could be capped until there’s more clarity on a timeline for the country.

Related: Venezuela shock may rock oil, stocks this week