On January 5, 2026, the energy sector led the S&P, rising by 2.7%. This increase was due to improved US access to Venezuelan oil and potential redevelopment, not immediate supply disruptions. In 2025, Venezuela produced about 1.1 million barrels per day, making up 1% of global supply. This explains the stability in crude prices, even as equity markets fluctuate.

Refiners and Oilfield Services Companies

Refiners and oilfield services companies saw notable gains. Valero’s stock rose by 9%, with others increasing between 3% and 9%. US actions in Venezuela created unstable oil prices that ended up benefiting energy stocks. Investors are focusing on policy changes and long-term investments, rather than immediate oil supply issues. Refiners such as Valero and Phillips 66 saw increases of 5% to 15% due to their capacity to process heavy sour crude from Venezuela. Companies like Baker Hughes gained from the potential for infrastructure rebuilding. Integrated oil firms, including Chevron, which rose by 5%, benefited from favorable policy access. Possible political changes could allow firms like ConocoPhillips and Exxon to recover their assets. The energy sector includes integrated majors, producers, oilfield services, refiners, and midstream businesses. Investment strategies vary and emphasize geopolitical risks, infrastructure rebuilding, and the impact of stable oil supplies. Key concerns include policy uncertainty, project timelines, oversupply, and broader geopolitical effects. The market indicates this is more about stock performance than an immediate issue with crude oil supply. Crude prices have remained relatively steady, while volatility for refiners like Valero (VLO) surged past 50, significantly higher than the general oil volatility index. This suggests that traders should focus on equity derivatives where the real action is occurring.

US Gulf Coast Refiners and Trading Strategies

The best immediate opportunity lies with US Gulf Coast refiners, designed for the heavy sour crude produced by Venezuela. Before sanctions escalated in 2019, these refiners imported over 500,000 barrels per day of this crude, which they can process profitably. This is why buying short-dated call options on companies like Valero or Phillips 66 is a primary strategy, allowing investors to take advantage of expected margin increases. For a longer-term perspective, the oilfield services sector is worth considering. Venezuela’s output in 2025, approximately 1.1 million barrels per day, is just a fraction of its peak production of over 3 million barrels in the late 1990s. Restoring this capacity will require significant infrastructure investment, making longer-dated call options for companies like SLB and Halliburton appealing for a multi-year capital cycle bet. Since Venezuela’s current output is only about 1% of global supply, we don’t foresee a major shock to crude prices soon. This supports the idea that crude oil prices may remain stable, making strategies like selling strangles or iron condors on WTI futures suitable for collecting premiums. The risk is that geopolitical events could cause sudden price spikes, but for now, the supply and demand picture looks stable. We also need to monitor the crack spread, which indicates refiner profitability. The benchmark 3:2:1 crack spread has recently widened to over $35 per barrel, a level not seen consistently since mid-2025’s volatility. Traders can utilize futures to go long on refined products like gasoline (RBOB) while shorting crude oil (WTI) to take advantage of expanding refiner margins. Create your live VT Markets account and start trading now.

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