The news these days is kind of rough for oil stocks, but Chevron (NYSE:CVX) is making some headway as new reports suggest that potential oil issues may have some workarounds. Chevron is up fractionally in Monday afternoon’s trading as reports note that Venezuelan oil is getting a chance to shine, even as Middle East oil looks even more uncertain.
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The word from Principal Financial Group is making the picture look downright grim. The ongoing Israel-Hamas war, which some now project will be a long, drawn-out affair, is likely to put pressure on Middle East oil supplies. Already restrained by a mutual choice between Saudi Arabia and Russia, the new situation isn’t likely to improve matters. In fact, Principal analysts noted that a rise in oil prices might even prompt a return of rapidly-rising inflation, which may trigger central banks to hike interest rates.
And that’s where Chevron comes in. The Biden Administration reached a deal with Venezuela, allowing some loosening of sanctions on its oil sales in exchange for Venezuela agreeing to stage a presidential election next year that will be both open and monitored by international authorities. Such a deal opens up a new source of oil that has little to do—at least geographically—with the Middle East and may help keep gas prices from spiking and interest rates somewhat stable. Since Chevron has the most exposure to Venezuela of any U.S. oil company, the benefits are clear.
Is Chevron a Buy or Sell Today?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CVX stock based on seven Buys and five Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average CVX price target of $191.33 per share implies 15.56% upside potential.
