Chevron's New Upside Catalyst in Venezuelan Oil Rights

It‘s no secret that the ongoing trade tariff negotiations between the United States and China have sparked significant volatility and uncertainty in many areas of the market and the global economy alike, with the energy sector being one of the most affected. With sanctions and tariffs on oil being sold to China from places like Venezuela, it seemed like most American oil giants were set to be left outside of the game altogether.

That is, until a recent agreement was struck between President Trump and Venezuela’s Nicolas Maduro, which allows one specific player to re-enter the trade route scene with the South American country’s government-led oil and natural gas company, Petróleos de Venezuela, S.A. (PDVSA).

Of course, this new agreement could result in new sources of revenue and profits for the chosen partnership, creating a quickly emerging opportunity for investors to take advantage of today.

This partnership has been awarded to Chevron Corp. (NYSE: CVX), and the stock reacted as any investor would expect, given the company's new financial windfall amid heated competition with China for Venezuelan oil. Following a 4% rally after the announcement, there are still reasons to believe this future has not been fully priced into the company yet.

Price Action Is Just The Beginning

Now that Chevron stock trades at 92% of its 52-week high, investors shouldn’t be surprised to see even more upside momentum and potential in the coming months, especially as the financial and market share effects of this new route grant start to spread into how the market perceives the stock trading.

With this in mind, there are also other factors to consider for Chevron's future and how the market may impact the stock. First and foremost, Wall Street analysts offered their views in an immediate reaction to the news, which was, to say the least, positive.

Roger Read from Wells Fargo was the leading analyst in this reaction. The day the news came out, he reiterated an Overweight rating on Chevron stock while also boosting his valuation targets from $165 per share to $178 in a swift vote of confidence for the company’s future.

Of course, these are only initial takes. Once Chevron really starts showing where its underlying earnings and financials could go once the volume kicks in, investors can expect to see more opinions emerge about Chevron. However, this latest one still calls for a new 52-week high, not to mention an implied rally of 15% from today’s price.

Sentiment Begins to Shift for Chevron Stock

Knowing that Wall Street analysts are turning bullish on Chevron stock, another factor could also help boost further momentum and sentiment toward the company. However, this one typically takes a while longer to be implemented in the market.

Wall Street analysts forecast that Chevron will report earnings per share (EPS) of up to $4.01 for the third quarter of 2025, a significant increase of nearly 100% from the $2.18 reported today. As most investors are already aware, this significant increase in EPS growth could propel the stock, along with it, to a price target surpassing its current levels.

As bullish as this may sound, however, these EPS forecasts have not changed to reflect the new Venezuelan rights deal, meaning that a revision higher still could be in the works. When these new forecasts are inevitably released, it will be too late for investors to act, as the expectations will have already been priced into the stock by then.

Acting before this happens and the opportunity is gone forever, investors can see some of the smart money allocators start to flex some financial muscle ahead of time.

The day after the announcement, the Aberdeen Group decided to increase its stake in Chevron stock by 5.7%, bringing its entire position to a high of $129.8 million as of today.

As a vote of confidence and a high conviction that this new oil rights deal could significantly brighten Chevron’s earnings future, these institutional players are seeking to extract every bit of profit before this view becomes common sense, and they are not the only ones acting from this perspective.

Over the past month, up to 3.1% of Chevron’s short interest declined, a clear sign of bearish capitulation. Even the short sellers realize that the risk-to-reward setup in this stock today greatly favors the buyers and not the sellers, creating yet another angle from which bulls can lean when building their buying thesis in Chevron stock.

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The article "Chevron's New Upside Catalyst in Venezuelan Oil Rights" first appeared on MarketBeat.