U.S. President Donald Trump unveiled on Friday a significant agreement between his administration and Venezuela, potentially granting the U.S. access to abundant untapped oil reservoirs in the South American nation at favorable terms.
Trump took to social media to announce the groundbreaking deal, revealing that the negotiation was spearheaded by U.S. Secretary of State Marco Rubio, U.S. Secretary of War Pete Hegseth, and Venezuela’s interim President Delcy Rodríguez.
According to a statement from Rodríguez’s government, the agreement entails the development of 17 fields holding an estimated 65 billion barrels of oil. The deal is expected to attract $100 billion in U.S. investment into Venezuela’s oil sector and generate over $209 billion in tax revenues for Caracas.
Rodríguez expressed optimism about the deal’s impact on Venezuela’s economic revival in a post on Telegram. The arrangement allows for the formation of a new private company, in partnership with an undisclosed operator in Venezuela, to exploit the oil reserves, as per a U.S. official familiar with the deal details.
The U.S. will own a 55% stake in the new private company, granting it an ownership interest and the right to purchase oil at production cost. This move positions the company as the second-largest holder of proven reserves globally, following Saudi Aramco.
The announcement of this deal follows the U.S. military’s operation under Trump’s orders, aimed at apprehending then-President Nicolás Maduro of Venezuela, who faced charges related to narcoterrorism and drug trafficking.
With rising gas prices in the U.S. amid the ongoing conflict in Iran and dwindling petroleum reserves, Trump is under pressure to address the situation. The U.S. has already tapped into its strategic petroleum reserves, which have decreased to below 300 million barrels.
Furthermore, the tension in the Gulf, resulting from the U.S.-Israel conflict with Iran, has disrupted the flow of oil through the Strait of Hormuz, a critical global trade route. Gas prices in the U.S. have surged to an average of $4.09 per gallon, up from $3.21 per gallon a year earlier.
The potential drop in gas prices as a result of the Venezuela deal may not be immediate. Experts caution that revitalizing Venezuela’s oil production will be a gradual process, necessitating extensive infrastructure repairs and substantial investments over several years.
Trump’s push for American oil companies to re-enter Venezuela post-Maduro’s removal has met with mixed reactions from industry leaders. While some executives expressed interest, others remain cautious due to the country’s political instability and deteriorated infrastructure.
Despite skepticism, Trump maintains that his administration has stabilized Venezuela, arguing that the nation’s oil was “stolen” when assets were nationalized by former President Hugo Chavez. Rodríguez’s decision to open up Venezuela’s oil sector for privatization marks a significant shift from the country’s socialist stance of the past two decades.
Senator Rubio lauded the agreement, highlighting the influx of private investments into Venezuela and the potential for reduced gas prices in the U.S. The purchased oil from the new company is intended for the U.S. strategic petroleum reserve and military purposes.
Venezuela boasts vast oil reserves, estimated at 303 billion barrels, representing around 17% of the global supply. While the reserves are well-known, the country’s oil production currently accounts for only 1% of the world total due to infrastructure challenges.