On August 28, United States President Donald Trump announced what he described as the biggest oil deal in world history, involving a major expansion of energy cooperation with Venezuela. The administration claimed the agreement would more than double US oil reserves and lead to substantially lower gas prices for all Americans. This move comes as the US seeks to bolster domestic energy security amid global supply disruptions, specifically the ongoing blockade of the Strait of Hormuz by Iran.
Venezuela possesses the world’s largest proven oil reserves, estimated at 303 billion barrels, which accounts for approximately 17 percent of the global total according to the US Energy Information Administration. The newly announced deal grants the United States control over more than 65 billion barrels of these reserves. To facilitate this, the White House is establishing a private joint venture with North American Blue Energy Partners (NABEP), a firm owned by billionaire Venezuelan businessman Alejandro Betancourt, a former ally of the late Hugo Chavez.
The Pentagon’s Office of Strategic Capital will hold a 35 percent stake in the venture. The White House stated that the partnership will include reputable US auditors, lawyers, and advisors to oversee operations. Under the terms, millions of barrels of new Venezuelan output will be processed through US refineries using American infrastructure, a strategy intended to support domestic investment and job creation. Furthermore, the US has secured the right to purchase 20 percent of the production at cost.
The joint venture is expected to produce roughly 200,000 barrels of crude oil per day. This initiative arrives as the US continues to import significant quantities of Venezuelan oil, following the capture of President Nicolas Maduro by US forces in January. By August, US Under Secretary of Energy Kyle Haustveit reported that over 500,000 barrels per day—about 40 percent of Venezuela’s 1.25 million barrel daily output—were already flowing to the United States.
Despite the administration’s optimistic projections, market data indicates that US crude prices have actually climbed since the deal was unveiled. Johannes Rauball, a senior analyst at Kpler, noted that West Texas Intermediate (WTI) crude was trading between $83 and $86 per barrel before the agreement. Prices have since surged, with WTI moving past $90 and Brent crude exceeding $95 per barrel, largely driven by geopolitical risks in the Middle East. On Thursday morning, WTI futures rose another 0.7 percent to $90.83.
Analysts remain skeptical that the deal will provide near-term relief at the pump. Rauball explained that Venezuela’s severe physical bottlenecks and aging infrastructure will likely delay any meaningful production ramp-up for years. Furthermore, US refineries are currently operating at near-maximum capacity to meet both domestic and international demand, leaving little room to process additional crude into gasoline or diesel.
Tracy Shuchart, a senior economist at NinjaTrader, noted that the recent increase in Venezuelan production—now roughly 1.2 million barrels per day—is largely the result of Chevron ramping up existing wells rather than the development of new infrastructure. Experts also point out that the global oil market is currently grappling with the aftermath of Iran’s closure of the Strait of Hormuz, a critical transit point for over 20 percent of global oil and gas shipments. With Brent crude prices having risen from $66 per barrel before the conflict to over $100 following the blockade, the market remains highly volatile.
While officials like Wright have suggested that increased investment will eventually exert downward pressure on prices, industry observers are cautious. The high-price environment has already suppressed demand, and the significant risks associated with operating in Venezuela may deter other major oil companies from committing the massive capital required to overhaul the country’s energy sector. Consequently, while the deal represents a significant strategic shift, it is unlikely to serve as a quick fix for American fuel costs. The report also notes that sour crude and extracting and refining it is costly, but the country’s oil is heavy. The report also notes that which is also expected to add much-needed funds to the state’s treasury, venezuela’s interim President Delcy Rodriguez welcomed the oil deal. The report also notes that while his vice president, Rodriguez, was left as interim leader, maduro was flown to the US to stand trial on guns-and-drugs charges. The report also notes that she has since facilitated US access to Venezuela’s oil industry and the US has lifted personal sanctions against her. The report also notes that a senior crude oil analyst at Kpler, the global trade intelligence agency, noted that before Washington’s agreement with Caracas, US West Texas Intermediate (WTI) crude was trading about $83-$86 per barrel, while Brent crude – the global benchmark for oil prices – was hovering between $85-$88 per barrel, johannes Rauball. The report also notes that “Since then, prices have moved even higher – with WTI pushing past $90 and Brent topping $95 per barrel – driven up primarily by heightened geopolitical risks and acute Middle East supply disruptions around the Strait of Hormuz,” he told. The report also notes that on Thursday morning (06:00 GMT), WTI crude futures had climbed by 61 cents, or 0.7 percent, to $90.83. The report also notes that why aren’t US crude or gas prices coming down.