The United States has entered into a historic agreement with Venezuela, granting control of the South American nation’s vast oil reserves. President Donald Trump announced the deal on Friday, stating that it would more than double American oil reserves and significantly increase the country’s oil supply.
The agreement, brokered by Secretary of State Marco Rubio and Secretary of War Pete Hegseth, involves a private joint venture that will have majority US control over more than 65 billion barrels of proven oil reserves in Venezuela. This deal comes at a critical time, as the US faces increasing pressure due to high gas prices and the ongoing war with Iran, which has disrupted a significant portion of the world’s oil supply.
The historic oil agreement
The deal, described by Trump as the biggest oil deal in world history was negotiated with the Highly Respected Interim President of Venezuela, Delcy Rodriguez. According to a White House official, the US will have 55% effective output of the new private joint venture, which will become the second-largest private oil company by reserves in the world.
The agreement grants a private company, a joint project of the US government and a Venezuelan operator, 100-year concessions for the oil fields. The US government has secured more than half the value of this new oil giant, split between equity ownership and guaranteed at-cost off-take. This stable supply of at-cost oil in the Western Hemisphere will go toward filling the US strategic petroleum reserve and fulfilling the supply needs of the US military.
Potential impacts on the US and Venezuela
Secretary of State Marco Rubio touted the deal as a huge win for both the US and Venezuela. He stated that the agreement would bring nearly $100 billion in private investment to Venezuela, support thousands of high-paying jobs, and drive the reconstruction of the country’s economy.
For the US, the deal is expected to substantially lower gas prices for all Americans, long into the future. With US emergency reserves at their lowest since the early 1980s, this agreement comes as a much-needed relief. The deal also sets Venezuela on a course toward tremendous success and great prosperity according to President Trump.
The road to the agreement
In January, the US military carried out an operation to capture Venezuela’s President Nicolás Maduro, bringing him and his wife to New York to face criminal charges. Following this operation, President Trump stated that American companies would work to rebuild Venezuela’s oil industry. Venezuelan lawmakers approved a law change, backed by Rodriguez, to make it easier for foreign companies to participate in the country’s oil industry.
Venezuela possesses more proven oil reserves than any other nation on the planet, with an estimated 303 billion barrels of crude oil. However, due to dilapidated infrastructure, the country only produces about 1% of the world’s oil. This agreement aims to tap into these vast reserves and bring them to market, benefiting both the US and Venezuela.
