President Donald Trump is touting the deal to acquire a vast stake in Venezuela’s oil reserves as a game-changing breakthrough that will drive down prices at the pump and begin to refill depleted emergency government oil inventories in the United States.
But many in the oil industry are warning not to expect quick relief — that extracting this oil will be a dangerous, laborious and costly endeavor, and it’s not clear how it’s all going to come together.
Among the little the White House has shared publicly about the deal is that it gives the U.S. government a 35 percent stake in a Venezuelan oil production company, which is gaining contracts to operate 17 oil fields with estimated reserves of about 65 billion barrels. The U.S. will maintain rights to purchase the extracted oil.
Even if the opaque, controversial agreement announced Friday night triggers a surge of investment in oil production, industry insiders and analysts say substantial amounts of new crude would not flow out of Venezuela for years.
That much was evident in the shrug with which oil traders responded to the deal. Prices didn’t come down at all over the weekend. They went up.
Prices at the pump
When Trump announced what he branded “THE BIGGEST OIL DEAL IN WORLD HISTORY,” he said it would “substantially lower Gas Prices for all Americans.” But will it?
Not for at least a couple of years, if ever, many in the industry say. Certainly not before voters, who are deeply frustrated by the price of gas, cast their ballots in the fall midterm elections. And probably not before Trump leaves office.
That’s because the tens of billions of barrels of reserves that U.S. is seeking to gain access to through the novel deal are very difficult to get out to the ground.
“Everyone cheering the Venezuela deal thinks a flood of cheap oil is about to hit and pull gas prices down. It isn’t,” Tracy Shuchart, senior economist at futures trading platform NinjaTrader, posted on X.
“The barrels that could actually move a U.S. pump price are 5 to 15 years out,” she wrote.
Venezuelan interim President Delcy Rodriguez said the project is signed for a term of 25 years and that the goal is to reach more than 1.5 million barrels per day.
A target of 1.5 million is not a huge amount in the context of a global oil industry that produces roughly 105 million barrels per day.
“The United States grew its oil production by 1.5 million barrels per day in just the last couple of years,” said Mark Finley, a fellow in energy and global oil at Rice University’s Baker Institute for Public Policy. “The Venezuelans are talking about it taking many times longer there. These barrels are likely to be slow in coming. We are not talking about a fast ramp-up.”
Trump made no mention of gas prices when reporters asked about the deal in the Oval Office on Monday. Instead he stressed more broadly what a great deal he felt he had made for the United States.
“Here’s a deal that nobody’s ever heard of, a deal like that,” Trump said. “Maybe the greatest deal ever made. Who knows?”
The Strategic Petroleum Reserve
A White House fact sheet says the deal guarantees the U.S. can purchase at least 20 percent of all oil produced by its Venezuelan partner “at production cost” to refill the Strategic Petroleum Reserve.
The reserve is a crucial inventory the U.S. can use in times like the wars in Iran and Ukraine to help stabilize prices when there is a shortage of crude globally. It is equipped to hold as much as 714 million barrels of crude in massive salt caves in Texas and Louisiana.
That stockpile has been greatly depleted by the administrations of both President Joe Biden and Trump. Its inventory has fallen to just 287 million barrels, creating economic and national security concerns.
To help start replenishing the reserve quickly, the agreement offers a discount to the U.S. on some of the oil its Venezuelan partner is currently producing. “The ‘topping out’ process will begin very shortly, and is a Gift from Venezuela to the People of the United States,” Trump said over the weekend.
But the Venezuelan company’s total production right now is only 200,000 barrels per day. Even with the planned ramp-up, it would take years to replenish the SPR with Venezuelan oil under the terms of the deal.
The crude that comes out of Venezuela is also much heavier than what is currently stored in the SPR and would require U.S. refineries to process it.
Any major expenditures needed to refill the reserve could require congressional approval — and run into opposition from Democrats who oppose the Venezuela deal.
“It seems a little premature to talk about filling the Strategic Petroleum Reserve when we are still drawing it down,” said Kevin Book, managing director at ClearView Energy Partners, a research firm. Some 3 million barrels were drained from the reserve in just the past week, bringing it to its lowest level since 1982.
Risk to taxpayers
Secretary of State Marco Rubio, a key architect of the deal, told a Senate panel in January that “there is no world in which the United States is subsidizing investment in Venezuelan oil.” The Trump administration is maintaining that the new arrangement will not cost U.S. taxpayers anything.
But getting the oil out of the ground and to the market could leave U.S. taxpayers exposed to quite a bit of risk, experts say.
This is one of the points of the deal about which federal officials have been especially cagey. They shared that the U.S. would be claiming its stake through an office of the Pentagon that has been working with private companies to “accelerate and scale private investment in critical supply chain technologies.”
But how that office would engage is unclear. The expectation in the industry is that it would step up with loan guarantees or some other major backing to major oil firms and other investors that have been sitting on the sidelines.
“I don’t know the answer to where the money is coming from,” Book said. “The role the Pentagon is or is not playing remains a mystery.”
The Venezuelan firm involved is North American Blue Energy Partners, NABEP, the second largest private oil company in the country, controlled by wealthy businessman Alejandro Betancourt.
Betancourt said in a statement Monday that the deal will “unleash” Venezuela’s potential to produce oil “to the great benefit of both Venezuelans and Americans.”
The statement noted that the company aims to ramp up production to 1 million barrels per day and that the project will require nearly $100 billion in investment. The company is aiming to achieve that goal within five years, but expects to produce “meaningful” increases sooner, within one to two years, according to a person familiar with the deal who spoke on the condition of anonymity to discuss undisclosed details.
NABEP spending in Venezuela to date totals just $1 billion, according to the company’s statement.
Betancourt, 46, built a fortune beginning in his early 30s, when his company won contracts to build power plants for the government of Hugo Chávez, the founder of Venezuela’s socialist state. Over the past decade, as he continued to expand his wealth with businesses around the world and as a major player in Venezuela’s oil industry, he has faced investigations in multiple countries into alleged money laundering, including in the United States.
The Department of Justice included Betancourt as an unnamed co-conspirator in two criminal cases, in 2018 and 2024, The Post reported. Swiss authorities in May asked the U.S. to arrest Betancourt, in connection to a Zurich money laundering investigation against him. Instead of arresting him, the U.S. granted Betancourt a multi-entry visa for meetings with officials — and is now signing a long-term agreement with his company.
Betancourt has not been charged and his lawyer has denied any wrongdoing by his client.
Although it will not be explicitly mentioned in the contract with the U.S., NABEP anticipates that it will gain access to U.S. government loans or credit, according to the person familiar with the deal.
Investment could also come from other much larger oil companies, though they have generally been reluctant to expand operations in Venezuela and may need further incentives.
“There are huge economic challenges that have to be overcome to make this real,” said an oil industry official with deep connections to Venezuela who spoke on the condition of anonymity to offer a candid assessment.
“They need to induce an Exxon or some other big oil company to say we want to join in developing these fields,” the person said. “Most of these fields have been there and nobody had been saying they want to run over there to develop them. It is economically not feasible to do it.”
“Right now this feels like pie in the sky,” the person said.
Durability of the agreement
As oil industry officials are trying to interpret the deal and the extent to which it could spur more production in Venezuela, even they are confused by the mixed massages.
The White House said the agreement involves 100-year contracts. Rodriguez said the contracts would last only 25 years.
That discrepancy alone could make a big difference to an oil company gauging whether to invest.
“It matters to the companies spending the money,” said Dan Mark, global projects partner at Baker Botts, a law firm that represents oil companies. “The amount they spend [on oil field infrastructure] will be a function of how much time they have on the contract.”
There are other unanswered questions. Could firms count on the deal enduring after Trump leaves office, especially as some Democrats are already signaling they plan to work to unwind it? What happens when Rodriguez, who is only serving on a temporary basis, is no longer in charge?
“These companies are in the business of taking risk, and these are risks they will try to identify and quantify,” Mark said. “There is the physical security risk they have to consider, as well as the risk that they won’t be able to continue doing what they hope to be doing. It is no different an analysis than these major oil companies need to make in other foreign countries where they operate.”
Venezuelans are also still trying to comprehend what exactly their leadership has agreed to and what it means for oil production in their country.
Francisco Monaldi, director of the Latin American Energy Program at Rice University, said the Venezuelan government appeared to be arguing the deal is “nothing completely out of the ordinary,” comparing it to other production-sharing agreements with private oil operators in the country.
“We still have to figure out if this is a more standard orthodox kind of agreement with some attractive features that the government conceded to the U.S. and to U.S. companies,” Monaldi said, “or if this is something really out of the ordinary in which the U.S. government will have a role we have not seen in a long while in the history of the sector, if ever.”
Good for Venezuela?
The agreement has a much bigger impact on everyday Venezuelans than Americans. Many of their leaders are unnerved by it, despite the administration’s framing that it is a boon for Venezuela.
“I have to stress, it was also a very good deal for Venezuela,” Trump told reporters Monday. “You have the most powerful, the richest companies in the world going into Venezuela, where before it was just — it was this unbelievable value that was sitting dormant.”
But in Venezuela, questions are being raised about who ultimately benefits beyond a regime many voters there see as illegitimate and Big Oil firms that are close with the White House.
The agreement consolidates the power of Rodriguez. The administration is now more invested in keeping her on as a partner, despite its promise that her interim regime would be replaced with democratically elected leaders. Critics say the U.S. taking control of a vast amount of that country’s natural resources in a deal with private oil firms has echoes of colonialism.
“Let’s be clear: this isn’t a win,” wrote Sen. Chris Van Hollen (D-Maryland) on X. “This is proof Trump put our service members at risk to get Venezuelan oil for his billionaire buddies.”
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