President Donald Trump recently unveiled what he termed the biggest oil deal in world history, an agreement with Venezuela announced on August 28. The administration claims the partnership will more than double United States oil reserves and eventually lead to substantially lower gas prices for all Americans. Venezuela, which holds the world’s largest proven oil reserves at approximately 303 billion barrels—roughly 17 percent of the global total—is central to this strategy.
The deal grants the United States control over more than 65 billion barrels of Venezuela’s reserves. To facilitate this, the White House is establishing a private joint venture with North American Blue Energy Partners (NABEP). This firm is owned by Alejandro Betancourt, a billionaire businessman and former ally of the late Venezuelan leader Hugo Chavez. The Pentagon’s Office of Strategic Capital will hold a 35 percent stake in NABEP, which the administration promises will feature reputable US auditors, lawyers, and advisors to oversee operations.
Under the terms of the agreement, millions of barrels of new Venezuelan output will be processed through US refineries using American rigs and infrastructure. This initiative is expected to support billions in domestic investment and create thousands of jobs. Furthermore, the United States has secured a guaranteed right to purchase 20 percent of the venture’s output at cost. The project is designed to produce about 200,000 barrels of crude oil per day, a move intended to bolster US production while global markets grapple with the effects of Iran’s blockade of the Strait of Hormuz.
Venezuela’s interim President, Delcy Rodriguez, has expressed support for the deal, noting that it will provide essential funding for the state treasury. The joint venture also simplifies operations for NABEP within a country still subject to US sanctions. This follows a broader trend of increased energy cooperation; in August, US Under Secretary of Energy Kyle Haustveit reported that over 500,000 barrels per day are currently moving from Venezuela to the US, representing roughly 40 percent of the nation’s 1.25 million barrel daily output.
This heightened flow of oil began following the capture of President Nicolas Maduro by US forces in January, after which he was removed from the country. Since then, production has risen slightly, reaching between 1.1 million and 1.2 million barrels per day. Despite these figures, the anticipated relief at the gas pump has not materialized. In fact, US crude prices have trended upward since the deal was announced.
Johannes Rauball, a senior crude oil analyst at Kpler, observed that West Texas Intermediate (WTI) was trading between $83 and $86 per barrel before the agreement. Since the announcement, WTI has climbed past $90, while Brent crude has surpassed $95 per barrel. As of Thursday morning, WTI futures had risen by 61 cents, or 0.7 percent, to $90.83. Analysts attribute this surge primarily to geopolitical risks and supply disruptions in the Middle East.
Experts remain skeptical that the Venezuelan deal will provide short-term price relief. Rauball noted that while the agreement may improve long-term market sentiment, severe physical bottlenecks and aging infrastructure in Venezuela will delay any meaningful increase in production for years. Furthermore, US refineries are already operating at maximum capacity to satisfy both domestic and international demand, leaving little room to process additional crude into gasoline or diesel.
Tracy Shuchart, a senior economist at NinjaTrader, cautioned that the market should not expect a flood of cheap oil. She pointed out that recent production gains in Venezuela were largely driven by Chevron ramping up existing wells after sanctions were eased, rather than the development of new infrastructure. Other industry observers, such as energy analyst Schneider, suggest that major oil companies are unlikely to invest heavily in Venezuela due to high-risk factors and an uncertain demand forecast, especially with the potential for Gulf oil to return to the market.
The global energy landscape remains volatile, particularly due to the closure of the Strait of Hormuz, a critical maritime chokepoint through which over 20 percent of global oil and gas is typically shipped. Since the blockade began in early March, Brent crude prices have spiked from pre-war levels of approximately $66 per barrel to over $100. While officials like Wright argue that increased investment will eventually create downward pressure on prices, the current reality remains defined by constrained refining capacity and high geopolitical tension. 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 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 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 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. The report also notes that “It will take years for this deal to result in a meaningful ramp-up in production due to Venezuela’s severe physical bottlenecks and ageing infrastructure – most notably degraded pipeline gathering systems, insufficient electrical grid support, and a lack of specialised crude upgraders,” he said. The report also notes that “While access to heavier Venezuelan crude supplies offers the specific feedstocks US Gulf Coast refiners require, it will not translate into near-term price relief at the pump given these refining throughput constraints and ongoing operational delays,” he said. The report also notes that senior economist at futures trading platform NinjaTrader, wrote in a post on X on August 29: “Everyone cheering the Venezuela deal thinks a flood of cheap oil is about to hit and pull gas prices down, tracy Shuchart.
