A historic agreement? It will take time for the Venezuelan oil to seep into the US economy

Trump wrote on the social network under his control, Truth, that the agreement will more than double the US oil reserves and “significantly lower fuel prices for all Americans”.

● The victim of the tariff war between Canada and the US – and Trump’s revenge
● How will Erdogan react? Trump gives a boost to the huge project in which Israel is a partner

The announcement comes at a time when Trump is under increasing pressure within the United States to rein in fuel prices, which have soared following the war in Iran and disruptions in the supply of oil through the Strait of Hormuz.

Will the agreement really help lower fuel prices for the American consumer? not quite.

Venezuela does hold the largest proven oil reserves in the world, but so far it has not been able to translate this into actual production. Obsolete infrastructure, lack of investment and equipment, sanctions and mismanagement have meant that its oil output is far from the peaks it reached in the past.

Rehabilitating fields, pipelines and production facilities and increasing output will require investments of tens of billions of dollars from the US, and the whole process will take time.

So, while the deal is expected to change the global energy map in the long run, it’s hard to see how it will add enough oil within months to dramatically lower the price of gasoline in the U.S. before the midterm elections in November.

In addition, a large part of the Venezuelan oil is “heavy and sour” oil, that is, oil with a high density and a relatively high sulfur content, which requires a more complex and expensive refining process. To handle the amount of oil in question in the deal, suitable refining facilities will be required, which limits the deal’s ability to provide a quick solution to fuel prices in the US.

Prof. Yossi Man, an expert on the energy market from the Middle East Department at Bar Ilan University, explains that “the deal will not have an immediate effect on the price of a barrel of oil. The amount of time it will take for companies operating in Venezuela to restore the pipeline infrastructure in the country and increase the output of crude oil in the fields is expected to continue according to optimistic estimates for about five years, that is, to bring the current output from about 1.2 million barrels of oil to about 2.5-3 million”.

Details of the agreement

In a televised speech on Saturday, Venezuela’s interim president Delsey Rodríguez welcomed the agreement and called it “historic”. According to her, the agreement with Washington will be valid for 25 years and will allow Venezuela to redevelop its oil industry, while maintaining its “ownership and sovereignty” over the country’s natural resources.

Rodriguez, who has the support of the US, said the agreement includes the development of 17 strategic oil fields, which have a proven potential of 65 billion barrels.

The initial goal, according to her, is to reach a production of 1.5 million barrels per day. The plan also includes the development of eight new drilling areas that have not yet been developed at all, as part of a significant expansion of the country’s energy sector.

Rodrigues also revealed details about the distribution of the project’s revenue. According to her, from every barrel of oil produced as part of the agreement and transferred to the U.S., $19 will be transferred to the Venezuelan coffers, an arrangement that she claims may be worth up to $209 billion per year to the country.

According to her, the investments under the agreement are expected to total more than 100 billion dollars. “These investments will contribute not only to the rehabilitation and modernization of our industry, but also to the economic growth of our country, the energy security of our hemisphere and greater balance in international markets,” she said.

An American source told the CBS network that the US government will hold 55% control in a joint venture with an “experienced private operator in Venezuela”. According to him, Rodrigues granted the venture a 100-year concession to operate the oil fields.

Trump said that Rubio and Defense Secretary Pete Hegseth reached an agreement with the Venezuelan leadership “through a partnership with the private business sector.” The president did not provide many details about the identity of the companies involved, the terms of the contract or the obligations assumed by the US, but emphasized that the agreement was reached “at no cost to the American taxpayer”.

The signal to Iran

Beyond the profit signaled by both sides of the agreement, there is a signal here for Iran.

One of the weak points of the global energy market is the large concentration of oil supply in the Persian Gulf region and the shipping lanes that pass through it.

Increasing the capacity to extract Venezuelan oil and deliver it directly to US refineries gives Washington additional backup in the event of another crisis in the Middle East.

Prof. Man explains that “the deal has far-reaching consequences” in the long term. “The deal can signal to Iran what the lifting of sanctions and American entry into the Iranian oil industry means. As both countries have suffered in recent decades from a sharp drop in output due to the lack of foreign investment and knowledge to increase local output.

“In addition, Venezuela is an important player in OPEC and actually holds about 24% of the world’s oil reserves. The signing of an agreement could speed up Venezuela’s exit from OPEC and severely damage the power of the organization that now controls 73% of the world’s proven oil reserves after the United Arab Emirates’ departure, and then may control less than 50% of the world’s oil reserves. Also, the deal could hurt Canada, especially against the background of the tariff war. Since the US produces mainly light oil while the latter sells heavy oil to the US. Venezuela, whose oil is characterized as very heavy, may take its place as an important supplier of heavy oil.”

The USA is currently in first place in the world in crude oil production, with an average of 13.6 million barrels per day as of 2025, ahead of Russia and Saudi Arabia.

But in terms of proven oil reserves, it is far from the leader. At the end of 2023, the USA had about 55 billion barrels of proven reserves of crude oil, compared to more than 300 billion in Venezuela, which holds the largest reserves in the world. So the USA is the largest oil producer in the world, but Venezuela is the one sitting on the largest proven oil reserve.

The deal connects, at least on paper, American production capacity, capital and technology with Venezuela’s vast oil reserves.

Not everyone is happy

“We need to be clear: this is not a victory,” wrote Democratic Senator Chris Van Hollen, saying that Trump had put troops at risk “to obtain Venezuelan oil for his billionaire friends.”

Senator Tim Kaine accused Trump of using Maduro’s ouster to “control Venezuela’s oil.”

“Will the prices for Americans go down? Who knows,” Kane wrote, and claimed that the agreement “will line the pockets of the Trump family and the big oil companies.”

As you may recall, the move comes after in January American forces captured the then president of Venezuela Nicolás Maduro and his wife, in a raid on the capital, in order to bring him to New York to stand trial on drug charges. Hours after the operation, Trump said that the US would indefinitely control the sale of Venezuela’s oil. Now it seems that the American president is fulfilling this statement.