Donald Trump reinforced his presence at the centre of global energy supplies as he made a massive declaration regarding Venezuelan oil on Friday (US time). The President announced via Truth Social that the US government had entered a historic agreement with the South American neighbour that could hand control of billions of barrels of oil supply to the United States. The statement comes months after Trump claimed his administration would now “run” Venezuela, “fix the oil infrastructure” and “start making money for the country”.
Venezuela’s acting President Delcy Rodriguez, who took charge after former President Nicolas Maduro was captured by US forces in January, said the deal calls for developing 17 fields with a proven potential of 65 billion barrels of oil. A statement issued by her government emphasized that the agreement would also involve “an investment of more than $100 billion, and more than $209 billion in taxes for the State.”
The development has come to light as the US and Iran are also embroiled in a tussle, as both sides continue to claim authority over the Strait of Hormuz, which generally facilitated the passage of a fifth of the world’s oil and LNG before the West Asia conflict broke out on February 28. Even today, the Republican leader-led White House asserted America’s stance on the issue through an official release titled “President Trump Was Right: America Controls the Strait of Hormuz.”
What Trump said about the Venezuelan oil deal
The POTUS wrote on Truth Social: “The United States of America has just entered into an Agreement with the Country of Venezuela on, THE BIGGEST OIL DEAL IN WORLD HISTORY!”
He also disclosed that the deal was reached after Secretary of State Marco Rubio and Defence Secretary Pete Hegseth held negotiations with Venezuela’s leadership “through a partnership with private business.”
Although further details on the partnership were kept under wraps, Trump stressed that the deal was reached “at no cost to the American Taxpayer.”
The agreement is unlikely to immediately bring down price hikes, as Trump continues to face intensified pressure to control inflation amid the war in Iran, which has already hit the six-month timeline. The average gas price in the US was about $4.09 a gallon on Friday, according to AAA. It was $3.21 at the same time last year.
Earlier this month, the American president declared that high oil and gas prices are worth the cost as the US fends off Iran, while ensuring it doesn’t get a nuclear weapon. At one point, he even blamed two of the biggest oil companies in the US, Chevron and ExxonMobil, for surging oil prices, accusing them of “making too much money” off the situation.
US State Secretary Marco Rubio hailed the oil deal a “huge win for both the American and Venezuelan people.”
“For the Venezuelan people, this deal will bring nearly $100 billion in private investment, support thousands of high-paying jobs, and drive the reconstruction of Venezuela’s economy,” Rubio wrote on social media.
What do we know about the oil deal so far?
Neither side has offered detailed specifics about the unexpected deal. However, in addition to the aforementioned statement, Venezuela’s acting president said in her statement that it would result in a “significant impact on our nation’s revival.”
She added that hundreds of billions of dollars that will be invested in the work empowered by the agreement would contribute to the Venezuelan oil industry’s modernisation and recovery, just as it would boost economic growth, energy security and bring about better balance in international markets.
Although the exact timeline for the deal’s finalisation remains unclear, US Energy Secretary Chris Wright has been discussing plans to visit Venezuela next week as his department works out way to boost oil production by US firms, according to an Axios report.
A US official has since told CBS News that the US government will have 55% control of a joint venture with an “experienced private operator in Venezuela” as part of the deal. Speaking on the condition of anonymity, they also revealed that Rodriguez has given the venture 100-year rights to operate in the oil fields.
According to the Associated Press, the new private company at the centre of the deal would be the second largest corporate holder of proven reserves after Saudi Aramco, the official stated.
Recent events that led to the US-Venezuela oil deal
Trump’s declaration of a “historic” deal between the United States and Venezuela comes nearly nine months after he ordered an operation to capture the South American country’s then-President Nicolas Maduro and his wife, Cilia Flores.
He eventually faced federal narcoterrorism and drug trafficking charges in the US, where he remains jailed now. Maduro has pleaded not guilty.
Hours after Maduro was ousted, Trump said that he would take charge of the country until a “safe, proper and judicious transition” could happen. He further declared that the US would indefinitely control Venezuelan oil’s sale. He has since asked American oil firms to invest at least $100 billion to revive the country’s oil industry, which has plummeted since it peaked in the late 1990s.
Although US companies expressed their support for Trump’s plans, they haven’t been as enthusiastic due to their experience in the country. ExxonMobil’s CEO Darren Woods even said at the time that he saw Venezuela as “uninvestable.”
The country has one of the largest oil reserves in the world, with an estimated 303 billion barrels of crude oil in the ground, making for about 17% of the world’s supply, according to the US Energy Information Administration. However, badly damaged infrastructure has proved to be its bane, resulting in the country’s minimal ability to produce about 1% of the world’s oil, the Associated Press reports.
Delcy Rodriguez, on her part, signed a law opening Venezuela’s oil sector to privatization as part of one of her earliest decisions after taking power following Maduro’s ouster.