Roughly nine months following the ouster of Venezuelan leader Nicolás Maduro, President Donald Trump has finalized an agreement granting the United States a major foothold in Venezuela’s oil sector—a nation boasting massive petroleum reserves but severely degraded infrastructure.
During an Aug. 31 appearance in the Oval Office, Trump acknowledged that securing billions of barrels of Venezuelan crude at favorable rates would not translate to an immediate drop in U.S. gas prices, which have remained elevated over the past half-year.
Even so, the president expressed confidence in long-term relief for American consumers, stating, “Ultimately, prices are going to come down. Now, will it happen before the election? I can’t tell you that.”
Energy analysts note that tangible benefits for motorists are a distant prospect, likely requiring years to materialize—well past the upcoming midterm elections. Furthermore, these advantages depend entirely on a multitude of factors, including whether the pact survives congressional scrutiny and outlasts the current presidential administration.
“While it is certainly possible that Venezuela could get back to producing 3 million to 4 million barrels per day, that will happen over years,” explained Severin Borenstein, a professor of business administration and public policy at the University of California-Berkeley. Venezuela hasn’t reached those production levels in about a decade.
“The impact of such a quantity on the world market would be huge if it were delivered today, but it will be far more muted, coming online over many years,” Borenstein added.
Details of the Agreement and Potential Market Impacts
According to the White House, the U.S. will form a joint venture with North American Blue Energy Partners, a firm led by Venezuelan businessman Alejandro Betancourt. The newly created entity secures 100-year rights across 17 Venezuelan oil fields containing an estimated 65 billion barrels in proven reserves.
Under the terms, the U.S. government—specifically through a Pentagon office—acquires a 35% ownership stake in the enterprise alongside a guaranteed right to purchase 20% of the extracted oil at cost. Betancourt’s firm has pledged to finance $100 billion in infrastructure upgrades.
The arrangement drew immediate criticism from Capitol Hill. Senate Armed Services Committee ranking Democrat Jack Reed of Rhode Island voiced strong reservations, stating, “President Trump’s effort to turn the U.S. military into an investor in Venezuelan oil is a blatant abuse of power and taxpayer dollars.”
Patrick De Haan, head of petroleum analysis at GasBuddy, suggested that the Pentagon’s unusual involvement may be designed to mitigate anxieties for private investors worried that a future Venezuelan government might reverse course on foreign partnerships.
De Haan views the pact with Venezuela—which sits atop the world’s largest recoverable oil reserves—as a potential “paradigm shift” for global energy markets in the medium to long term.
“If the U.S. takes control over this quantity of proven oil reserves, it could greatly change how other oil producing companies respond to the markets,” De Haan noted, adding that the agreement could disrupt established business strategies globally as competitors adapt to a massive new player backed by Washington.
The Necessity of Massive, Multi-Year Infrastructure Investments
Industry experts have strongly warned against anticipating swift relief at the pump.
Expecting overnight results is comparable to “hoping that a superhighway opens overnight,” De Haan remarked.
Skip York, a fellow at Rice University’s Center for Energy Studies, pointed out that Venezuela’s petroleum sector requires substantial capital across multiple fronts. Immediate fixes are needed simply to jumpstart production, followed by long-term projects to expand pipelines, storage tanks, shipping terminals, power grids, ports, roads, and communication networks.
Most analysts project that a meaningful expansion in Venezuelan oil output will take anywhere from four to 10 years, provided the promised billions in investment actually materialize.
“The up-front costs associated with infrastructure will be quite large, and there is a lot of uncertainty in the long-term ability for companies to operate there,” said Hugh Daigle, a professor in the petroleum and geosystems engineering department at the University of Texas at Austin.
Is the Energy Sector Prepared to Invest in Venezuela?
While interest from energy companies has ticked upward since Maduro’s removal in January, widespread hesitation remains.
A primary deterrent stems from history: major U.S. firms like ExxonMobil and ConocoPhillips pulled out of Venezuela after former leader Hugo Chávez nationalized the industry in 2007. Chevron stands as the sole major U.S. oil company to maintain a continuous operational presence in the country.
Companies are “very wary given the past behavior of Venezuelan governments,” Borenstein observed. “They also realize that Trump will not be in office that much longer and that the property rights he is claiming for U.S. oil companies might not be that secure after his departure.”
Even so, York noted a psychological shift among firms without prior ties to the region, many of which are now viewing the country as a viable investment destination.
Could Venezuelan Crude Replenish the Strategic Petroleum Reserve?
Established in the wake of the 1973–1974 OPEC oil embargo to shield the U.S. from international supply shocks, the Strategic Petroleum Reserve possesses the capacity to hold over 700 million barrels of crude within underground salt domes.
Following emergency drawdowns by both the Trump and Biden administrations, the reserve dropped to its lowest point since the early 1980s. Although Trump pledged during his 2024 campaign to rapidly refill the stockpile, those efforts stalled as his administration tapped the reserves to counter supply disruptions stemming from the conflict with Iran, which retaliated against U.S. military actions by restricting shipments through the Strait of Hormuz.
During his Aug. 31 address, Trump reaffirmed his objective to replenish the reserve “fairly quickly,” suggesting the Venezuelan accord would facilitate the process. However, experts caution that execution will be complex.
Crude oil is categorized by weight and sulfur content (“sweetness”). Most domestic U.S. production yields “light” and “sweet” oil, whereas Venezuelan output consists of “heavy” and “sour” crude, which features a thick, tar-like consistency.
“Venezuelan heavy crude is attractive to a lot of U.S. refiners, especially along the Gulf Coast,” York explained. “But because of its heavy nature, it isn’t well-suited for storage in the Strategic Petroleum Reserve. It would strain the pumping system.”
Furthermore, heavy Venezuelan crude cannot be commingled with the light, sweet petroleum currently housed in the reserve.
A workable alternative would involve selling Venezuela’s heavy crude on the open market and utilizing the revenue to acquire lighter grades suitable for reserve storage, according to Borenstein.
Regardless of the approach, he concluded, “The supply from these fields is generally years away, and we probably need to take action to refill the reserve before then.”