Trump will use Venezuelan oil to replenish US oil reserves; details of the deal remain unclear | Today’s news
US President Donald Trump said oil from Venezuela would be used to replenish the country’s strategic petroleum reserves (SPR), which he claimed were “virtually depleted” under former President Joe Biden.
In a post on Truth Social, Trump said: “The ‘replenishment’ process will begin very soon and is Venezuela’s gift to the people of the United States.
But it remains unclear how quickly Venezuelan oil could reach US strategic reserves or provide any immediate benefit to US motorists.
The stockpile held about 290 million barrels as of Aug. 21, near a 44-year low. The US has withdrawn supplies under both the Biden and Trump administrations in response to global supply disruptions, including Russia’s invasion of Ukraine and the conflict with Iran.
Trump calls Venezuela deal ‘biggest oil deal ever’
Trump described the deal announced Friday as “THE BIGGEST OIL DEAL IN WORLD HISTORY,” but the White House released few details about the arrangement.
Trump said the deal would give the U.S. a stake in Venezuela’s vast oil reserves and help revive the country’s battered energy industry.
The deal follows the capture of former Venezuelan President Nicolás Maduro by the US in January. Maduro was flown to New York to face federal drug-trafficking charges.
Acting Venezuelan President Delcy Rodríguez hailed the deal as a step toward reviving the country’s oil industry and boosting economic recovery.
“Venezuela retains ownership and sovereignty over its resources,” Rodríguez said in a televised address.
She said her government wants Venezuela to become a major oil producer, gas exporter and petrochemical developer.
What is known about the oil trade?
According to the Rodríguez government, the agreement involves the development of 17 oil fields with a proven potential of around 65 billion barrels.
Venezuela’s government said the deal could attract about $100 billion in investment to the country’s oil industry and generate more than $209 billion in taxes for Caracas.
A US official said a new company formed by the US government and an unnamed private operator had been granted rights to untapped oil fields for 100 years.
The company would reportedly give the U.S. 55% of its actual production through a combination of ownership stake and rights to buy oil at a price.
Some of the oil purchased by the US would go to strategic oil reserves and the military, according to the official.
However, the exact ownership structure, the identity of the private operator and the exact terms of the contract remain unknown. The full text of the agreement has not been made public.
Will the deal lower gas prices in the US?
Probably not anytime soon.
Trump claimed the deal would help lower U.S. gasoline prices. But energy experts say Venezuela’s aging and damaged oil infrastructure would require years of investment before production could rise substantially.
The average U.S. gasoline price was around $4.08 a gallon on Saturday, compared with about $3.20 a year earlier, according to AAA.
Venezuela previously produced more than 2.5 million barrels a day above current production levels, he said.
Venezuela’s oil industry faces major obstacles
Venezuela has some of the world’s largest proven oil reserves, but years of underinvestment, sanctions, deteriorating infrastructure and political instability have weakened its energy industry.
The new deal is expected to attract large-scale investment, but it is unclear who will finance the infrastructure upgrades needed to boost production.
Chevron, the only major U.S. oil company currently producing in Venezuela, declined to comment on Trump’s announcement. Exxon Mobil also declined to comment.
Resistance is growing in Venezuela
The deal has already faced criticism inside Venezuela.
Some Venezuelans see the deal as a departure from decades of government policy that emphasized national control over the country’s oil resources.
Harvard University professor and former Venezuelan planning minister Ricardo Hausmann called the agreement a “shameful deal”, saying Rodríguez lacked the constitutional authority to bind Venezuela to such an agreement.
Rodríguez rejected such criticism, insisting that Venezuela will retain ownership and sovereignty over its natural resources.
She said the government intends to pursue more deals with international energy companies, including Chevron, Repsol and Shell.
US lawmakers are divided over the deal
The deal also divided lawmakers in Washington.
Republican Senator Bernie Moreno praised the deal, calling it historic and saying it would benefit both the US and Venezuela.
Democrats, however, accused Trump of targeting Venezuela’s oil interests with the military operation that resulted in Maduro’s capture.
Sen. Tim Kaine called the arrangement “corruption on an epic scale,” while Sen. Chris Van Hollen accused Trump of endangering U.S. service members in securing Venezuelan oil.
It remains unclear whether Congress will have a formal role in approving the deal.
Major questions remain
Several key details of the Venezuelan oil deal have not yet been released.
Who will finance the estimated investments needed to rebuild Venezuela’s oil infrastructure?
Who is the unnamed private operator involved in the new company?
How exactly is the 55% share of effective output in the US calculated?
How Fast Can Venezuela Increase Oil Production?
How much Venezuelan oil could end up in the US Strategic Petroleum Reserve?
Will US oil majors be willing to invest amid Venezuela’s political uncertainty?
Read also | Venezuela considers leaving OPEC after decades as it deepens ties with US
