Venezuela oil deal gives U.S. a 55% production stake as gas prices top $4
Global energy markets have been absorbing an Iran war premium for months, with average U.S. regular gasoline at $4.08 per gallon, up from $3.20 a year ago according to AAA. Against that backdrop, the Trump administration on…
Key takeaways
- The Trump administration on Friday unveiled an agreement giving the United States a 55% effective interest in output from a new private company managing 65 billion barrels of Venezuelan proven reserves.
- The deal covers 17 Venezuelan fields and lets the U.S. purchase oil from them at cost, with Secretary of State Marco Rubio estimating nearly $100 billion in expected private investment.
- U.S. average regular gasoline stood at $4.08 per gallon, up from $3.20 a year earlier according to AAA, amid an Iran war premium in energy markets.
- Rystad Energy said in July that Venezuelan production could rise 17% by 2028, but only with higher drilling, extensive workovers, better infrastructure, and greater rig availability.
- U.S. oil companies have been cautious about Venezuela, with ExxonMobil CEO Darren Woods calling the country "un-investable."
Global energy markets have been absorbing an Iran war premium for months, with average U.S. regular gasoline at $4.08 per gallon, up from $3.20 a year ago according to AAA. Against that backdrop, the Trump administration on Friday unveiled terms of an agreement giving the United States a 55% effective interest in output from a new private company formed to manage 65 billion barrels of Venezuelan proven reserves. President Trump said the deal would "substantially lower Gas Prices for all Americans, long into the future."
The deal's commercial terms
The arrangement covers 17 Venezuelan fields and allows the U.S. to purchase oil from them at cost, a provision that could give American buyers access to cheaper crude once production increases. Secretary of State Marco Rubio put the expected private investment at nearly $100 billion. The 55% stake applies to oil ultimately produced from those fields. The U.S. does not immediately gain access to 35.75 billion barrels of the total.
The capex cycle behind the headline
The read-through for near-term supply is constrained. Rystad Energy said in July that Venezuelan production could jump 17% by 2028, but only with higher drilling activity, extensive workover campaigns, improved infrastructure, and significantly greater rig availability. Venezuela's crude is extremely heavy; S&P Global described it in 2021 as having "the viscosity of asphalt," and the country needs a steady supply of diluents to move oil through pipelines to export terminals. Trump separately predicted gas prices could fall to $2.50 per gallon if the Strait of Hormuz fully opens, a signal that the administration is tracking the Iran war as a parallel driver of the pump-price problem.
U.S. oil companies have been cautious about Venezuela, citing deteriorated infrastructure and an uncertain business environment. Days after the Trump administration ousted Nicolás Maduro, Trump met with oil executives to discuss investment, but several expressed reservations. ExxonMobil CEO Darren Woods said he viewed Venezuela as "un-investable." The Energy Information Administration, writing in October 2023 after the Biden administration lifted most U.S. sanctions on Venezuela's oil sector, warned that "years of underinvestment and mismanagement" would limit growth. On balance, Rystad's conditional 17% production ceiling by 2028 is the figure that anchors the cross-border supply case.
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