US strikes massive oil deal with Venezuela amid Iran conflict

President Trump announced Friday that his administration has secured what he calls “the biggest oil deal in world history” with Venezuela, a sweeping agreement that could reshape American energy strategy amid ongoing geopolitical tensions.

The deal, negotiated by Secretary of State Marco Rubio and Defense Secretary Pete Hegseth with Venezuela’s acting President Delcy Rodriguez, grants the United States a 55% effective output stake in a new private company tasked with developing 17 oil fields containing 65 billion barrels of proven reserves. Under the 100-year agreement, the US also secures rights to purchase oil at cost, a significant advantage in volatile global markets.

Addressing the Energy Crisis

The timing of this announcement reveals Trump’s urgent need to address soaring gas prices at home. With the US averaging $4.09 per gallon on Friday compared to $3.21 a year prior, pressure on the administration has intensified. The six-month war in Iran has strangled Gulf oil supplies flowing through the Strait of Hormuz, which typically handles 20% of world petroleum. Strategic petroleum reserves have plummeted below 300 million barrels, down over 100 million since January 2026.

Rodriguez’s government highlighted the economic potential, claiming the development could attract $100 billion in investment and generate over $209 billion in taxes for Caracas. Secretary Rubio called it “a huge win for both the American and Venezuelan people,” emphasizing billions in private investment and lower gas prices.

But experts urge caution. A meaningful drop in US gas prices shouldn’t be expected anytime soon. Repairing and expanding Venezuela’s dilapidated oil infrastructure requires years of work and billions in capital investment. The country currently produces only 1% of global oil despite sitting on roughly 303 billion barrels, approximately 17% of world reserves.

The Maduro Factor

This agreement emerged directly from Trump’s controversial decision last November to capture then-President Nicolas Maduro and extradite him to face federal narcoterrorism and drug trafficking charges. Maduro remains incarcerated and has pleaded not guilty. Rodriguez assumed power following the military operation, quickly signing legislation that privatized Venezuela’s oil sector and reversed decades of socialist nationalization policies.

The new company created under this agreement will rank as the second-largest holder of proven oil reserves globally, trailing only Saudi Aramco. Oil purchased will stock America’s strategic petroleum reserve and support military operations.

The Investment Uncertainty

Convincing major American oil corporations to return to Venezuela presents substantial challenges. When Trump gathered oil executives at the White House days after Maduro’s ouster, the response was mixed. While executives expressed interest in the opportunity, caution prevailed given their troubled history there. ExxonMobil CEO Darren Woods bluntly described the country as “un-investable” at that moment, citing political uncertainty and severely damaged infrastructure.

Trump argues his administration has stabilized the situation enough to attract capital. He’s also framed the agreement as reclaiming what Venezuela stole when Hugo Chavez nationalized American oil assets decades ago. Yet the question remains whether American companies will risk billions in a country with a complicated recent history.

The oil extracted from these 17 fields won’t solve America’s immediate energy crisis, but it represents a long-term bet that Venezuela’s reserves can eventually help offset global supply constraints.

Source: AP News