Donald Trump on Friday inked the “biggest oil deal in world history” with Venezuela. The agreement would increase American access to crude, expand supplies and eventually bring down gasoline prices, the US President said.
Trump said the US secured majority control of more than 65 billion barrels of Venezuelan oil reserves through a partnership involving the government and private businesses.
“At my direction, secretary of state Marco Rubio, and secretary of war Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority US control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer,” Trump wrote on Truth Social.
He said the agreement was a major boost for US energy supplies and claimed it would “MORE THAN DOUBLE” American oil reserves and help lower gas prices.
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Venezuela welcomes deal
{{/usCountry}}READ MORE | Trump declares himself 'Acting President of Venezuela' days after Maduro capture
Venezuela welcomes deal
{{/usCountry}}Venezuelan interim President Delcy Rodriguez welcomed the agreement, saying it would bring major revenues to the country's treasury.
Rodriguez said the deal would bring in a large amount of investment to Venezuela, mainly to rebuild and upgrade infrastructure needed to grow its oil industry.
She said the agreement would boost oil production with the help of private companies and involve the development of 17 key oil fields, with proven reserves of around 65 billion barrels.
The projects were expected to attract more than $100 billion in investment and bring in over $209 billion in taxes for Venezuela.
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Rodriguez said the country also wanted to use its huge oil reserves to become a bigger energy producer, create jobs, increase workers' incomes and improve living standards.
“Venezuela is thus ushering in a new era of recovery, growth, production, security, and prosperity for our people,” she said.
US to control 55% output
A White House official said the deal would give the US an effective 55% share of the oil produced by a new private joint venture, which was expected to become the world's second-largest private oil company by reserves.
The official said Rodriguez, with US backing, had given the private company 100-year concessions to operate the oil fields. The venture would be run jointly by the US government and a private operator in Venezuela.
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The US government had secured more than half the value of the new company through an ownership stake and guaranteed purchases of oil at cost, the official said.
“The United States Government has secured more than half the value of this new oil giant, split between equity ownership and guaranteed at-cost off-take,” the official said, as per CNN.
The oil produced will help replenish the US Strategic Petroleum Reserve and meet the energy needs of the American military, according to the official.
Why the Venezuela oil deal matters now
The six-month US' war on Iran has severely disrupted oil flows through the Strait of Hormuz, one of the world's most important energy chokepoints.
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Before the war, roughly 20% of global energy supplies moved through the strait. Fighting and restrictions on shipping sharply reduced traffic, forcing oil producers, traders and governments to look for alternative supplies.
Reuters reported last week that only seven commodity ships crossed the waterway on one day. That makes Venezuela particularly important to Washington. The country has the world's largest proven crude oil reserves.
The current US-Venezuela relationship comes after a political change in Caracas earlier this year.
How Venezuela's president was removed
On January 3, US forces entered Venezuela and captured then-President Nicolas Maduro. Maduro was subsequently taken to the US to face federal charges allegedly due to involvement in a narco-terrorism and cocaine-trafficking conspiracy.
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Maduro's removal created a power vacuum in Caracas. His former vice president, Delcy Rodriguez, was sworn in as interim president on January 5.
Trump initially took a hard line towards Rodriguez. After she became interim president, he warned that she could face severe consequences if she failed to cooperate with Washington.