Will Trump’s ‘historic’ oil deal with Venezuela lower gas prices?
President Donald Trump says the deal will substantially lower gas prices for Americans, but experts don’t expect an immediate drop.
WASHINGTON —
President Donald Trump is touting a historic oil deal with Venezuela and promising a substantial drop in gas prices for Americans, but experts don’t expect an immediate decline as a result of the agreement.
What’s in the deal?
In a social media post on Friday night, Trump described the agreement as “THE BIGGEST OIL DEAL IN WORLD HISTORY!”
The White House did not immediately release the full text, and details were still emerging overnight Saturday.
Trump said Secretary of State Marco Rubio and Defense Secretary Pete Hegseth, also known as the secretary of war, worked closely with acting Venezuelan President Delcy Rodriguez on the agreement, in partnership with an unnamed private business.
Trump said the U.S. negotiated majority control of more than 65 billion barrels of proven oil reserves in Venezuela “at no cost to the American Taxpayer.”
In a separate statement, Rodriguez said the agreement calls for the development of 17 strategic fields and an investment of more than $100 billion. She said it will have a “significant impact on our nation’s revival” and celebrated strengthening economic ties between Venezuela and the U.S.
It’s a stunning turnaround for the bilateral relationship less than a year after Trump ordered the overnight capture of Venezuela’s former leader, Nicolás Maduro, on narcoterrorism and drug trafficking charges. Maduro has pleaded not guilty and remains jailed in the U.S.
According to one U.S. official familiar with the deal, it gives America 55% effective output of the new joint venture, including an ownership stake and guarantees to buy oil at cost. The official said it will be the second-largest private oil company by reserves in the world.
As the company scales production, the official said the additional supply will go toward meeting U.S. military needs and refilling the U.S. Strategic Petroleum Reserve. The emergency stockpile of crude oil recently hit its lowest level in more than four decades amid the war with Iran.
What does this mean for gas prices?
In his Friday night post, Trump declared that the agreement “MORE THAN DOUBLES American Oil Reserves” and “will substantially lower Gas Prices for all Americans, long into the future.”
The White House did not immediately respond to emailed questions on the president’s expected timeline for lowering gas prices.
Experts are not predicting an immediate drop as a result of the deal, in part because it will likely take years and billions of dollars to build up Venezuela’s infrastructure.
Patrick De Haan, GasBuddy’s head of petroleum analysis, described the agreement as promising but stressed that it will take billions of investment to obtain that oil. He said the 65 billion barrels that the president is referring to is what geologists estimate Venezuela may have.
“But drilling and pumping that oil will take a very long time,” De Haan said. “Changes to fuel prices won’t happen overnight or even in months.”
Oil executives have previously balked at investing in the historically risky region, but the Trump administration has insisted U.S. involvement will bring stability.
Meanwhile, conflicts that have driven oil supply disruptions are still ongoing. The United States and Iran are engaged in economic warfare over the fate of the Strait of Hormuz, a crucial oil shipping route in the Middle East. The war between Russia and Ukraine has strained refining capacity.
“The idea that this will lower domestic US gas prices at any point in the near future is…tenuous, at best,” wrote Gregory Brew, a senior analyst at the geopolitics consulting firm Eurasia Group, on social media.
“Gas prices are currently high because of the US confrontation with Iran, the war in Ukraine, and a relative shortage of global refining capacity. Some oil in Venezuela–the commercial viability of which is largely theoretical–does little to address this,” Brew added.
The national average for a gallon of regular gas remained elevated Saturday morning at $4.08, roughly unchanged compared to last month and up from $3.20 a year ago, according to AAA.
There is political pressure for Trump to address gas prices ahead of this fall’s midterm elections, as affordability remains a major issue for many voters.
