Trump and Venezuelan oil: an “agreement” full of loose ends

Donald Trump announced the arrangement with Caracas late on Friday, in typically grand terms. The U.S. president said the deal would give the United States access to a fifth of Venezuela’s proven oil reserves, the largest in the world. Yet the details of what was announced remain largely unclear.

Trump called it the “largest” oil transaction in history. The figures cited in the announcement amount to 65,000 billion of Venezuela’s 300,000 billion barrels of crude underground. The article notes that this does not, despite the White House’s claim, amount to twice the United States’ proven reserves of 46,000 billion barrels. Beneath the language of an “agreement,” it says, lies what looks like the appropriation of oil fields thousands of kilometers south of U.S. jurisdiction.

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Caracas offered a different description. The Venezuelan government spoke of significant U.S. investment to “recover and rebuild” an oil industry weakened by decades of neglect and a lack of investment. It gave the same figure of 65,000 billion barrels, but added details absent from Trump’s announcement: U.S. private operators would invest about $100 billion, or €86.3 billion, while Caracas would receive an additional $209 billion in revenue. The government did not say how or over what period those sums would materialize.

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The attraction for the United States is the character of Venezuela’s crude. Most of it is heavy and sour, a more abundant and generally less valued type of oil than light crude. U.S. refineries need to blend heavy crude with the lighter oil produced domestically, much of it through fracking. American energy companies have largely met that need with imports from Canada, but Canadian crude has become a major bargaining chip in an emerging trade dispute between Washington and Ottawa.

The article also links the renewed value of heavy crude to disruptions affecting Russia’s production and refineries since the invasion of Ukraine, as well as Kuwait’s limited ability to export through the Strait of Hormuz. The Venezuelan supply could secure large volumes for U.S. refineries in the long term, but it will not make gasoline cheaper immediately.

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