Trump Bets on Expensive Fuel in Venezuela

Donald Trump promised cheaper crude oil and fuel after announcing what he called a historic oil agreement with Venezuela. Yet oil and gasoline prices are rising because of new tensions in the Persian Gulf, and the deal faces two less visible problems.

The first is time. Venezuela cannot quickly increase global oil supplies because its production infrastructure needs years of investment. US sanctions and prolonged neglect have left much of the country’s oil infrastructure in poor condition. Much of Venezuela’s crude is also exceptionally dense, making it more expensive to process.

The agreement would give the United States access to about one-fifth of Venezuela’s oil reserves, according to the article. It covers the development of 17 oil fields containing roughly 65 billion barrels of reserves, representing more than 20% of the South American country’s known reserves.

The second problem concerns economics. Making Venezuelan production worthwhile requires oil prices to remain high over time, which means expensive fuel rather than the quick price reductions Trump predicted. The agreement therefore promises access to substantial reserves, but not an immediate surge in supply or a straightforward fall in prices.