Trump's Venezuelan Oil Deal: A Long-Term Gamble with Uncertain Rewards
US President Donald Trump has announced what he calls 'the BIGGEST OIL DEAL IN HISTORY' with Venezuela, which will supposedly increase American oil reserves and lower gasoline prices. The deal grants the US majority control of Venezuela's 65 billion proven oil reserves, estimated to be worth around $5.4 trillion at current WTI prices.
However, Patrick De Haan, an analyst at GasBuddy, cautions that it will take 'billions of investment' to source oil from Venezuela and that the deal won't translate to lower fuel prices anytime soon. He notes that global oil refining capacity is currently constrained, making it difficult for additional oil to be processed.
De Haan also questions the validity of the deal, pointing out that the US can't simply lay claim to a sovereign country's natural resources without proper legal and financial arrangements. The analyst believes it will take years for the deal to have any impact on gas prices, which are currently being driven up by global supply chain disruptions.
Venezuelan interim President Delcy Rodriguez has confirmed that the energy agreement with the US will remain in effect for 25 years, with an initial goal of increasing crude production to over 1.5 million barrels per day. The deal is seen as a major win for Trump ahead of the midterm elections.