US-Venezuela Oil Deal May Take Years to Lower Gas Prices as Iran Conflict Drives Costs Higher

A new oil deal between the US and Venezuela may take years to meaningfully lower gas prices, according to petroleum analyst Patrick De Haan. The agreement covers 65 billion barrels of proven Venezuelan reserves, but extracting that oil requires significant investment in infrastructure, including wells, drilling rigs, and exploration.

De Haan noted that the arrangement raises legal questions, citing Venezuela's 1999 constitution which states that the country's natural resources are for the sole benefit of Venezuelans. The US deal may be seen as a questionable agreement with a potentially illegitimate regime in Venezuela.

In addition to the Venezuelan deal, renewed hostilities between the US and Iran have sent oil prices surging over 3% on Monday, with Brent crude climbing above $91 a barrel and US benchmark crude rising above $86. The conflict is pushing oil prices higher, making it likely that Americans will face even higher gas prices this Labor Day weekend.

The situation is compounded by fresh problems with the Olympic Pipeline in western Washington and Oregon, which could cause a spike in gas prices. Diesel prices are near an all-time record, affecting every American indirectly through higher prices at the grocery store and beyond.