Venezuela-US Oil Deal Set to Reshape Global Energy Sector

The US and Venezuela have reached a historic agreement on oil production, which could reshape the global energy sector.

The deal, announced August 28, allows the US to partner with a private operator in Venezuela to create a new company that will take control of the country's oil reserves. Secretary of State Marco Rubio, Defence Secretary Pete Hegseth, and Venezuela's acting President Delcy Rodríguez negotiated the agreement.

The new venture will hold 100-year rights to develop 17 strategic fields with proven reserves of 65 billion barrels, backed by an investment commitment of more than $100 billion. The deal gives the US a 55 percent effective output interest, including ownership stake and the right to buy oil at cost.

Analysts are unsure about the numbers projected by the two countries, as much of the acreage is either undeveloped or has decayed under years of underinvestment. Turning paper reserves into flowing barrels will require years of capital-intensive work.

The deal's impact on oil markets is expected to be gradual and long-term, rather than immediate. Incremental Venezuelan output of one to two million barrels a day may not materialize until the late 2020s or early 2030s.