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President Donald Trump on Friday touted an agreement with Venezuela that he said would lower gas prices by giving the U.S. majority control over 65 billion barrels of oil from the South American country's proven reserves.
The breakthrough comes as disruptions to global energy markets from the Iran war continue to push up prices at the pump, with Americans now paying an average of $4.08 per gallon for regular gasoline, up from $3.20 a year ago, according to AAA.
The agreement with Venezuela will give the U.S. a 55% effective interest in the output of a new private company formed to manage the reserves, a U.S. official familiar with the deal told The Associated Press.
While the U.S. will not immediately gain access to 35.75 billion barrels of oil, the 55% interest applies to the oil ultimately produced by the 17 Venezuelan fields covered by the agreement.
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The agreement also allows the U.S. to purchase Venezuelan oil at cost, a provision that could give American buyers access to cheaper crude once production from the fields increases.
The deal is unlikely to translate into an immediate drop in U.S. gasoline prices, however, because experts have said bringing significantly more Venezuelan crude to market will require years of infrastructure work and billions of dollars in investment, according to the AP.
Rystad Energy, an independent energy research firm, said in July that Venezuelan oil production could jump 17% by 2028, but only if significant advances are made.
According to the firm's report, Venezuela will need "higher drilling activity, extensive workover campaigns, improved infrastructure and significantly greater rig availability."
Since much of Venezuela's crude is heavy and viscous, the country also needs a steady supply of diluents - lighter hydrocarbons blended with the crude to make it thin enough to flow through pipelines and reach refineries and export terminals.
In 2021, S&P Global described Venezuelan oil as having "the viscosity of asphalt."
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The U.S. Energy Information Administration has also previously weighed in on Venezuela's troubled oil industry.
In October 2023, after the Biden administration lifted most U.S. sanctions on Venezuela's oil sector, the agency said "years of underinvestment and mismanagement" would limit growth.
The Trump administration, however, is betting that U.S. involvement and a massive influx of private investment can reverse the decline.
Trump said Friday the new agreement would greatly increase the U.S. oil supply and "substantially lower Gas Prices for all Americans, long into the future."
Secretary of State Marco Rubio similarly said the deal would bring nearly $100 billion in private investment to Venezuela and lower gas prices in the United States.
U.S. oil companies have been cautious about investing in Venezuela, citing the country's deteriorated infrastructure and uncertain business environment.
Days after the Trump administration ousted Nicolás Maduro, Trump met with oil executives to discuss potential investment in Venezuela's energy sector, but several expressed reservations.
ExxonMobil CEO Darren Woods said at the time that he viewed Venezuela as "un-investable."
The Associated Press contributed to this report.
