What’s In Trump’s Allegedly Greatest Oil Deal In History, With Venezuela?

The deal is illegal, with no immediate impact. But Canada is warned.

Trump Claims the Greatest Deal in History

Truth Social: BREAKING NEWS: The United States of America has just entered into an Agreement with the Country of Venezuela on, THE BIGGEST OIL DEAL IN WORLD HISTORY! At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority U.S. control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer. This Historic Transaction MORE THAN DOUBLES American Oil Reserves, greatly increases our Oil Supply, and will substantially lower Gas Prices for all Americans, long into the future, while helping to continue to set Venezuela on a course toward Tremendous Success and Great Prosperity. This Transaction will greatly strengthen the already growing relationship between Venezuela and the United States! Thank you for your attention to this groundbreaking matter. MAKE AMERICA GREAT AGAIN! President DONALD J. TRUMP
Aug 28, 2026, 4:47 PM

U.S. to Take Control of Much of Venezuela’s Proven Oil Reserves

The Wall Street Journal reports U.S. to Take Control of Much of Venezuela’s Proven Oil Reserves

Since ousting Maduro in January, Trump has pushed U.S. oil companies to plow money into the country in a bid to shore up oil production. But many have been hesitant to do so.
Friday’s deal would give the U.S. a foothold in some of the most promising oil-and-gas fields. The country says it has some 300 billion barrels of proven reserves, the largest in the world. In comparison, the U.S. has about 46 billion.
Trump also said the agreement would substantially lower gas prices for all Americans. He and his team have been trying to shore up energy security in the Western Hemisphere while the Iran war has locked a big portion of the world’s oil and gas behind the Strait of Hormuz.
The Details
Rodríguez, Venezuela’s interim president, has granted a private company—a joint project of the U.S. government and a private operator in Venezuela—a 100-year lease for the oil fields, a U.S. official said. The entity would be the world’s second-largest corporate holder of proven reserves after Saudi Aramco.
The U.S. government would hold a 55% share, split between equity ownership and oil production. As the company scales production, the oil would help fill the U.S. Strategic Petroleum Reserve, the official added.
The Context
Direct U.S. involvement in foreign oil production is rare. During World War II, the administration of Franklin D. Roosevelt created a state company to get foreign reserves and sought to buy a U.S. company that had concessions in Saudi Arabia. But the effort ultimately failed.
Friday’s deal could help reassure American companies that are on the fence about gambling capital there. Chevron (CVX) is nearing a deal to make a big investment in Venezuela’s oil fields, The Wall Street Journal reported earlier Friday. But many others, including ExxonMobil (XOM) and ConocoPhillips (COP), have been skittish.
Some companies have said they would need security guarantees and an overhaul of the country’s legal and commercial framework to consider diving in. Venezuela’s oil production has been slow to ramp up since Maduro’s ouster. It is pumping about 1.1 million barrels a day, roughly in line with last year’s figures.
The Reaction
News of the talks caused an outcry among some in Venezuela’s opposition who have been pushing for the U.S. to pressure Rodríguez to hold elections. The Trump administration has played a major role in overseeing Venezuela’s oil industry since ousting Maduro and replacing him with Rodríguez.
“An illegitimate interim government with an illegitimate hydrocarbons law has no legitimacy to strike this unconstitutional deal,” Ricardo Hausmann, a Harvard University economist and former government official in Venezuela, wrote on X. “It will be a fiasco for all involved, starting with [Secretary of State Rubio].”
Venezuela’s constitution says the country’s oil deposits belong to the Venezuelan state and cannot be transferred to another owner—a potential legal obstacle to any deal that would give the U.S. government control of reserves.

Practical Realities

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The ad hominem attacks on Hausmann were rampant, centering around his association with Harvard and Axios.

Here’s a better rebuttal from Brett Erickson, Managing Principal, Obsidian Risk Advisors.

Near-Term Risk

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Obvious Risk

“The prospect of one of the world’s wealthiest countries taking the natural resources of an impoverished country like Venezuela will cause immediate political consequences for the Rodriguez government.
“The obvious risk is the people who are already very much struggling will riot and rise up and see this as being a clear raping of their resources, which it is.
“It doesn’t take a rocket scientist to see that this is a very corrupt deal and completely against the will of the Venezuelan people. These are their natural resources.”

Not Hard to Understand

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Who Will Make the Investments?

The Washington Post comments Trump says he has secured a vast U.S. stake in Venezuelan oil industry

President Donald Trump announced Friday night that the United States had secured a long-term stake in a vast share of Venezuela’s oil fields, a potentially costly and legally precarious proposal that aims to nudge reluctant energy companies to drill in the risky region.
Under it, according to federal officials, the U.S. has gained a controlling stake in nearly a quarter of Venezuela’s untapped oil reserves. It makes the U.S. the majority owner of a giant new joint venture oil company that will hold 100-year contracts at the Venezuelan oil fields.
In his post this evening, Trump said the Venezuela deal “will substantially lower Gas Prices for all Americans,” although most experts say that any real increase in Venezuelan oil production is years away.
Trump also claimed the deal would come at no cost to U.S. taxpayers. But deal points reviewed by The Washington Post and interviews with people who were close to negotiations as the deal came together suggest that for the plan to succeed in producing oil in the amounts the administration projects, the U.S. government may ultimately need to invest significant amounts.
A list shared with The Post before the deal was announced noted 17 oil fields in which the U.S. would take a stake. Several of the fields lack any infrastructure or access to transport hubs to treat and move the crude. Those where such infrastructure does exist have fallen victim to years of neglect and theft of machinery.
Pumping oil from the fields could require investments of many billions of dollars and costly security plans to protect oil workers and production facilities in lawless and violent regions. The deal points reviewed by The Post say the U.S. government stake in the newly formed oil company will be split between equity ownership and guarantees that it will purchase oil produced by it at cost to refill the U.S. Strategic Petroleum Reserve.
But it is unclear who would make the tens of billions of dollars in infrastructure investments needed before oil can be pumped from the largely dormant fields. Major oil companies have mostly seen such spending as too risky.
Pentagon officials said they could not comment on any particular deals being weighed at the OSC, but they stressed that the office cannot take any ownership stake in private companies.
“OSC’s role is strictly limited to providing capital assistance in the form of a loan, loan guarantee, or technical assistance (including transaction structuring for developing and financing investments),” said a statement from Pentagon spokesman Sean Parnell.
Trump made Rodríguez “interim” president while pledging that her country eventually will return to democratic, elected governance. “From a legal standpoint in Venezuela, Delcy has no standing,” said a Venezuelan with long participation in the oil industry, who also spoke on the condition of anonymity to provide a candid assessment.
The person said this will leave banks and other institutions typically involved in financing drilling operations asking, “Why are we signing deals with people who have zero legitimacy?”
Under the structure of the deal, according to people familiar with it, oil could be produced using an existing joint venture legal structure in Venezuela through which the U.S. would be granted access to develop the oil fields, but Venezuela would still be guaranteed a cut of all revenue they produce.
The deal could face stiff resistance in Venezuela as well as in the U.S.
Any U.S. government expenditures or loans needed to develop oil fields would probably need congressional approval just as Trump’s GOP allies risk losing control over the legislative branch in the upcoming midterm elections.
Despite claims by the Trump administration that Maduro’s removal would unleash a frenzy of drilling in Venezuela, oil production there has increased little, up only about 200,000 barrels over the past year, with projections for the same increase or less next year.
It remains unclear “whether anybody would want to operate” in a country where electricity is limited and port infrastructure is not capable of handling increased production, among other limits that “are holding back the majors from going into the country right now,” said David Goldwyn, head of the international energy consulting firm Goldwyn Global Strategies.
Even if the deal enables the U.S. to supersede all Venezuelan government jurisdiction over the oil fields, those areas “would have the same risks” that have limited new investment so far to smaller, less risk-averse companies, Goldwyn said.

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An Open Mind

Trump’s deal with Venezuela is illegitimate, but that does not imply it won’t be honored or revised to make it legitimate.

The US had a puppet government in Iran for a long time in the 1950s.

The 1953 Coup in Iran

The 1953 Coup: The CIA and British intelligence (MI6) orchestrated Operation Ajax to oust Iran’s elected Prime Minister, Mohammad Mosaddegh, after he nationalized the country’s oil industry.
The Shah’s Rule: Mohammad Reza Pahlavi returned to absolute power as monarch and a key Cold War ally to the United States.
Duration: The Shah ruled with strong American backing for 26 years (from August 1953 until he was overthrown in February 1979).

A similar scenario may not be likely, but it is possible.

US companies undoubtedly know the risks. Chevron seems more willing to take a chance with Exxon-Mobil less willing.

Canada Is Warned

The Venezuela deal acts as a massive wake-up call highlighting Canada’s extreme export concentration. Historically, roughly 97% of Canadian crude oil exports have gone directly to the United States.

This alleged deal is a huge warning to Canada that Trump would rather steal Venezuelan oil than have a legitimate deal with Canada.

And this is something I warned about long ago.

Canada needs to improve alternate export routes and the most obvious are pipelines to the Canadian West coast to supply China and Japan.

Canada’s existing pipeline system to its West coast is at full capacity.

Trans Mountain Pipeline Expansion (TMX)

Following the 2024 completion of the Trans Mountain Pipeline Expansion (TMX), which tripled Western Canada’s export capacity to the Pacific coast to 890,000 barrels per day, Asian markets immediately integrated Canadian crude into their supply chains.

This shift has accelerated due to escalating U.S.-Canada trade disputes and a desire to diversify away from traditional geopolitical choke points.

China’s Consumption

Top Customer: China has emerged as the largest buyer of Canadian crude oil shipped through the TMX.
Refinery Integration: Major Chinese refiners, such as Rongsheng, actively process heavy Canadian oil sands crude at large-scale coastal facilities.
Volume Spikes: Tanker data shows China taking nearly two-thirds of the oil moving off Canada’s west coast, a massive increase from negligible volumes before 2024.

Japan’s Consumption and Investment

Energy Security: Japan imports roughly 95% of its crude oil from the Middle East. Disruptions in the Strait of Hormuz have forced Tokyo to aggressively seek safer, alternative sources like Canada.
Technical Adapting: While Japanese refineries were traditionally designed for lighter Middle Eastern crude, Japanese firms are buying Canadian cargoes and adapting.
Active Negotiations: The Japanese government and organizations like the Japan Organization for Metals and Energy Security (JOGMEC) are in talks with Alberta to invest in refinery upgrades (such as coker units) and secure long-term oil supply pacts.

While the current economic friction feels uniquely tied to Trump’s personal style, Canada cannot assume this policy shifts when his term ends in two years.

Vice President JD Vance, or a subsequent nationalist-populist Republican successor, would likely institutionalize this “America First” energy doctrine.

Upgrading West Coast pipeline capacity to achieve absolute energy independence from the U.S. market is no longer a long-term option for Ottawa. it is an immediate requirement for national sovereignty.

The irony and stupidity of this setup is the US should be working with Canada to combat China’s dominance in manufacturing and rare earth elements.

Instead, Trump has pushed Canada closer to China.

My Warning to Canada

On March 22, 2025, I asked Should the US Import Oil from Venezuela Instead of Canada?