U.S. Energy Secretary Chris Wright arrived in Venezuela to oversee the signing of agreements poised to more than double the country's crude production in the coming years. This visit follows a deal where Venezuela granted the U.S. control of about one-fifth of its oil reserves, specifically 17 oil fields holding an estimated 65 billion barrels, under a 100-year lease to the U.S.-backed firm North American Blue Energy Partners (NABEP).
Wright emphasized that the increased oil output from Venezuela, coupled with easing regulations on refiners by the Trump administration, is expected to drive down U.S. gasoline prices. Major oil companies, including Chevron, Eni, ONGC, GeoPark, and GE Vernova, are slated to sign new energy project agreements in Caracas, aiming to attract the significant investment needed to revitalize Venezuela's oil infrastructure, which has suffered from underinvestment and sanctions, causing production to plummet from over 3 million barrels per day in the late 1990s to around 1.1-1.2 million bpd recently.
Separately, President Donald Trump stated that the Venezuelan oil acquired through this deal would be used to replenish the U.S. Strategic Petroleum Reserve (SPR), which is currently at its lowest level since 1982. The SPR had released 130 million of its 172 million authorized barrels during the Iran war. However, concerns have been raised by CNN that the heavy, sludgy nature of Venezuelan oil may not meet the SPR's quality standards and could potentially damage storage facilities.
Wright also noted a significant increase in oil transit through the Strait of Hormuz, with 17 million barrels passing through on Monday, marking the highest level since the U.S.-Israeli war on Iran reduced flows. The deal in Venezuela, while aiming to stabilize global oil markets and counter Russian and Chinese influence, has faced criticism, with some likening it to colonial-era agreements, and concerns from some Venezuelan lawmakers about the undisclosed terms.
