President Donald Trump announced Friday that the United States struck a deal with Venezuela to gain majority control of more than 65 billion barrels of oil reserves, as the war with Iran disrupts the global crude trade.
In an evening social media post, Trump described the agreement as "THE BIGGEST OIL DEAL IN WORLD HISTORY," saying it comes "at no cost to" U.S. taxpayers. According to Trump, the deal more than doubles the U.S. oil reserve. Department of Energy data released earlier this month showed oil volumes in the Strategic Petroleum Reserve had hit lows not seen since the 1980s.
The agreement follows the U.S. attack on Venezuela in January, during which Nicolás Maduro, the country's then-president, and his wife, Cilia Flores, were captured. Trump said U.S. officials coordinated with government leaders in Venezuela and utilized a "partnership" with unnamed private businesses to secure the deal. "This Transaction will greatly strengthen the already growing relationship between Venezuela and the United States," Trump wrote.
Energy prices and market context
- The announcement comes as consumers face rising energy prices ahead of the midterm elections, which will determine whether Trump's Republican party retains full control in Washington.
- Trump said the Venezuela deal should bring down prices at the pump. The average U.S. gas price reached around $4.09 per gallon on Friday, up 27% year over year, according to AAA.
- West Texas Intermediate crude prices fell 4% this week, the first losing week in three, though prices have jumped more than 24% since the U.S. war with Iran began.
- The war with Iran has hampered transit through the Strait of Hormuz, a key passageway for crude. Only a handful of ships have recently crossed the strait daily, down from around 100 a year ago, according to the International Monetary Fund's PortWatch tracker.