US and Venezuela strike oil deal

The United States and the Venezuelan governments have confirmed that they have reached an agreement for the US to control around a fifth of Venezuela’s oil reserves.

According to various media reports backed by statements attributed to top US and Venezuelan government officials, the US will have access to around 65 billion barrels of Venezuelan oil. It has been described as the US having “a direct stake in more than a dozen oilfields.”

In typical triumphalist tones, the US President Donald Trump wrote on his Truth Social social media site that “The United States of America has just entered into an Agreement with the Country of Venezuela.” In capital letters, he called it “THE BIGGEST OIL DEAL IN WORLD HISTORY!”

US Secretary of State Marco Rubio has been reported as calling the deal “a huge win for both the American and Venezuelan people,” although details are still sketchy.

Venezuela’s interim President, Delcy Rodríguez, is said to have hailed the deal, estimated to potentially earn her country over US$200 billion, and expressed her “deep gratitude” to President Trump. She is reported as having said it would spur “our country’s economic growth, the energy security of our hemisphere, and the greater balance of international markets.”

Venezuela has the world’s largest proven crude oil reserves with an estimated 303bn barrels, compared with Saudi Arabia’s 268bn and Iran’s 208bn.

DOWNSTREAM IMPACT

President Trump has said that the deal with Venezuela will substantially lower gas prices for all Americans. It comes at a time when concerns have been growing over America’s dwindling oil reserve stock, said to be at its lowest level in around 40 years. That has been attributed in part to the US’s ongoing conflict with Iran, the blockage of the Strait of Hormuz, and other oil industry factors.

Some oil industry experts have been sounding an alarm about what they regard as the precarious situation of the US oil reserves, especially as the winter season approaches.

It has also been pointed out that domestic shortages in America would not only increase national demand and trigger a price increase at home. Such a scenario, it has been explained, could also have a significant downstream cost impact on those countries which buy their oil supplies from the US.

In that context, the Venezuela arrangement is seen as a sigh of relief not just for the US.

However, critics are questioning the nature and circumstances surrounding the Venezuela/US deal, particularly in relation to recent and ongoing diplomatic developments between the two countries.

The US seized the former Venezuelan leader, Nicolas Maduro, and shipped him to the US in a daring raid in Caracas in January this year. The former Venezuelan strongman is presently imprisoned in the US where he is on trial on a series of drug-trafficking-related charges. The current Venezuelan leader, Delcy Rodriguez - who was Mr Maduro’s deputy - had condemned his abduction by the US.

The Trump administration had also subsequently imposed a blockade on international oil trading with Venezuela and seized several tankers loaded with Venezuelan oil said to be violating the blockade. The situation surrounding that confiscated oil, said to be valued at around $13 billion, remains unclear.