The US is gobbling up Venezuelan oil, but will it lower fuel prices?

When United States President Donald Trump announced “ the biggest oil deal in world history ” with Venezuela on August 28, he claimed it would “more than double” US oil reserves and “substantially lower gas prices for all Americans”.

Venezuela is home to the world’s largest proven oil reserves – an estimated 303 billion barrels, or about 17 percent of the global total, according to the US Energy Information Administration. But the country’s oil is heavy, sour crude and extracting and refining it is costly.

While US Gulf Coast refineries are able to process this type of oil from Venezuela, analysts have warned that, in reality, Washington’s deal with Caracas will not lower crude prices in the US in the near term.

What is in the US-Venezuela oil deal, and will it lower fuel prices in the US – or elsewhere?

Last week, the Trump administration announced a deal that would give the US control of more than 65 billion barrels of Venezuela’s proven oil reserves. That is more than one-fifth of all of Venezuela’s known oil.

To do this, a White House fact sheet has revealed, the US is creating a private joint venture with North American Blue Energy Partners (NABEP), which is owned by billionaire Venezuelan businessman Alejandro Betancourt , an ex-ally of Hugo Chavez, the former socialist president.

NABEP is already the second-largest operator in Venezuela after US oil giant Chevron, which is also expected to expand its oil operations in Venezuela.

The deal will give the Pentagon’s Office of Strategic Capital a 35 percent stake in NABEP, which will “have reputable US auditors, lawyers, and advisors”, the White House said.