Announcing the "historic" oil deal that his administration reached with Caracas on Aug. 31, U.S. President Donald Trump lauded the agreement as a major step toward strengthening U.S. energy security, an especially politically salient achievement given Washington’s unpopular war in Iran, which has pushed gasoline prices to around $4 a gallon.
Venezuela’s interim President Delcy Rodriguez, meanwhile, framed the agreement’s provision of U.S. capital and technology as pivotal to reviving the country’s decrepit oil sector, whose production has dwindled by 2.5 million barrels of oil a day from its historical levels. While Trump presented the agreement as a major economic and geopolitical victory that would “more than double U.S. oil reserves,” Rodriguez downplayed concerns that it represented another violation of the country’s sovereignty following Washington’s Jan. 3 removal of deposed President Nicolas Maduro, instead emphasizing its potential to generate state revenue for social and economic recovery.
The deal’s murky legal and operational details have allowed Rodriguez and Trump to reinforce their divergent narratives, cushioning frictions within their respective circles of power and support bases while maintaining their bilateral strategic convergence.
Yet, both are pursuing their immediate political and economic objectives through an agreement that prioritizes economic opening and energy integration over institutional and democratic reform. While this may deliver short-term economic and strategic benefits to both governments, it risks entrenching Venezuela’s existing power structures while leaving unresolved the institutional weaknesses that have long undermined investor confidence and sustainable development.
Under the terms so far publicly announced, the U.S. would obtain access to roughly one-fifth of Venezuela’s oil reserves through an arrangement under which North American Blue Energy Partners (NABEP) would receive 100-year leases for 17 oil fields holding 65 billion barrels of reserves.
The U.S. government would control 55% of NABEP’s output, with a 35% ownership stake and the right to purchase 20% of oil production at cost. The Trump administration says the arrangement could mobilize around $100 billion in private investment and eventually generate more than $200 billion in Venezuelan tax revenues.
The deal would reportedly also give the U.S. veto power over the composition of NABEP’s board, while requiring a majority of its members to be American citizens. The resulting entity would become the second-largest corporate holder of proven oil reserves after Saudi Aramco. Yet, unlike Saudi Arabia, the U.S. has no national oil company, leaving the precise operation of this public-private partnership unclear.
That the Trump administration is eager to make Venezuela’s energy sector economically functional and strategically useful by relying on financial engineering to absorb investor risks, rather than by helping address the institutional and political conditions that have made the sector "uninvestable," is telling. Washington has repeatedly shown a willingness to employ legally and politically dubious manoeuvres, including cooperating with the very government it had previously deemed illegitimate, in pursuit of its energy and geopolitical interests.
The deal acts as an extension of Washington’s efforts to contest what it considers foreign malign influence, including Chinese, Russian and Iranian access to strategic resources and assets in the Western Hemisphere, through the so-called "Donroe Doctrine." Securing control over Venezuela’s oil sector not only constrains Beijing’s access to a major source of discounted oil but also strengthens Washington’s energy position amid the ongoing and politically costly war in Iran, making energy-security gains particularly valuable ahead of the U.S. midterm elections in November 2026.
The deal drew criticism from both Chavismo hard-liners and opposition forces, with the former condemning Rodriguez’s perceived abandonment of Chavismo’s historical resource nationalism and the latter criticizing Washington’s failure to condition an agreement with an unelected interim government whose democratic legitimacy remains contested on commitments to political reform.
Yet, concerns over the deal’s legality and political viability were quickly muted following its ratification by the National Assembly on Sept. 2 and the backing it received from Venezuela’s broader power structures, including the governing PSUV socialist party and the armed forces. Their support underscores Rodriguez’s hold on institutions underpinning the Chavista state, even as she moves away from its traditional ideological and economic orientation.
Whatever the eventual value of the royalties to Caracas, and despite the uncertainty surrounding them, Rodriguez’s narrative of economic recovery through Washington’s exploitation of Venezuela’s strategic resources reveals a calculation that material benefits can translate into social and political legitimacy. It promises to restore oil production and generate revenues for oil-sector reconstruction and public-service recuperation, while neutralizing Venezuela’s potential political fissures over questions of surrendering sovereignty.
In parallel, the agreement reflects Rodriguez’s pragmatic departure from the anti-American foreign policy that characterized the Chavez and Maduro presidencies. It creates a mutually beneficial relationship: Rodriguez gains investment, sanctions relief and political space, while Washington gains an economic stake in her government’s continued viability.
This alignment further insulates Rodriguez from external challenges to her government’s legitimacy and strengthens her control over the state apparatus, while allowing her to offer Washington the economic liberalization it seeks in place of deeper political reform. In turn, the arrangement reinforces many of the very Chavista structures Washington purported to dismantle with Maduro’s removal.
The convergence of Trump’s and Rodríguez’s calculations produces an equation that attempts to manufacture investor confidence without resolving the political conditions that undermine it. U.S. guarantees, preferential access and political bargaining cannot substitute for reliable and independent institutions, predictable regulation and secure contracts.
The arrangement instead risks preserving the institutional status quo underpinning Venezuela’s investment problem by prioritizing oil-sector opening and immediate energy gains over the political reforms needed to make investment durable. This matters precisely as Venezuela’s transition has begun to produce limited institutional reforms: facilitating investment without requiring further political liberalization weakens the incentive to deepen them.
And even the economic payoff remains distant, as restoring Venezuela’s oil production to its former levels is likely to require years of sustained investment. The result is a paradox: the deal may unlock investment in the short term while leaving unresolved the institutional conditions on which a genuinely sustainable investment climate depends.
