President Donald Trump’s much-publicised oil deal with Venezuela may eventually increase access to crude and strengthen U.S. energy security, but motorists are unlikely to see cheaper gasoline anytime soon.
Trump has promised that the agreement will “substantially lower” fuel prices for Americans over the long term. However, Venezuela’s oil industry has suffered years of underinvestment, mismanagement and deteriorating infrastructure. Rebuilding production capacity will require substantial capital and, more importantly, time.
The agreement reportedly gives the United States access to oil fields containing about 65 billion barrels of proven reserves. Venezuela has the world’s largest proven crude reserves, estimated at roughly 300 billion barrels, but its current production remains only around 1 million to 1.1 million barrels per day.
The immediate problem is supply, not reserves. Oil sitting underground cannot quickly translate into cheaper petrol at the pump. New investment, repairs to wells and pipelines, restoration of refining and export infrastructure, and the mobilisation of equipment and skilled workers could take months or years.
That reality makes Trump’s promise of lower gasoline prices a long-term proposition rather than an immediate solution to the current energy squeeze.
Middle East war overshadows Venezuela deal
Oil prices rose sharply after the United States attacked an Iranian island in the Strait of Hormuz and Iran said it had retaliated. Shipping through the strategic waterway has also fallen sharply, reflecting growing concerns among operators about attacks on commercial vessels.
The development is significant because the Strait of Hormuz is one of the world’s most important oil-transit routes. Any prolonged disruption could tighten global supplies and push crude prices higher.
The United States is also preparing additional secondary sanctions against Iran, potentially increasing pressure on Iranian oil exports and financial institutions.
In our view, these developments are likely to have a much faster effect on oil prices than the Venezuelan agreement. Venezuela may eventually provide additional barrels, but disrupted Middle Eastern supplies can affect the market almost immediately.
Trump turns to oil refiners
According to report, Trump is also scheduled to meet U.S. oil-refining executives to discuss persistently high gasoline prices and ways to strengthen domestic refining capacity.
The meeting could provide clues about the administration’s strategy. But the president faces a difficult balancing act: increasing crude supplies alone will not automatically produce cheaper gasoline if refining capacity, transportation costs, geopolitical risks and global demand remain elevated.
The Venezuela agreement therefore raises a more fundamental question: who will finance the enormous investment required to restore Venezuela’s oil industry, and how quickly can that investment translate into additional production?
Oil may remain above $80
Analysts continue to expect oil prices to remain above $80 a barrel in 2026, with the conflict involving Iran and disruptions to shipping supporting prices, while weaker Chinese demand limits further gains.
This creates a difficult environment for Trump’s promise of cheaper fuel. Even if Venezuela increases production, its additional supply may initially be absorbed by global demand or offset by disruptions elsewhere.
The more realistic impact of the deal may therefore emerge in 2027 and beyond, rather than in the immediate months ahead.
Global economy faces another inflation risk
Finance ministers and economic policymakers from major economies are meeting against a backdrop of elevated inflation, slower growth, Middle East conflict and rising government borrowing costs.
U.S. Treasury Secretary Scott Bessent is expected to push G20 countries to reconsider their trade relationship with China and encourage Beijing to rely more heavily on domestic consumption rather than exports.
That strategy carries its own risk. Renewed trade tensions could revive tariffs and supply-chain pressures, creating another source of inflation at a time when central banks are already struggling to balance price stability with economic growth.
Markets await jobs and inflation data
Investors are also looking ahead to a busy week of corporate earnings and economic data. Broadcom is expected to report results, while Dell Technologies, Hewlett Packard Enterprise and Ciena are also scheduled to release earnings.
The most important economic indicator will be the U.S. jobs report, followed shortly afterwards by inflation data. Together, those figures will help determine the Federal Reserve’s next interest-rate decision.
With oil and gasoline prices showing renewed upward pressure, energy costs could complicate the inflation picture and make monetary policy more difficult.
AI creates a new financial-system risk
Another concern emerging among global policymakers is the growing cyber risk associated with artificial intelligence.
Financial Stability Board Chair Andrew Bailey has warned that AI could increase the speed, scale and economic impact of cyberattacks, while many countries lack adequate systems to manage the deployment of advanced AI.
The warning extends beyond technology companies. As financial institutions become increasingly digital and interconnected, cyber risk is becoming a broader financial-stability issue.
The bigger picture
Trump’s Venezuela agreement is therefore significant but** should not be mistaken for an immediate solution to high gasoline prices**.
The United States may eventually benefit from greater access to Venezuela’s enormous oil reserves But reserves are not the same as production, and production is not the same as gasoline at the pump.
For now, the market is being driven more by the Iran conflict, Strait of Hormuz shipping risks, sanctions and existing supply constraints than by the prospect of Venezuelan oil coming online.
The political appeal of the Venezuela deal is obvious: it offers Trump a powerful narrative about expanding energy supplies and reducing dependence on hostile producers. The economic reality, however, is considerably slower.
The real test will not be the size of Venezuela’s reserves, but how quickly those reserves can be converted into reliable additional production without creating another geopolitical or financial burden for the United States.
