US Strikes Deals to Boost Venezuelan Oil Output Amid Global Price Hikes
The United States is seeking to increase global oil supply through a series of agreements signed in Venezuela, aiming to bring significant amounts of crude back to the market from a nation once a major energy producer but now struggling with deteriorating infrastructure. These deals, finalized recently in Venezuela's presidential palace with U.S. Energy Secretary Chris Wright in attendance, are designed to counter rising oil prices, particularly as the Middle East tightens supply.
Venezuelan oil production, which peaked at around 3.5 million barrels per day in 1997, collapsed to below one million barrels per day for much of 2025, only recently surpassing that mark again. U.S. officials estimate that several hundred thousand barrels per day could be added relatively quickly, potentially returning Venezuela to a production level of approximately two million barrels per day within five years.
The agreements are multifaceted. Chevron is separately investing about $7 billion in three projects, with its CEO outlining plans to more than double its Venezuelan production. The U.S. government itself is also taking a stake in a private operating company, North American Blue Energy Partners, which will convert its holding into future oil output. Italy's Eni and other private American firms are also participating.
However, the return of Venezuelan oil is expected to be gradual. The country has lost significant human and technological capital in the sector, its oil fields have suffered years of neglect and environmental damage, and its civil infrastructure, including Caracas's international airport, remains impaired following a June earthquake. Rebuilding requires substantial investment in equipment, skilled personnel, and years of work.
Furthermore, even if Venezuelan production increases, refining capacity remains a bottleneck. The U.S. has not built a major new refinery since the 1970s, and existing refineries face challenges, including shipping concerns in the Persian Gulf and Ukrainian attacks on Russian facilities. This disparity between crude oil prices and refined product prices, such as diesel, is contributing to price surges at the pump.
Market reactions are already evident, with refining stocks being the strongest performers in the last quarter. Analysts' forecasts for Brent crude prices next year vary, with projections ranging from $75 to $95 per barrel. Some analysts believe the global energy sector is in its best position in two decades, as the energy transition is adding demand rather than replacing existing sources.
For Israeli investors, two key factors are the U.S. 10-year Treasury yield approaching 5%, a level not seen since 2007, and the Federal Reserve's expected interest rate hike on September 16. Any easing of supply, even from Venezuela, could alter these financial dynamics.
