How does the US-Venezuela oil trade work and what happens next?

What we heard from energy stakeholders

It was one of the most eye-opening and fascinating business trips of my 30-year career. It was an opportunity to visit Venezuela to witness firsthand the signing of an oil deal between the Caracas and Venezuelan governments and Western oil companies.

CNBC was one of the few news organizations allowed to visit Caracas with the U.S. Secretary of Energy.

The trip was only 24 hours long and carefully scheduled. Venezuela is not a country where the American media just hangs out. It is one of the poorest countries in the world and that was evident the moment we landed. The airport remained closed due to the severe earthquake that occurred in June. More details later. We were one of the only planes to land at Simón Bolivar International Airport and took a 20 minute bus ride to downtown.

You can see the remains of the wealth that the country and its people once had. Many of the buildings in the downtown and business districts were probably built in the 1980s or 1990s, when the country was rich in oil and energy. Venezuela’s crude oil production peaked in 1997 at about 3.5 million barrels per day. Then strongman dictator Hugo Chávez took over, and his partnership with imprisoned President Nicolas Maduro succeeded in stripping the proud people of most of their funds. Oil production fell to less than 1 million barrels per day for most of 2025. It only recently exceeded 1 million barrels per day. While many Russian and Chinese companies became richer, Venezuelans became even poorer.

Let me explain the agreement we signed last week with the United States.

This reveals a few things about what these deals are and what they aren’t.

It’s not just one deal, it’s many different deals. Chevron has signed a unique deal in Venezuela to expand production in the country where it has operated for more than 100 years. This is separate from other contracts. These transactions primarily involve the U.S. government acquiring a stake in a privately operated oil company called North American Blue Energy Partners. The company, better known as NABEP, is run by the rather mysterious oil investor Alejandro Betancourt. The media has been picking on Betancourt, as it is widely reported that he is under investigation in Switzerland for possible financial crimes. That being said, our conversations with the U.S. government and others focused on the fact that despite the investigation, no charges were filed. Regardless of one’s view of Betancourt and his past, U.S. and other officials we spoke with added that unfortunately in a volatile, complex, and often dangerous country like Venezuela, the operators often have to deal with are not without their problems. The US government has acquired a stake in NABEP and plans to exchange that investment for future oil production. That’s really the point of all this. Will these bold and potentially risky new investments made with NABEP, Italian energy giant ENI, and American private companies like Aspect Energy result in meaningful new production growth?

When we spoke with U.S. Energy Secretary Chris Wright, he was confident that Venezuela’s production could rapidly expand by hundreds of thousands of barrels a day. Meanwhile, there is also cautious optimism that, combined with an increase in investment by Chevron of about $7 billion across three different projects, Venezuela could return to production levels of 2 million barrels per day relatively soon. If possible, the U.S. agreement is designed to create a framework in which some of the revenue and tax revenue can be repatriated to the Venezuelan people, rather than being plundered by nefarious actors abroad.

It’s not rocket science to know that the most cynical among us will say that the United States is “taking” our oil or that this is some kind of new form of American colonialism. You’re wrong on both counts. We are contracting with private operators to sell more oil.

My take → If you want to talk about “colonialism,” take five minutes to dig into how Russia, China, and even Cuba have plundered this country over the years. These countries have not only extracted much of the oil for their own profit, but in some cases have caused severe environmental damage in doing so. People who have visited some of those oil fields tell me about “pools” of oil that stain the landscape.

My view #2 → When we were in the presidential palace, Venezuelan media members were clearly excited to be back. Officials who visited the country earlier this year told me that some members of the media were openly crying over their return to the capital. They were barred, silenced, or simply too scared to re-enter the building. I hope that we can help change. It’s not just about oil.

Venezuela doesn’t have the money to invest and regrow its once-proud energy business. This will require external capital, know-how and human energy. I would take on Russia and China, and the United States, Italy, and other Western countries any day of the week, twice on Sunday. But maybe that’s just me.

Anyway, here are some photos I took in Caracas. Some were completed quickly so I apologize for the lack of professional quality.

This has been one of the most difficult things to write since the launch of Power Insider. The headlines and price movements over the past few days have been dizzying. By the time you read this, oil prices may be $1, $5, or even $10 higher or lower than they are today. That’s how fast the news flowed this week. But, dear reader, at some point we have to call and publish a newsletter.

As I type these words, oil prices are above $100 here in the United States, slightly higher in the world market for Brent crude oil, and even higher in other contracts around the world. For the first time here in the United States, diesel fuel has reached $6 a gallon (though the inflation-adjusted price is even higher).

My view → There are all kinds of rumors and market “chatter” circulating in the market and social media. I won’t repeat it here, but as of this writing, it’s unclear what the truth is. Stay alert and stay focused

There are three important points when oil passes through the Strait of Hormuz:

1) Trading volume remains significantly below pre-war levels;

2) Ship owners say some captains are reluctant to return to the Arabian Gulf for fear of being stranded.

3) The real worry isn’t oil: it’s a lack of refining capacity.

Refineries are needed to turn oil into diesel or jet fuel. The United States hasn’t built a large-scale refinery since the 1970s. There are large refineries in the Arabian Gulf, but they are struggling due to a lack of vessels and concerns about export risks (point #2 above). Although Russia is the “gas station to the world,” the country is a global pariah, and Ukraine is wisely pursuing Russian refineries to reduce its war funding. One recent interview worth revisiting is with Amos Hochstein, managing partner of TWG Global and former senior energy advisor in the Biden administration. He met with us a little less than a month ago to warn us that the market was mispricing oil and that the refining issue was a story to watch.

Oil and gas stocks plummeted as prices rose. Look at these quarter-to-date profits.

They are good, but pale in comparison to refined strains. You can research for yourself what a “crack spread” is, but let’s just say that wide spreads are a very, very good thing for refining groups. The worst-performing refineries have risen 47% since July 1. The best one had a 22% increase over that. oh.

It was a tough job, but I think it’s over now. perhaps. All of these stocks are right at or above Wall Street’s current price targets. Either price targets continue to rise, or analysts believe this is all there is to it.

From a macro perspective, here’s a summary of what some on Wall Street are saying about oil prices right now. As I said earlier, things can change in a matter of days or hours based on new information. Remember to check CNBC and CNBC.com daily to get real-time updates on what’s happening.

Below is a quick summary of Wall Street’s comments on oil.

JPMorgan asked whether the market was getting used to a “perpetual conflict” that could see Brent oil prices average $87 next year. Mr. Kaneba, who has become a must-hear in the energy market, points out that the futures curve is “$6 too high in the front and $10 too low in the back.” One possible “savings” in the energy market, she points out, is that global demand is about 5 million days below recent highs, due in part to lower usage from China.

Barclays is very bullish on energy, saying: “The outlook for the global energy sector is the most attractive it has been in 20 years. “Population growth, economic development, electrification, AI and digital infrastructure are increasing energy demand, while geopolitical fragmentation is increasing the value of reliable and secure supply.”

Goldman Sachs has three major themes to watch in the fall regarding agriculture and, by extension, the energy market. The first one is, of course, Holmes. Goldman is concerned that “continued diesel and fertilizer disruption could raise input costs across agriculture.” Next up is the Black Sea risk, with Goldman analysts worried that escalating fighting between Russia and Ukraine could hurt grains. The company notes that this is peak wheat export season and levels are below normal. The final theme is weather and the risk of a “Super El Niño” system, which could be one of the strongest on record to lower water levels in the Panama Canal.

UBS sees Brent crossing $100 as a milestone, not a turning point for global markets. The company just raised its forecast for Brent crude oil to $95 by the end of this year and to $90 by March next year.

Not to be outdone, Bank of America recently raised its forecast for Brent crude oil to $85 this year and $75 next year. The company is also one of the rare companies that dares to issue fairly long-term forecasts of around $70 starting in 2028.

My Take → I love BofA’s excuse, but the late, great Boone Pickens said it’s nearly impossible to predict oil prices more than a few months out.

Another big thing Wall Street is watching is how oil prices affect borrowing costs. Bond yields are rising around the world. Here in the US, the yield on 10-year government notes is sniffing at 5%. This is the highest level since 2007. Ben Emmons of FedWatch Advisors highlights that the correlation between spot crude oil bond yields has risen to 0.75, higher than during the Great Financial Crisis. Emmons points out that higher oil prices, and therefore higher inflation rates, will affect central bank thinking. The US Federal Reserve will hold a major meeting next Wednesday, the 16th. It is increasingly likely that the US will raise interest rates.

My Take → With all due respect to the Federal Reserve, I’m not sure what a small rate hike would do to stem the effects of a war-related oil price shock. And isn’t a fall 2024 rate cut looking increasingly ill-timed and frankly odd?

Check out my two big interviews from Venezuela. The first is Energy Secretary Chris Wright. We discussed the details of the U.S.-Venezuela oil trade, the impact on U.S. domestic oil production, and the amount of oil passing through the Strait of Hormuz.

The second was Chevron CEO Mike Wirth, who announced plans to more than double Venezuela’s oil production over the next five years.

This week’s Inside Line interview is with my friend and former CNBC colleague Michelle Caruso-Cabrera. She is one of the few Western journalists to have visited both Iran and Venezuela.