How will Trump's oil deal with Venezuela work?

Venezuela will let the United States use its huge oil stores in a 25‑year deal. (Reuters: Leonardo Fernandez Viloria)

US President Donald Trump says his government has made "the biggest oil deal in history", giving the US use of Venezuela's huge oil stores.

Venezuela's Acting President, Delcy Rodríguez, says the deal will help the country recover, and that it still owns its resources.

The South American country has the world's biggest proven oil stores, but makes far less oil than it could because of years of low investment, poor management and sanctions.

Here's what we know about the deal.

Announced on social media

Mr Trump announced the deal on Truth Social on Friday night, local time.

Here's some of that post:

"The United States of America has just entered into an Agreement with the Country of Venezuela on, THE BIGGEST OIL DEAL IN WORLD HISTORY!

"At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority US control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer.

"This Historic Transaction MORE THAN DOUBLES American Oil Reserves, greatly increases our Oil Supply, and will substantially lower Gas Prices for all Americans, long into the future, while helping to continue to set Venezuela on a course toward Tremendous Success and Great Prosperity."

Venezuela's leader praises deal

Ms Rodríguez spoke about the deal in a televised national address on Saturday night, local time.

"This 25-year bilateral project envisages the development of 17 strategic oilfields with a production target of more than 1.5 million barrels per day," she said.

"That figure relates solely to the bilateral agreement between Venezuela and the United States."

Delcy Rodríguez says the deal with the US will revive her country. (AP: Pavel Golovkin)

Ms Rodríguez said the agreement could bring about $US209 billion ($291 billion) in revenue for Venezuela, based on a benchmark oil price of $65 per barrel, though she noted oil prices can change.

She said about $US19 from each barrel made and sold under the deal would go straight to Venezuela.

She said the "historic" deal would help bring back the country's economy and raise government income, stressing it would keep Venezuela's control over its natural resources,

"One thing must be absolutely clear: Venezuela retains ownership and sovereignty over its resources."

Ms Rodríguez was named the interim leader of Venezuela after the US military captured her predecessor, Nicolás Maduro, in a middle-of-the-night raid in January, and brought him to New York to face federal drug trafficking charges.

Ms Rodríguez had been vice-president to Mr Maduro before his capture.

What are the terms?

The US government and an unnamed private operator in Venezuela formed a new company that was given the rights to untapped oil fields for 100 years, the Associated Press reports.

The deal gives the US 55 per cent effective output of the new private company, including an ownership stake and rights to buy oil at cost.

American purchases of the oil will go towards the US strategic oil reserves along with the military, according to a US official who was not authorised to discuss the matter publicly and spoke to the Associated Press on the condition of anonymity.

The company would be the second-largest corporate holder of proven reserves after Saudi Aramco, according to the official.

Will it cut fuel prices in the US?

Probably not any time soon.

Experts have repeatedly warned that Venezuela's dilapidated oil infrastructure will take years and billions of dollars to repair.

They say a substantial boost in production is not expected to happen quickly.

"[The deal could be] helpful in the long run, but it's not going to do anything to change the price of gasoline at the retail station for Labor Day weekend," said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University.

Neither side made clear who would pay for infrastructure investments and at what cost.

The average price of petrol in the US stood about $US4.08 a gallon on Saturday, according to AAA.

The average price was $US3.20 at the same time last year.

Kevin Book, managing director at ClearView Energy Partners, said the oil industry was awaiting clarity on the deal's details.

Venezuela has room to increase its oil production, he said — in the past it produced more than 2.5 million barrels a day above current levels — but investments of this scale do not happen quickly.

"It's going to take time — many years — to deploy that much capital and produce the kind of incremental results that history suggests possible," Mr Book said.

Venezuela has the world's largest proven oil reserves. (Reuters: Carlos Garcia Rawlins)

What questions remain?

Many important details remain unclear, including who will cover necessary investments, the identity of the private operator and how America's stake in the company breaks down.

The US will get 55 per cent of the company's effective output, but it was not clear what portion of that comes from an ownership stake and how much comes from the right to buy oil at cost.

It also is unclear how the industry will react.

Persuading big American oil companies to return to the region could prove a challenge given the political uncertainty and damaged infrastructure.

Chevron, the only US oil company actively producing in Venezuela, declined to comment.

Separately from Mr Trump's announcement, Chevron already had been in talks to expand investment in the country.

Exxon Mobil also declined to comment.

David Oxley, chief climate and commodities economist at Capital Economics, said that on the face of it, the deal could double US oil reserves and reduce dependence on crude oil from Canada and Mexico.

He cautioned that there were logistical hurdles though, and said the value of Venezuela's reserves may have been exaggerated under former president Hugo Chávez.

Even with legal and security guarantees, it is not clear that US oil companies "would be eager to invest," he said, noting that "there simply might be more enticing commercial opportunities on offer elsewhere".

How will Venezuelans react?

Some in Venezuela considered it a betrayal of what their government has stated repeatedly for decades: Venezuelan resources are for Venezuela, and leaders would not allow the US government access to those resources.

At a market in eastern Caracas on Saturday, Douglas Borjas said he was upset about the announcement.

"I think they're doing it to cling to power," he said of Venezuela's leaders.

"It's like, 'I'm giving you a vast amount of petroleum as long as you leave me alone here in power'.

"The Venezuelan people deserve better. Venezuela has resources that can be exploited, but for the benefit of the people, not for the benefit of the corrupt elite."

Harvard University professor Ricardo Hausmann, a former Venezuelan planning minister, called it a "shameful deal".

"Venezuelans will not respect this illegitimate deal and no major US oil company will take it seriously because they know it will not last," Hausmann said on social media.

He said Ms Rodríguez had "no legitimacy or constitutional power to commit Venezuela to any such deal".

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