The inside story on the historic U.S.-Venezuela oil deal and how it will work

What I’m hearing from energy insiders

It was one of the most eye-opening and fascinating business trips in my 30-year career: the opportunity to travel to Venezuela to witness firsthand the signing of oil deals between the government in Caracas and Venezuelan and Western oil companies.

CNBC was one of just a handful of news organizations allowed to travel to Caracas with the U.S. secretary of energy.

The trip was barely 24 hours long and was tightly scheduled. Venezuela is not a country where the American media is just going to wander around. It is one of the poorest countries in the world, and that was obvious the moment we landed. The airport was still shut down due to the effects of a terrible earthquake that hit back in June. More on that in a minute. We were one of the only planes to land at Simón Bolívar International Airport and took a 20-minute bus ride downtown.

You could see the remains of wealth the country and its people once had. Many of the buildings downtown and in the business district appear to have been built in the 1980s or 1990s, when the country had more than its share of oil and energy riches. Venezuela oil production peaked out in 1997 at about 3.5 million barrels per day. Then strongman dictator Hugo Chavez took over and, between him and jailed president Nicolas Maduro, they succeeded in stripping the proud nation of most of that money. Oil production collapsed to under 1 million barrels per day in much of 2025. It’s only recently gone back above 1 million barrels a day. While many Russian and Chinese firms got richer, the Venezuelan people got poorer.

Enter the United States and the agreements it signed last week.

That clears a few things up about what these deals are … and what they are not.

What they are is a variety of deals, not just one. Chevron is making its own deal in Venezuela, expanding production in a nation it’s operated in for over 100 years. That is separate and distinct from the other agreements. Those deals primarily involve the U.S. government taking a stake in a private operating oil company called North American Blue Energy Partners. Better known as NABEP, the company is run by the rather mysterious oil investor Alejandro Betancourt. Betancourt has taken his lumps in the media, as it’s been widely reported that he was investigated for potential financial crimes in Switzerland. That said, our conversations with the U.S. government and others focused on the fact that, despite the investigations, charges were not brought. Whatever your take may be on Betancourt and his past, U.S. and other officials we spoke with added that, unfortunately, in volatile, complicated, and often dangerous countries such as Venezuela, oftentimes the operators you have to deal with are not without some warts. The American government is taking a stake in NABEP and will trade that investment for future oil production. That is really the key point in all this: Will these bold and potentially risky new investments — made with NABEP, Italian energy giant ENI, and private American companies like Aspect Energy — result in meaningful new production growth?

When we spoke with U.S. Secretary of Energy Chris Wright, he was confident that production in Venezuela could quickly scale up by a couple hundred thousand barrels per day. Between that, along with the increased Chevron investment of about $7 billion across three different projects, there is cautious optimism that Venezuela could jump back to 2 million barrels per day of production relatively soon. If it can, the U.S. deals are designed to create a framework where some of the proceeds and tax revenues do flow back to the Venezuelan people, not looted by nefarious overseas actors.

It’s not rocket science to know that the most cynical among us are going to say that the United States is “taking” the oil or that this is some sort of new form of American colonialism. Wrong on both counts. We are making deals with private operators with an eye toward selling more oil.

My take →  If you want to talk about ‘colonialism’ do five minutes of digging on how Russia, China and even Cuba have looted the country for years. Those countries not only took most of the oil for their own benefit, but in some cases have created serious environmental damage in doing so. People who have been to some of those oil fields tell me about ‘pools’ of oil gunking up the landscape

My take #2 →  When we were in the Presidential palace, members of the Venezuelan media were clearly excited to be back. Officials who had been to the country earlier this year told me that some members of the media were openly weeping at returning to the capital. They had been banned, silenced or were simply too afraid to re-enter the building.  That is what we can hopefully help change. It’s not just about oil.

Venezuela doesn’t have the money to invest in and regrow its once-proud energy business.  It will take outside capital, know-how and human energy.  I’d take the U.S., Italy and other western countries over Russia and China any day of the week and twice on Sunday.  But maybe that’s just me.

Anyway, here are photographs I took while in Caracas. Some were done quickly, so apologies that they lack professional quality:

This has been one of the most difficult Power Insiders to write since we launched. The speed of headlines and price action the last few days are head spinning. By the time you read this, the price of oil might be $1, $5 or $10 up or down from right now. That’s how fast the news flow has been this week. But, dear reader, at some point we just have to call it and get the newsletter out.

As I type these words, oil is above $100 here in the United States, slightly higher in the Brent crude global market and even higher in other contracts around the world. Diesel fuel has hit $6 per gallon for the first time here in America (though it’s been higher on an inflation-adjusted basis).

My take → There are all kinds of rumors and market ‘chatter’ flowing around the markets and social media. I won’t repeat them here, but as of this writing it’s unclear what may be true or not. Stay nimble, and stay focused

While oil is flowing through the Strait of Hormuz, three key points:

1) Volumes are still well below pre-war levels,

2) Shipowners tell me some captains are unwilling to go back into the Arabian Gulf due to fears they may get stuck, and 

3) Oil isn’t the real worry: it’s lack of refining capacity

Turning oil into diesel or jet fuel requires a refinery. The U.S. hasn’t built a big refinery since the 1970s. There are large refineries in the Arabian Gulf, but they are suffering due to lack of ships and fears of export risk (point #2 above). Russia is the ‘gas station to the world’ but the country is a global pariah and Ukraine is smart enough to go after Russian refineries to try to cut off its money for war. One recent interview worth rewatching is with TWG Global managing partner and former Biden administration senior energy adviser Amos Hochstein. He was with us just under a month ago and warned that the market was mispricing oil and that the refining issue was the story to watch.

Higher prices have popped oil and gas stocks. Look at these quarter to date returns.  

As good as those are, they pale in comparison next to the refining stocks. You can do your own research on what a ‘crack spread’ is, but let’s just say the wider spreads are very, very good for the refining group. The worst performing refiner is up 47% since July 1st. The best, up 22% more than that.  Wow.  

It’s been a heck of a run, but is it over? Maybe. All these stocks are right at, or even above, their current Wall Street price target. We’re either going to see a round of price target raises or analysts believe these gains are all there is.

From a macro sense, here’s an as-of-now summary of what some on Wall Street are saying about the price of crude. As I said, this could change in days – or hours – based on any new information. I remind you to tune in to CNBC and CNBC.com every day for the very latest on what’s happening, real-time.

Here’s a quick rundown of some Wall Street commentary around crude:

JPMorgan asks if the markets are getting inured to a “forever conflict,” one where Brent crude could average $87 next year. Kaneva – who has become a must-listen to in energy markets – notes that the futures curve is “$6 too high up front and $10 too low at the back.” One thing she notes that may be ‘saving’ energy markets is that global demand is about 5mbd below recent highs, thanks in part to lower use from China.

Barclays is out with a very bullish call on energy, writing “the outlook for the global energy sector is the most attractive it has been for two decades. The energy transition increasingly looks like a process of energy addition rather than substitution, with demand for oil, gas, electricity and renewable power rising simultaneously. Population growth, economic development, electrification, AI and digital infrastructure are driving energy demand higher, while geopolitical fragmentation has increased the value of reliable and secure supply.”

Goldman Sachs with 3 big themes to watch around agriculture and even energy markets heading into the fall. The first is, naturally, Hormuz. With Goldman worried that continued “diesel and fertilizer disruptions may raise input costs across agriculture.” Next up is the Black Sea risk, with Goldman analysts worried that rising Russia-Ukraine fighting will hit grains. The firm notes that this is peak wheat export season, and levels are below normal. The final theme is the weather and the risk of a “Super El Nino” system that could be one of the strongest on records, cutting water levels in the Panama Canal.

UBS sees Brent above $100 as a sort of milestone, not a turning point for global markets. It just raised its Brent crude forecast to $95 at the end of this year and $90 in March of next year.

Not to be outdone, Bank of America also recently raised its Brent crude forecast to $85 this year and $75 next year. It also is one of the rare firms daring to put out a much longer 2028 forecast of around $70 from 2028.

My take → While I love BofA’s moxie, the late, great Boone Pickens told me that trying to forecast oil prices more than a few months out was nearly impossible.  

One other big thing Wall Street is watching is how oil prices are impacting borrowing costs. Bond yields around the world are on the rise. Here in America, our 10 year government note is sniffing a yield of 5%. That’s a level we haven’t had since 2007!  Fedwatch Advisors Ben Emons highlights how the spot-oil-bond-yield correlation has risen to 0.75, higher even than during the Great Financial Crisis.  Emons notes that high oil – and thus higher inflation – will impact central bank thinking. The U.S. Federal Reserve has a big meeting next Wednesday the 16th.  It’s increasingly likely America gets an interest rate hike.

My take → Respectfully to our Federal Reserve, I’m not sure what a slight interest rate hike is going to do to stem the impact of a war-related oil price shock. And boy, are those fall 2024 interest rate cuts looking more and more ill-timed and, frankly, bizarre.

Watch my two big interviews from Venezuela. The first is with Energy Secretary Chris Wright. We discussed the details of the U.S.-Venezuela oil deal, impact on U.S. domestic oil production, volume of oil going through the Strait of Hormuz:

The second, Chevron CEO Mike Wirth, who announced plans to more than double its oil production in Venezuela 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 who has visited both Iran and Venezuela.