A U.S.-Venezuela oil deal has been announced by President Trump and Interim President Delcy Rodríguez. Although the public knows virtually nothing about the details of the agreement, it is clear that the agreement was arrived at in secrecy, with no public debate, and signed under duress. Therefore, it is illegitimate and probably illegal.
That said, it is vital to understand the importance of establishing clear private property rights in Venezuela’s vast oil reserves. The establishment of such private rights would give Venezuela’s vast oil reserves a positive present value. Today, Venezuela’s publicly-owned oil reserves are virtually worthless because depletion rates are so low. At current depletion rates, it would take 380 years to deplete only half of Venezuela’s reserves. It is rather obvious that if you have to wait 380 years to produce and sell a barrel of oil, that barrel is virtually worthless in today’s dollars.
Therefore, at current depletion rates, most of Venezuela’s oil reserves are worthless. I’ve explained this in detail in the Georgetown Journal of International Affairs, “The Political Economy of Venezuela and PDVSA”.
It is important to mention that I am speaking as someone with experience in petroleum economics and as someone who was a member of the UAE’s Financial Advisory Council from 2008 to 2014. In the UAE, I used a simple model that I had developed, plugged in realistic numbers, and concluded that the UAE should be depleting its vast oil reserves at a much more rapid rate than it was.
My advice to the UAE was to take the money and run.
The UAE agreed. For years, it attempted to obtain a dramatic increase in its OPEC quota. But a dramatic increase was never forthcoming. As a result, in May 2026, the UAE took the exit door and left OPEC.
