The Pentagon's Office of Strategic Capital is leading a U.S. partnership with a private oil producer in Venezuela, a deal President Trump announced Friday. The office, which reports to Deputy Defense Secretary Stephen A. Feinberg, was founded in 2022 under Defense Secretary Lloyd J. Austin III to boost defense industrial production. Its loan authority has grown from $1 billion to $100 billion.

The agreement involves North American Blue Energy Partners, founded by Alejandro Betancourt López. The U.S. government would receive penny warrants for up to a 35% stake in the parent company plus preferential oil access, reportedly at zero cost. Defense Secretary Pete Hegseth and Secretary of State Marco Rubio negotiated with the Venezuelan government. The warrants, similar to those Treasury received from airlines during the pandemic, could be converted into shares for as little as 1 cent.

Mr. Feinberg, a billionaire businessman and political appointee, approves the office's deals. Under the Trump administration, the office typically seeks warrants alongside loan repayment. Mr. Betancourt said the deal would unleash Venezuela's potential to the benefit of both nations. The partnership could help the company raise private capital and shield it from legal or political risks in Venezuela.