China’s Oil War

Three months. 

We only have about three months left before people start to catch on to just how cheap oil is. If you thought that oil at $50/bbl wouldn’t have much of an impact and is good for the U.S., just wait until summer rolls around. 

I told you yesterday that we’re due for a crude awakening, and it couldn’t come at a more important time. 

Look, you don’t need to be an economics professor to see what’s going on. Low oil prices will have a direct impact on drilling activity in the lower-48 states. Believe me, nothing will shut down drilling in the U.S. more than cheap crude prices; E&P companies will go into survival mode if oil prices remain this low for long. 

And as we learned recently, oil companies in Texas fields need crude prices between $61-$70 per barrel just to break even. Remember, our oil output grew by a paltry 2% in 2024 after experiencing a huge jump the previous year. 

This is a problem because many projections from groups like the EIA and IEA are relying on the U.S. to carry the brunt of non-OPEC supply growth in 2025. 

That’s simply not going to happen anymore. But there’s more to this story than just lower output growth in the United States. 

We’re slowly losing our most valuable source of oil, and nobody can see it coming.

Just about a year ago, something happened that should’ve made you sit up and take notice; it certainly didn’t get much fanfare at the time in media headlines. 

But for us, it was only a matter of time. 

It’s time to start paying attention to China’s oil imports again. 

The accelerating trade war between China and the U.S. is getting pretty ugly. Although I don’t expect that to change anytime soon, it’s already having a direct impact on U.S. oil exports. 

Last month China slashed the amount of U.S. oil it imported by about 90%. However, WHERE China is turning to for more crude should be the eye-opener. 

Perhaps some of you remember the historic voyage of the Dubai Angel, a rather average Aframax tanker that was anchored off the Port of Vancouver last May. Her hull was filled with more than half a million barrels of Canadian crude oil — the first barrels that flowed west from Alberta’s oil sands through the newly completed Trans Mountain Pipeline Extension. 

Since then, China has been quietly buying up more and more Canadian barrels. Last month, China’s imports of Canadian crude hit a record high of 7.3 million barrels per day. 

Those imports from Chine will continue to grow as time goes on. 

Unlike the U.S., which should be buying crude hand over fist right now to fill our strategic reserve back up, China will take full advantage of cheap oil prices… and make no mistake, cheap oil will drive demand higher. 

Right now, we’re consuming roughly 19.5 million barrels per day of oil in the United States. Our distillate demand is up 7.1% year-over-year; jet fuel demand is up over 9% year-over-year. 

What do you think will happen when our gasoline demand comes roaring back once our summer demand rolls around again? Now ask yourself what will happen when our supply growth dries up just as that demand moves higher?

One thing you can bet on is that we’ll turn to Canada for more barrels. The truth is, we already have! 

Today, we’re importing more Canadian barrels than ever before. 

And we’re not the only ones who see this opportunity for what it is — this is one opportunity you need to check out for yourself right away.