The Unexpected Shift in Global Oil Power

Fool me once, shame on you; fool me twice, shame on me. 

Unfortunately, we’ve been fooled over and over so many times that it has become an exercise in futility. We’ve scratched our head so many times when it comes to U.S. energy policies that at this point we’ve embraced the absurdity. 

One of the more blatant head-scratchers has been the use — or absence — of sanctions. 

Back in 2017, the Trump administration levied heavy sanctions against Venezuela’s oil industry. 

Now, the U.S. has a history of sanctioning Venezuela in the past; so it wasn’t particularly new to any of us at the time. The country has a knack for drawing our rebuke, from terrorism to drug trafficking. 

Mind you, these actions aren’t controversial. The Maduro regime has been a blight onto Venezuelans ever since it took control 11 years ago. 

And if you want to hit Maduro’s government hard, you go after the one thing it needs more than anything else: Oil.

The nightmarish stories that have come out of the country during his reign are enough to make anyone shiver. And when you hear firsthand accounts of the food shortages, hyperinflation, and the horrific conditions and oppression Venezuelans have had to endure, it’s not hard to support the change the country desperately needs. 

So when the Biden administration started easing those sanctions last October, it must’ve felt maddening to some people — especially to the seven million emigrants that escaped the dire situation and made it to the United States. 

Oh, don’t worry. Maduro was sure to promise — with a straight face —  that this time there would be free and fair elections. It was a 12-point agreement that included things like updating voter registries and giving candidates access to media outlets. It even made sure that opposing candidates would be able to move safely through the country. 

Imagine our complete lack of shock recently when Venezuela’s top court upheld a ban on a very popular opposition candidate named Maria Corina Machado.

If this were a one time blunder, that would be one thing. Unfortunately, it’s a common sight these days. 

The U.S. government is looking to re-impose sanctions on Iran now that the Red Sea has become a chaotic bastion of conflict. The strength of the Iranian-backed Houthis is a direct consequence of the U.S. not enforcing sanctions on Iran, which has now allowed it to significantly increase its crude exports to places like China. 

Well, you know the saying… Fool me twice, shame on me.

The Shifting of Global Oil Order

Simply put, we’ve enjoyed the spoils of an unprecedented oil boom over the last 16 years. 

When you’re in control of global spare capacity — the ability to extract more barrels to meet rising demand — life is good. In our case, it led to a massive boost to U.S. oil output and the sudden explosion of crude exports after Congress repealed the ban in late 2015. 

Even more important was the fact that the world didn’t have to rely on the whims of OPEC and Russia as more and more U.S. oil flowed into the market. 

The problem is that those boom times are officially behind us. 

Even the EIA agrees, too. 

In its most recent Short-Term Outlook, the EIA forecasts that U.S. oil production will remain flat at around 13.3 million barrels per day and decrease slightly through the middle of 2024, and not exceeding this record until February 2025. 

Right now you’re seeing control in global oil supply shift from the U.S. back to OPEC and Russia, both of which are hungry for higher oil prices. 

What this does more than anything else is place a huge value on the key drillers that are keeping U.S. production at record levels. We’ve already seen a huge consolidation of Permian operators, so much so that just a few companies control the vast amount of production in one of the largest oil regions in the world. 

Earlier this week, I told you that finding those hidden oil stocks is getting harder and harder these days, with fewer stocks than ever before flying under Wall Street’s radar. 

That’s what makes this one so special… Perhaps it’s time you took a look firsthand. 

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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