Oil’s Power Shift

The markets get a reprieve, and oil continues to strengthen. 

But before you breathe a sigh of relief for the two-week support at which oil markets are finding in the high-$60/bbl range, know that prices may just be heating up. 

The power of Trump’s enemies is growing. His goal at home is to try and destroy crude prices, forever seeking to break the mythical $50 oil threshold and boast of cheap domestic energy; tariffs have been unleashed. 

The eye of President Trump now turns westward across the ocean to the Middle East, one the last geopolitical kingdoms capable of driving oil prices higher. 

But he’s going to have one helluva time reigning in this volatility, but not for reasons you think… because President Trump’s gaze is focused on the wrong oil catalyst.

Oil’s Power Shift

It’s been a spell since the Houthis have made it into the spotlight. 

Given the lightning pace with which the news cycles go today, not many remember the tale of the Sonuion. 

Last summer, the Houthi rebels attacked the Greek-flagged tanker in the Red Sea. In the hold of the Sounion was more than a million barrels of crude oil that threatened to become a catastrophic oil spill after a fire ensued during the attack. Fortunately, luck was on our side and a major spill was averted. 

Soon after, the Houthis attacked two additional oil tankers. Except this time, it was a Greek-flagged tanker and a Saudi-flagged tanker. The Saudi tanker alone held over two million barrels of crude oil. 

Now, with the President’s attention shifting toward the Middle East, the U.S. is stepping up its attacks against the Houthis in a new offensive campaign led with intense airstrikes. 

But the Houthis may not be the primary target soon, because the worst-kept secret in the Middle East is that the rebels are funded directly from Iran. President Trump knows this, and his threats are now being levied against Iran. 

Iran’s strength has undoubtedly grown over years of neglect from the Biden administration. The EIA reported last year that Iran sold more than $144 billion worth of crude during Biden’s first three years, and exports grew to roughly 2 million barrels per day last summer, and averaged 1.5 million barrels per day during the first eight months of 2024. 

Yet, it’s where that crude has been sold that should garner your attention. 

The biggest catalyst for oil in the coming months won’t be President Trump's actions against the Iranian regime. We’ve learned the hard way that even with strict sanctions placed on Iran’s oil industry, there’ll be a healthy black market for the country’s crude — it won’t come as a shock when a dark fleet of tankers transport Iranian crude through oil hubs off the Malaysian peninsula. 

No, the real catalyst will be China. 

Specifically, it’ll come down to whether the Chinese government’s latest special plan to vigorously boost consumption will give oil prices the strength it needs to move higher. 

The aptly named, “Special Action Plan to Boost Consumption” is aimed to lift China’s sluggish economy out of the dead marshes that it has languished in for the last several years. 

So far, China’s economy has sparked back to life, with industrial output growing nearly 6% year-over-year during January and February, with retail sales climbing 4%. 

Yet, there’s another major winner in China’s revitalization plans. You see, it’s not Iranian oil that will fuel the Middle Kingdom’s ambitious plans. For that, we need only look at the record crude output flowing through the TMX pipeline, which connects the Alberta oil sands with the British Columbia coast, where it continues its sojourn to Asian markets. 

The uncertainty surrounding the President’s tariffs will only serve to drive more of that Canadian crude across the Pacific. 

And that, dear reader, opens the door for us to find those perfect investment gems in the Canadian oil patch that have been beaten down by the market. Let me show you a few directly in this investment report I’ve put together for our community: You can check it out for free for yourself right here.

All’s well that ends better.