Biden's Biggest Oil Blunder of 2023

"The enemy of my enemy is my friend."

At one point or another, I know you’ve come across this ancient proverb. 

And although it wasn't officially recorded until the 18th and 19th centuries, the roots of this phrase comes from the Latin phrase Amicus meus, inimicus inimici mei.

However, that’s not the origin of this traditional saying.

For that, we’d have to go all the way back to the 4th century BCE, when it was authored by an Indian philosopher named Chanakya in a treatise on statecraft and written in Sanskrit.

The concept is similar, in which a king with a neighboring enemy disputing control of a territory would find a natural ally in that enemy's neighbor.

Today, we’re witnessing a twisted version of this idea play out in the global oil markets. 

Whether or not anyone told him, President Biden has decided to use a bastardized approach to it, opting to shout out to the world this week that the friend of his enemy is his friend… who is still his enemy.

Sounds confusing? 

Don’t worry, so are his latest energy policies. 

BRICS vs. the West

Over the last decade, global alliances within the oil industry have shifted. 

Russia has all but joined OPEC to curtail crude supply in response to a hostile Biden administration that has laid the blame for high oil prices on everything from OPEC to our own domestic oil companies. 

This unholy alliance has been a boon for Vladimir Putin, who recently hinted that not only will the OPEC+ output cuts extend into 2024 but may become even deeper. 

It’s a win-win situation for them, isn’t it? 

Higher oil prices have proven that the G7 price caps on Russian oil were toothless. Russian oil export revenues surged to $18.8 billion in September, which is the highest it's been since July 2022. 

Meanwhile, the House of Saud can sit back in smug satisfaction as President Biden pulls one desperate move after another to subdue prices. 

Last year, Biden drained half of our Strategic Petroleum Reserve to find short-term relief. 

When that failed and oil prices started rising again, the U.S. agreed to ease sanctions on Iran back in August. Bloomberg reported that U.S. officials have said that enforcement on Iranian oil sales relaxed, which helped push Iran’s oil exports to around 1.5 million barrels per day — the highest level since 2018. 

We know that hasn’t worked out so well today. 

The problem is that President Biden is backed up against a wall right now. The election cycle is going to reach a crescendo in 2024, and high energy prices are a death knell for a sitting president. 

So here we are, watching the Biden administration turn our enemy’s friend into a friend. 

In this case, it’s Venezuela. 

I guess enough time has passed that the average American has forgotten all about President Nicolás Maduro and his regime in South America… or that the U.S. declared his victory illegitimate in 2018 and significantly tightened its oil sanctions on the country a year later. 

Soon, the U.S. is going to announce a deal that will pull back some of those sanctions on Venezuela’s oil industry.

For anyone who hasn’t forgotten the dismal state of Venezuela’s oil industry and the rampant corruption at its state-run PDVSA, it’s clear this is another desperate Hail Mary to boost global supply and hopefully put pressure on oil prices. 

Let me spoil this one for you: It won’t work. 

However, I don’t want you to think this story has to end badly. 

Fortunately for us, there’s a patch of land 250 miles wide and 300 miles long that holds more than 30 billion barrels of light, sweet crude waiting to be tapped. 

And next week, we’re going to look at the emergence of a new phenomenon in this oil patch.

Stay tuned.

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.

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