Whenever oil starts heating up – I’m instantly transported back to the early to mid-Eighties – when oil was one of the hottest commodities around.
The simple mention of the term “OPEC” sends me back to my college years with my parents watching the news – complaining about how everything happening was going to ruin the stock market.
Well, everything old is new again…
As it seems that oil – and everything surrounding it is heating up – as dueling governments that are diametrically opposed in their economic goals.
The US is doing what it can to LOWER fuel prices – so Americans pay less at the pumps…
OPEC nations which include countries like Iran, Iraq, Saudi Arabia and Venezuela, among others – want crude prices to stay high in order to grab as much profit as they possibly can.
This opposition may lead to the next oil war – something we haven’t seen in decades.
Which side will come out on top?
Now, I’m going to warn you right now, there will be a few political statements in this conversation…
I won’t be saying anything positive or negative – just going to have to address the situation presented before us – as it is political in nature.
It all starts with President Joe Biden – as the commander-in-chief is playing a dangerous game.
So far, his policies have played a part in the US losing its energy independence – but it’s his latest move that could spark tensions with OPEC.
Politics are once again changing the economic landscape – as President Biden is trying to ease the pressure that Americans are feeling at the gas pump by releasing some of the US oil reserves.
Before we get into the repercussions of this strategic move…
Can we talk for a moment about how unnecessary this whole thing is?
Former Presidents Obama and Trump implemented or extended policies that finally gave America its energy independence – as through the technology of shale fracking – we had all the oil we needed and would need.
However, that’s changed under President Biden…
His policy to end fracking leases on federal land may have been the death knell for America’s oil supremacy (yes, we were the TOP producer of oil in the world from 2016-2021) – and we watched the price of gas soar with each energy-based decision this administration has made as we move toward a green energy future.
America has been watching gas prices raise at breakneck speeds – shooting up 50% over the past year – with no signs of slowing…
Well, sort of – as Biden releasing some of the oil reserves should see lower prices at the pumps soon enough.
Or will it?
Biden’s decision was to release the reserves was made after the President asked OPEC nations to do more to combat elevated energy prices by asking them to pump MORE oil…
He did this by trying to appeal to their more humanistic side – saying that it would help the world to recover from the pandemic lockdowns.
Well, they declined…
And in response, President Biden has decided that releasing some of the oil reserves will help alleviate some of the pressure that his administrations was getting from angry voters…
So, he announced that he’d be releasing some of the US’s oil reserves – 50 million barrels worth over the next several months.
This is the move that could put him in direct competition with what the OPEC nations want…
Which is higher oil prices.
They want to make back some of the profits they lost out on with America being oil independent over the past 5 years…
And the whole thing could trigger an oil war between OPEC and non-OPEC nations.
How?
If OPEC continues to pump at expected levels – then the additional supply from the released reserves would lower oil prices – which is what the Biden administration is hoping for…
But OPEC could CUT down on production in order to keep prices up – or cut back enough to push them even higher.
The Eurasia Group revealed how this could be a dangerous game, saying, “This raises the specter of a disruptive standoff that pits major producers led by OPEC+ against big consumers, led by the US. Countervailing moves by each side are likely to lead to increased volatility, producing seesawing oil prices and added uncertainty.”
So…
As investors, what does this tell us?
Should we be looking to get back into crude?
The answer to that question depends on your own financial strategy – but I have to tell you that it wouldn’t be a bad idea. Because, do you know who wins in an oil war?
Investors, that’s who!
In fact, I wouldn’t be surprised if oil companies started popping back up on the GorillaTrades radar – so, if you want to be along for the ride – I would suggest considering becoming a subscriber today…
Or, you can continue to guess which companies are going to go on a run.
Either way…
You may want to start looking harder at oil – it could help bolster your portfolio!
“New discoveries and production of resources like shale oil and gas are dramatically altering our energy supply outlook and the entire global geopolitical landscape. And the pace of change – particularly in the past few years – continues to accelerate.” – Fred Upton
