Tag: World News

Is The Global Oil Market Just Weeks Away From Imploding?

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Experts within the oil arena suggest that the global oil market could reach the point of no return between the end of May and the end of June, if the blockade of the Strait of Hormuz continues into the summer and beyond. Experts are advising that the blockade will reduce the levels of stock of diesel, jet fuel, gasoline and crude oil to critical levels by the end of May, when prices will go through the roof. 

One renowned expert advised that global oil reserves are currently at their lowest levels for eight years driven by trade frictions and refining bottlenecks, even though there are still ample supplies of oil . Estimates suggest that in Europe, and excluding government emergency reserves, commercial jet inventories could, by June, fall below the IEA’s (International Energy Agency) critical 23-day threshold. 

Analysts advise that any buffers to the shortages could well be reduced to zero by the end of June, pushing the price even higher than those predicted at the end of May, reaching levels of circa $200p/bbl or higher. The effect on households all over the world could be devastating as the cost of food increases, petrol and diesel at the pumps could see prices never seen before, and airlines dramatically reduce flights whilst increasing ticket prices.

Indeed, between them, global airlines have cut circa two million seats in May (2% of global aviation capacity) due to the frightening increase in jet fuel. Analysts advise that the most exposed country is the United Kingdom, being the largest net importer of jet fuel in Europe. Refineries in the UK have been requested to maximise jet fuel production under government agreed contingency planning, though the Labour government refused requests by industry to reduce taxes. 

On-going fighting between Iran and the USA has increased today, with Iran bombing a critical oil port in Fujairah, UAE. The longer the war goes on, more critical problems for economies will surface, with inflation in the Eurozone and the United Kingdom expected to move upwards. Hopefully, an end to the confrontation can be found soon, otherwise global economies, industry and households will all begin to suffer. Experts advise that families and businesses who intend to fly in the coming months should book early to avoid potential disappointment.

Fallout From the Middle East War Triggers Aluminium Crisis

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The Aluminium “Black Swan Event”

Analysts confirm that the global aluminium market will face a “Black Swan Event “in 2026, as continued conflict in the Middle East between the United States, Iran and Israel is triggering a supply shock. Experts point out that the Persian Gulf exporters account for circa 7 Million tonnes of smelted aluminium per annum, which is equivalent to circa 9.00% of global production per annum. Indeed, on the LME (London Metal Exchange) on April 16th this month, prices reached a four year record high of $3,673 per ton due to concerns in supply disruption. 

*Black Swan Event – This is a highly unpredictable event which can have severe consequences, however in retrospect, they often seem fairly obvious. Examples of a “Black Swan Event” are the Global Financial Crisis 2007 – 2009, the Dot Com bubble and the Covid-19 pandemic. In the case of the global aluminium market, analysts are calling it the largest single supply shock to any base metal this century.

Market Deficits and Regional Vulnerability

Analysts suggest that between now and the end of the year, the global aluminium market will face a deficit of circa 2 million tons, however, this may be a conservative estimation as increased shortages will be dependent on the length of the Middle East crisis, which has currently entered its 53rd day. Experts advise that Europe and the United States are particularly vulnerable due to current low stocks with the Middle East, accounting for 22% the USA’s 3.4 million tons of imported primary and alloyed aluminium, and 18.50% of Europe’s imported 1.20 million tons of the same. 

Supply Chain Limitations and Global Alternatives

Unfortunately, analysts suggest that there are few alternatives to fill the void left by the US/China/Israel conflict, as a serious amount of the metal quoted on the LME is of Russian origin, which has been sanctioned by western governments and is therefore untouchable. China is the world’s largest producer with an annual capacity of 45 million tons, however, their exports consist largely of sheet, rods and billets as opposed to speciality alloys and primary aluminium that western companies/fabricators require.

The Energy Cost Barrier

It has been suggested that idle smelters that have been mothballed both in Europe and the United States be restarted, however the cost of energy is going through the roof due to the Middle East crisis.With aluminium smelting facilities being highly energy intensive, bringing back idle smelters to production is a non-starter. Companies thinking about obtaining Russian aluminium would find a political minefield, especially as western governments are not in the mood to finance the Russian war machine.

Industrial Impacts: Automotive and EV Production

The effect of the aluminium shortage is seeping through to industry dependent sectors, such as the automotive industry where car makers are facing a dire scarcity of specialised alloys for engine components and wheels. Some companies are predicting production cuts by the end of the Q2, and the EV market which is highly dependent on aluminium, is facing cuts in production of up to 11.00% which will inevitably lead to job losses. 

Construction, Consumer Packaging, and Demand Destruction

Elsewhere in the construction and infrastructure sectors, increased aluminium costs are impacting construction budgets across the board, whilst data centres and healthcare construction facilities are facing budget uncertainty. In the consumer packaging sector which includes aluminium bottles, food containers and beverage cans, the arena is facing severe supply disruptions. Firms are struggling to secure supplies due to material shortages and rising premiums which is causing what is known as “demand destruction”.*

*Demand Destruction – This is a permanent or long-term decline in the consumption of a commodity or product, driven by prolonged high prices or severely constrained supply. It represents a structural shift where consumers switch to alternatives, adopt efficiency measures, or permanently alter habits, rather than a temporary dip in purchasing.

Economic Outlook and Consumer Impact

As with the export of crude and its offshoots from the Persian Gulf, experts predict that the price of aluminium will remain elevated due to the time it will take to get supplies of the metal back to normal. Once again, the consumer will bear the brunt of this damaging war whether through the increase in prices of household energy bills and the price of fuel at the pumps, or through the negative impact on jobs as companies cut staff due lack of available commodities.

Central Banks who have Kept Interest Rates Steady Despite the Iranian Conflict

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Two months ago, on February 28th the United States and Israel launched a major military campaign against Iran, which after thirty 39 days came to a halt (on 7th April 2026) so peace talks could take place in Islamabad, Pakistan. The US delegation to Islamabad was led by Vice President J.D. Vance who yesterday announced, after 21 hours of talks, that negotiations with the Iranians had sadly failed.

However, since the conflict began, Iran closed the Strait of Hormuz through which 20% of the world’s oil is shipped. During this time, the price of oil has shot up and down on the back of President Trump’s announcements, usually on his media outlet, Truth Social. Currently, jet fuel prices per the European Benchmark have more than doubled, rising from a pre-conflict price of $831/tonne to a closing price of $1,838/tonne on Friday, April 3rd. Similarly, the benchmark Brent Crude oil price has surged from approximately $70/bbl before the conflict to peaks exceeding $119/bbl. It currently sits at $102.22/bbl, following a closing price of $95.20/bbl on Friday the 26th.

Oil prices are now well above pre-conflict prices and as such, inflation is at the forefront of thoughts of policymakers at central banks across the globe. The recent failure of peace talks between Iran and the United States has resulted in the increased attention to inflation in the bond markets where, according to experts, the expectation is there will be no movement downward in interest rates but they will stay higher for longer. Many experts are suggesting that if the conflict carries on for much longer, and as increased energy prices are reflected in CPI (consumer price index), central banks may have to increase interest rates to battle rising inflation. Last week’s data released revealed that in the US there was the steepest advance in consumer prices for nearly four years.

However, last week a number of central banks had policy meetings where interest rates were kept on hold despite the conflict as can be seen below:

New Zealand

On Wednesday 8th April 2026, the MPC (Monetary Policy Committee) of the RBNZ (Royal Bank of New Zealand) kept the Benchmark OCR (Official Cash Rate) at 2.25% with officials noting, “If the increase in near term inflation is largely temporary, the committee envisages gradually moving the OCR to more neutral levels as activity recovers and near term inflation dissipates. However, any signs of significant second round inflation expectations would require decisive and timely increases in the OCR to re-anchor inflation expectations. The committee is vigilant to these risks”. 

Local economists and analysts suggest that headline inflation will hit 4.50% by June/July this year, outstripping the RBNZ’s target of 1% – 3% for 2026. The Governor of the RBNZ, Anna Breman, said that the MPC had discussed the possibility of a “relatively early” increase in interest rates. However, she later advised that committee members were not close to enforcing such a measure at this time. 

South Korea

On Friday 10th April 2026, the MPB (Monetary Policy Board) of the BOK (Bank of Korea), by a unanimous decision, held its Benchmark Seven-Day Repurchase Rate steady at 2.50%. The BOK Governor Rhee Chang Yong issued a warning that due to the United States/Iran conflict, inflation may outpace this year’s forecast as the economy is threatened with a bigger supply shock than was seen after Ukraine was invaded by Russia. 

Governor Rhee warned that it was too early to make any substantial policy decisions and will hold off from adjusting rates whilst waiting to see if the supply shock proves temporary or not. Officials have advised that following the failure of US/Iran peace talks, the bank has adopted a cautious stance of monitoring whilst maintaining steady interest rates amid rising inflation and economic uncertainty. 

Peru

On Thursday 9th April 2026, the Consejo de Politica Monetaria/MPC (Monetary Policy Committee) of the BCRP (The Central Reserve Bank of Peru) left its Benchmark Reference Interest Rate steady at 4.25% for the seventh straight month. Officials noted after the meeting, that policymakers were of the opinion that the previous month’s surge in inflation would only be of a temporary nature. 

Officials went on to say, “it is projected that both year-on-year inflation and inflation excluding food and energy (underlying inflation) will return to the target range towards the end of the year and settle around 2.00% as the effects of supply shocks gradually dissipate”. Among emerging market economies, Peru has one of the lowest interest rates and despite on-going political turmoil enjoys one of the more stable economies and currencies amongst Latin American countries.

Kenya

On Wednesday April 8th 2026, the MPC (Monetary Policy Committee) of the CBK (Central Bank of Kenya) held their Benchmark Central Bank Interest Rate (CBR) at 8.75% finally ending a two year easing cycle. Analysts advise that the CBK’s mid-point target range for inflation is 5.00% and inflation currently remains below that figure, despite ticking up to 4.40%.

In a statement following the meeting, the Governor of CBK Kamau Thugge noted, “The conflict in the Middle East has disrupted global supply chains, leading to significantly higher energy prices and heightened risks to the global economic outlook”. The Governor also noted that likeminded central banks in the region (including South Africa) have paused monetary policy decisions whilst awaiting the outcome of the current Middle East conflict between Iran, the United States and Israel. 

Governor Thugge went on to say that helped by appropriate monetary policy actions, inflation is expected to remain within the target range of 2.50% – 7.50%, and he further expected food prices to be stable due predicted good weather and a stable exchange rate. However, analysts warn that due to the consequences of the Iran/US conflict, prices of fuel and food may well rise, testing the upper limits of a 2.50% – 7.50% inflation band.

Romania

On Tuesday 7th April 2026, the NBR Board (Board of the National Bank of Romania – monetary policy committee) of the BNR (Banca Nationala a Romaniei) kept its Benchmark Monetary Policy Rate* on hold at, and for the thirteenth time since October 2024 , at 6.50%. Officials also advised that that the NBR had left unchanged the Deposit Facticity Rate**at 5.50% and the Lending Facility Rate*** at 7.50%

*Monetary Policy Rate – The main benchmark interest rate for 1-week repo operations which guides interbank market rates.

**Lending Facility Rate (Lombard) – The rate used by the central bank to provide overnight liquidity to banks.

***Deposit Facility Rate  – The rate at which banks can deposit excess funds with the central bank

Officials noted after the meeting that, “ High uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, arise however from the Middle East war and the on-going energy crisis, via the effects potentially exerted through multiple channels on consumer purchasing power, as well as firm’s activity and profits, also by affecting the dynamics of economies and inflation in Europe/Worldwide and the risk perception towards the region, with an impact on financing costs”.  Put simply, along with many other central banks, rates are left on hold as the world awaits the outcome of the on-going crisis in the Middle East.

Analysts suggest, as does the above cross-section of central banks, that interest rates are being kept on hold until the on-going conflict between Iran/US becomes clearer. Or in some countries if inflation had spiked dramatically interest rates may well be increased. Financial markets are waiting to see what interest rate decisions will be made by the Federal Reserve, the BOE (Bank of England) and the ECB (European Central Bank) on 29th – 30th April 2026 respectively. 

The Loss of Helium Exports Due to the Iran Crisis Will Prove Critical

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Helium is a colourless, odourless, non-flammable, non-renewable inert gas. It is commercially extracted from natural gas using fractional distillation*. As the second lightest and second most abundant element in the universe, helium has widespread applications across multiple industries and medical fields. The sudden disruption to helium exports via the Strait of Hormuz is now having a significant negative impact on the medical sector, semiconductor manufacturing, and several other critical industries.

*Fractional distillation is a laboratory and industrial process used to separate mixtures of liquids with different boiling points. In the case of helium, it involves a cryogenic process in which natural gas is cooled to extremely low temperatures. This takes advantage of helium’s exceptionally low boiling point (−268.9°C), allowing it to be separated from nitrogen, methane, and other components.

Roughly two-thirds of the world’s helium supply comes from the United States, with much of the remainder supplied by Qatar. With the Strait of Hormuz currently closed, supply lines have effectively been choked. This disruption is now threatening the production and operation of semiconductor-based technologies used in everything from automobiles and washing machines to smartphones, space systems, and artificial intelligence infrastructure. Helium plays a vital role in semiconductor fabrication, particularly in cooling extreme ultraviolet lithography machines used to print microchips.

At present, around 200 helium containers remain stranded in the Persian Gulf, each holding approximately 41,000 litres of liquid helium. Experts warn that the gas will gradually boil off within 35 to 48 days, rendering the shipments unusable. These containers were destined for South Korea and Taiwan, which together manufacture approximately 90% of the world’s most advanced semiconductors. Without chips, global supply chains face severe disruption. Some analysts have even highlighted the knock-on effect on defence systems, noting that modern AI-driven technologies rely heavily on semiconductor availability.

In the medical sector, the shortage of helium is already affecting hospitals and diagnostic centres worldwide. MRI (magnetic resonance imaging) machines rely on helium to cool superconducting magnets to extremely low temperatures. Current shortages are delaying refills, increasing operational costs, and threatening the continuity of MRI services. Beyond MRI systems, helium is also critical for NMR spectrometers, cryosurgery procedures, and respiratory treatments.

  • NMR spectrometers are used to determine molecular structures essential for research and pharmaceutical development.
  • Cryosurgery and cryoablation use helium’s ultra-low temperatures to freeze and destroy diseased tissue.
  • Respiratory medicine uses helium-oxygen mixtures (heliox) to treat severe airway obstructions.

Donald Trump has issued an ultimatum stating that the United States will withdraw from the war zone “with or without a peace deal” once Iran’s nuclear capabilities are neutralised. However, logistics experts caution that even after hostilities cease, it could take more than three months for helium supply chains to normalise. If there is significant structural damage to Qatari production facilities, shortages could persist for years.

White House officials have indicated that US military forces could begin returning home within three weeks. However, recent history suggests that such timelines are often optimistic and subject to change.

Without semiconductors, modern economies could grind to a halt. Chips underpin almost every aspect of daily life, from aviation and automotive systems to global shipping, communications, and digital infrastructure. In emerging markets, access to MRI technology is already becoming limited, and prolonged disruption could soon affect developed nations as well.

Beyond the geopolitical narrative, the helium shortage represents a critical vulnerability in global supply chains. If the conflict continues, the consequences of helium scarcity may prove more damaging than the geopolitical tensions that caused it.

Is Gold Losing Its Lustre?

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In times of market turmoil and geopolitical unrest , gold is considered to be a safe haven with investors flocking to buy the yellow metal. However, at the close of business last Friday, gold extended its slide into a third consecutive week losing more than 6.00% and setting a record as its worst weekly performance since March 2020. Indeed, gold has shed more than 20% since the US/Iran/Israel conflict began and is currently trading at circa $4,400  – $4,435 per oz (showing great market volatility), from a high in late January of this year of just over $5,595 per oz.

The Impact of Monetary Policy and Inflation

Experts advise that gold is less appealing when interest rates remain high, and with energy costs surging due to the Middle East crisis, financial markets see the distinct possibility of interest rate hikes by central banks to ward off an increase in inflation. Both the Federal Reserve, the BOE (Bank of England) and indeed the ECB (European Central Bank), all held interest rates steady last week with money markets locking in bets for interest rate hikes this year by all three banks.

Central Bank Commentary and Market Expectations

In the Euro area, Joachim Nagel, a Governing Council Member of the ECB has said, “as things currently stand, it is conceivable that the medium-term inflation outlook could deteriorate and inflation expectations could rise on a sustained basis, meaning that a more restrictive monetary policy stance would probably be necessary”. There has been no official comment on interest rate hikes by the BOE, though they did highlight last Thursday concerns on the inflation front due to the Iran crisis. However, traders are betting on four interest rate hikes this year at 25 basis points per hike. 

ETF Outflows and Comparisons to 1983

Despite escalating geopolitical risk and geo-economic fallout due to the Middle East Iranian crisis, gold has failed to capitalise on its status as a safe haven, with data showing net outflows for gold ETFs reaching circa sixty tons since the start of the Iranian conflict. Analysts suggest the rapid fall in the price of gold is due to investor profit taking combined with sales of gold due to a higher dollar and rising interest rates. The last time gold plummeted so sharply was in 1983, when oil revenues collapsed and Middle Eastern oil producers dumped gold. 

Technical Support Levels and Market Volatility

Experts originally suggest that investors should look to a support level of $4,100 for gold if oil stays elevated, and an increase in bets on rate hikes by the financial markets keep ballooning. However, recently, gold briefly fell through the support level to $4,097.60, but as mentioned above it is currently trading in a range of $4,400  – $4,435 per oz. The gold market is experiencing extreme volatility as shifting investor sentiment and risk appetite, combined with algorithmic trading, continue to exacerbate price movements.

Geopolitical Outlook and Future Headwinds

The outlook for gold is based on the crisis in the Middle East, and if the situation moves towards a ceasefire, then rate hike expectations should diminish and should, experts say, trigger a recovery towards circa $4,800 – $5,000. Any movement in gold will also depend on the outlook from the Federal Reserve, with experts pontificating that if they look through the oil-driven inflation spike, it would remove a lot of the headwinds from gold. However, they went on to suggest that any increase in hawkish commentary would drive gold further down to new support levels. 

The Long-Term Investment Case

A number of analysts suggest that the fall in the gold price is a tremendous opportunity for investors to start buying, especially a staggered entry for long-term buyers. Analysts look to previous bull runs in 1971 – 1980 and 2001 – 2010 which saw a number of retreats that did not nullify any potential gains. Therefore, experts are suggesting that when the Iranian conflict is over, and the pressure on interest rate hikes deflate, gold will probably resume its safe haven status and prices will accordingly head north. However, analysts warn that the pace of any recovery in gold could be impacted by how long it takes for supply lines to recover. 

Update for Crude Oil Prices

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Current Market Performance vs. Predictions

In December 2025, many experts, commentators and analysts predicted that there would be an oversupply of crude oil in 2026, resulting in an oil glut caused by an increasing supply and weaker demand. Analysts suggested that the price of Brent Crude will average $58 bbl. At the time of writing, Brent crude futures traded up to $70 per bbl. for the first time since September 2025. Geopolitical tensions have helped bolster prices, with the global oil benchmark* rising by around 2.75%, while its US counterpart, West Texas Intermediate, climbed to just over $65 per barrel.

*Key Global Oil Benchmarks – The primary benchmarks are Brent Crude (North Sea), which covers 80% of global traded volume and West Texas Intermediate (WTI) (US), which is a key benchmark for the Americas. Dubai Crude is also used as a benchmark for Middle Eastern oil sent to Asia.

Impact of Geopolitical Escalations

The recent rise in crude oil prices has mostly been attributed to President Donald Trump, who threatened Iran with military action unless they agree to a nuclear arms agreement. Experts suggest that the threat issued via President Trump’s social media (Truth Social) yesterday evening, where he said that US ships had been ordered to the region and were ready to ”fulfil their mission with speed and violence, if necessary”, is responsible for the escalation in geopolitical premium of oil priced by potentially $3.00 – $4.00 per bbl.

Supply Disruptions and Global Conflict

Beyond the impact of geopolitical tensions on crude oil prices, the recent rise has also been driven by major supply disruptions in Kazakhstan. Prices were further supported last Friday after President Putin dampened hopes of a long-term settlement in the war with Ukraine. Experts advise that, despite the oversupply and lower prices that were predicted for this year, oil prices are expected to remain elevated for the time being as the markets wait for the next move by the White House and Iran. Analysts have reported that Tehran have stepped up negotiations with its OPEC+* counterparts and key Middle Eastern countries in an effort to stave off American aggression.

*OPEC+ – is short for the Organisation of the Petroleum Exporting Nations and is a coalition of 23 oil-producing countries, of which the full members are Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of the Congo, Saudi Arabia, United Arab Emirates and Venezuela. There are a further 10 non-OPEC Partner Countries that form the OPEC+ and make up the DoC (Declaration of Cooperation), consisting of Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan. The whole group’s modus operandi is to cooperate to influence the global oil market and stabilise prices.

Short-Term Outlook and Future Risks 

Experts advise that in the short-term (the next 4 to 6 weeks), based on technicals, the price of Brent Crude is estimated to trade within a range of $60 – 70 per bbl, with any movement being driven by geopolitical or inventory headlines. Despite a mid-range of analysts’ assessments of 2 – 3 million bbl per day, it is expected that today’s prices of crude oil will remain at the current level. Today, however, Iran has threatened to close the Straits of Hormuz, and analysts advise that this will definitely spike the price of oil and will no doubt, according to political and military experts, lead to military intervention from the United States.

Drill Baby Drill: Why Expanding Oil Production Still Matters for Economic Growth, Security & Global Stability

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For more than a decade, public debate surrounding energy has been defined almost entirely by the imperative of decarbonisation, ESG screens, and the political urgency of transitioning toward renewables. Governments, sovereign wealth funds, and large institutional capital allocators have been encouraged — and in many cases compelled — to shift funding away from hydrocarbons and toward solar, wind, hydrogen, and batteries. Yet the hard reality that continues to assert itself is simple: global societies remain overwhelmingly dependent on hydrocarbons, both as an energy source and as the irreplaceable feedstock for industrial production and logistics.

The much-maligned “Drill Baby Drill” policy position, shorthand for expanding domestic oil and gas extraction,  is often caricatured as outdated, environmentally negligent, or backwards-looking. But stripped of the politics, the logic of increased oil production remains compelling on economic, national security, and industrial grounds. For companies operating within the energy supply chain, traders, producers, refiners, and logistical operators, this reality is especially clear: hydrocarbons are not disappearing, the world is still short of energy, and the opportunity to fund and profit from oil transactions remains structurally significant for at least the next three decades.

At IntaCapital Swiss SA, we specialise in structured collateral financing, trade finance, and capital facilitation for legitimate, well-documented transaction flows — including oil trading, allocation funding, shipping, and production-linked financing. From our vantage point in the capital markets, the pro-production energy thesis is not ideological; it is grounded in commercial practicality and global macro conditions.

Oil Remains the Dominant Energy Source — And it Will For Decades

The starting point is empirical reality. Despite unprecedented investment into alternative energy, hydrocarbons still account for:

  • Over 80% of the global primary energy supply
  • Over 95% of transportation fuel
  • Near 100% of aviation, maritime, and heavy machinery fuel

Even optimistic transition forecasts from major agencies — including the IEA, EIA, and OPEC — anticipate substantial oil demand well into 2050, driven largely by non-OECD population growth, shipping expansion, urbanisation, fertiliser needs, plastics, petrochemicals, lubricants, and synthetic materials.

The “energy transition” debate tends to assume that oil is primarily a motor-fuel problem. But one cannot build solar panels, wind turbine blades, semiconductors, medical polymers, or electric vehicle tyres without petroleum derivatives. Even renewables depend on hydrocarbons for extraction, smelting, transportation, composite manufacturing, and installation.

Oil is not just a fuel — it is a foundational industrial material.

Expanding Production Lowers Costs & Protects Consumers

The economics of energy supply are as straightforward as any other commodity market: when production lags consumption, prices rise. For the last decade, policy pressures and ESG capital restrictions have underfunded upstream development. As a result, reserves have not been replaced at the pace required to stabilise long-term pricing.

When oil supply is restricted, the effects cascade across the economy:

  • Transport costs increase
  • Logistics and freight inflate
  • Food becomes more expensive
  • Manufacturing input costs rise
  • Consumer goods absorb energy-linked price increases
  • Governments face inflationary pressures

Discipline in upstream investment may be popular with shareholders seeking dividend yield and with activists focused on decarbonisation, but it is economically regressive. The households most impacted by expensive energy are not the wealthy; they are lower-income consumers for whom fuel and food expenditures represent a larger share of disposable income.

Expanding production through offshore platforms, shale development, onshore drilling campaigns, and improved refineries throughout has the opposite effect: downward pressure on prices, improved logistics competitiveness, and reduced inflationary strain throughout the economy. In macro-economic terms, an expanded hydrocarbon supply is profoundly pro-consumer.

Energy Security Cannot Be Outsourced

Perhaps the most powerful argument for expanding domestic oil production is geopolitical. Nations that rely on imported energy — particularly from adversarial or unstable regions — incur strategic vulnerabilities. Europe learnt this lesson twice in modern history: first with the geopolitical leverage of Russian natural gas, and more recently with global LNG and diesel supply constraints.

Energy is strategic sovereignty. If a nation cannot feed, fuel, and defend itself without foreign supply chains, it does not control its own outcomes. For this reason, countries including the United States, Saudi Arabia, UAE, Qatar, Brazil, Angola, and Canada are increasingly expanding their upstream capacity despite public climate rhetoric. The “Drill Baby Drill” position — when recast in strategic language — simply states: Domestic energy production equals national security.

From an investor and lender standpoint, energy security translates into long-duration capital commitments, infrastructure build-out, and predictable export revenue streams. These are precisely the conditions under which private corporate funding, trade finance, and structured collateral facilities thrive.

Oil Revenues Fund the Transition — Not the Other Way Around

Another uncomfortable truth: every successful renewable transition in history has been funded by fossil fuel prosperity. Nations that possess hydrocarbons — particularly Saudi Arabia, UAE, Norway, and the United States — are not abandoning fossil fuels. They are monetising them to accelerate modernisation, diversification, and future energy integration.

The slogan could be inverted as: Drill Baby Drill = Finance Baby Finance. It is not oil vs renewables; it is oil funding renewables. When oil is scarce and expensive, consumer acceptance of energy transition weakens, and governments lose the fiscal room to subsidise innovation. When oil is abundant and competitively priced, governments can directly channel cash flow into infrastructure, EV charging networks, nuclear modularity, and battery chemistry R&D. The global transition requires capital, and hydrocarbons remain the financial engine that provides it.

Market Liquidity in Oil Trade Creates Funding Opportunity

For firms like IntaCapital Swiss SA, the significance of expanded oil production is not merely theoretical; it directly influences transaction demand. The global oil and refined products sector is characterised by:

  • High-value spot and forward trades
  • Allocation-based offtake agreements
  • Refinery output contracts
  • Shipping and storage operations
  • Letters of credit utilisation
  • Collateralised performance obligations
  • Intermediated allocation structures

Where barrels are moving, there is demand for:

  1. Allocation funding
  2. Performance bonds
  3. Trade finance lines
  4. Collateral transfer facilities
  5. Warehouse & shipping finance
  6. Refinery output pre-financing
  7. Syndicated export structures
  8. Commodity-backed funding instruments

Historically, energy traders and allocation holders have faced funding gaps due to collateral requirements, KYC/AML scrutiny, or misalignment between banking risk appetites and commodity settlement cycles. Structured private capital has filled that gap — and continues to do so globally. Expansion in upstream production directly increases this flow, creating a larger universe of transactions requiring structured funding and credit enhancement.

Why ESG Capital Boycotts Created a Funding Vacuum

Over the last five years, major banks and sovereign funds adopted stringent ESG restrictions on hydrocarbon investments. While politically fashionable, this capital withdrawal has created a financing scarcity that private lenders, hedge funds, commodity houses, and structured intermediaries are now exploiting.

The irony is unavoidable:

  • Oil demand increases
  • Oil supply is constrained
  • Capital is restricted from upstream investment
  • Price volatility rises
  • Private capital steps in at a premium

Far from eliminating oil, ESG has made oil more profitable for those willing to fund it. For financing firms who understand the sector, this environment has created attractive margins, strong collateralisation structures, and heightened demand from credible counterparties seeking allocation funding or offtake financing.

The Global South Will Drive Oil Demand, Not the West

Another misconception often embedded in Western policy discourse is the assumption that energy demand patterns are uniform across the globe. They are not. Over the next 25 years, population growth and middle-class expansion in Africa, South Asia, Southeast Asia, and the Middle East will drive incremental consumption of:

  • Diesel
  • Jet fuel
  • Marine bunker fuel
  • Chemicals and plastics
  • Fertilisers
  • Asphalt
  • Petrochemicals

Even if OECD nations reach aggressive EV penetration and renewable diversification targets, the Global South is only beginning its industrial build-out. This difference is not ideological; it is demographic and developmental. The global oil industry will therefore not contract — it will re-centre.

Conclusion: Expanded Oil Production Is Rational, Beneficial & Bankable

The “Drill Baby Drill” energy thesis is not a relic of the past. It is an economically rational, strategically necessary, industrially indispensable, and financially attractive proposition anchored in material demand. The global economy still runs on hydrocarbons, and it will continue to do so for decades. Transition will occur — but it will not eliminate the need for oil; it will simply change the demand profile.

For companies involved in the sector — from upstream production to trading, refining, shipping, allocation management and distribution — the implication is clear: the real bottleneck is not rhetoric, it is capital.

Funding Oil Transactions — IntaCapital Swiss SA

IntaCapital Swiss SA facilitates structured financing for credible oil and refined product transactions globally. We support:

  • Allocation funding
  • Performance bonding & collateral transfer
  • Refinery & pre-export financing
  • Offtake funding
  • Collateral-enhanced trade finance structures

Applicants seeking oil transaction funding, allocation financing, or credit enhancement are invited to present their proposal for review, including:

  • Allocation or supply documentation
  • ICPO, SPA, or equivalent
  • Transaction flow structure
  • Counterparty details
  • Required financial instruments or facilities

To discuss funding options in confidence, contact our transaction structuring team.

Outlook for Global Currencies 2026

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Experts in the currency markets suggest that in 2026, projections show that the US Dollar will be weaker against most major currencies, primarily driven by easing from the Federal Reserve, as other central banks normalise policies, suggesting a narrowing of interest rate differentials. The Pound is expected to be on the volatile side and may see modest gains against the US Dollar, the Japanese Yen may appreciate gradually, whilst the Australian Dollar and the Euro are expected to firm modestly.

GBP/Sterling – GBP

Analysts in the sterling arena expect the pound to experience headwinds in Q1 and Q2 of 2026, mainly due to interest rate cuts, weak growth and political uncertainty. Cable (GBP/USD) may well strengthen if the new chairman of the Federal Reserve decides on a faster rate-cutting cycle, whilst GBP/EUR may well trend lower as the US Dollar weakens, and monetary policy divergence could well benefit the Euro. However, experts warn speculators that markets could be infused with volatility due to geopolitical problems, especially between Russia and Europe.

Several financial experts and commentators have suggested that the BOE’s (Bank of England) MPC (Monetary Policy Committee) decisions in 2026 could be the primary risk to Sterling. If financial conditions worsen in 2026, the BOE has stated that it will further loosen monetary policy, and experts suggest that if inflation eases, growth and the labour market remain slow, and there could be multiple rate cuts across 2026, resulting in a negative impact on the pound, whilst also dampening its appeal.

US Dollar – USD

Analysts suggest that the financial market outlook for the US Dollar for 2026 remains bearish for Q1 and Q2, but the greenback may rally slightly in the second half of the year with only a modest decline by year’s end. These forecasts are based on analysts’ persistent concerns regarding the independence of the Federal Reserve, plus the possibility of lower interest rates. The DXY* is expected to face a turbulent time with considerable headwinds in Q1 of 2026. Whilst it enjoyed a high point at the start of 2025 (above 110), it was down 9.1% by the close of business 31st December, and it is expected to hit the mid-range 90’s by the end of this year.

*The DXY (US Dollar Index) – This index was created by the Federal Reserve in 1973 after the Bretton Woods** system ended and is now maintained by ICE Data Indices (the Intercontinental Exchange, which provides a comprehensive suite of global financial benchmarks). This index measures the US Dollar’s strength against a basket of six currencies: the Canadian Dollar, Euro, Japanese Yen, Pound Sterling, Swedish Krona, and the Swiss Franc. The index rises when the US Dollar strengthens and falls when it weakens, serving as a key benchmark for traders, businesses and central banks to gauge dollar performance.

**Bretton Woods – This system was a post- World War II international monetary framework that established a system of fixed exchange rates by pegging major currencies to the US Dollar, which was in turn convertible into gold. The system aimed to foster global economic stability and prevent the competitive currency devaluations and protectionism that contributed to the Great Depression and the previously mentioned war. The US Dollar was the world’s primary reserve currency and the only one directly convertible into gold for foreign governments and central banks at a fixed rate of $35 per ounce.

The system collapsed due to persistent American balance of payments deficits, rising inflation from Vietnam War spending and the resultant surplus of US Dollars held by foreign central banks (which eventually exceeded the US gold reserves) and eroded confidence in the dollar’s convertibility to gold. As such, on August 15th, 1971, President Richard Nixon unilaterally announced the suspension of the US Dollar direct convertibility to gold.

The independence of the Federal Reserve is a key factor as to where the US Dollar will go in 2026, and many market experts have their eyes on not only the replacement of the chair of the Federal Reserve (a President Trump pick) but also whether or not President Trump is successful in his attempts to oust Fed Governor Lisa Cook. If he is successful, experts advise that there will be more outflows from US assets, particularly in AI and fixed income, placing more negative pressure on the greenback, especially if the President is then emboldened to try and remove further Fed governors.

While some expect the US Dollar to weaken, a contrary argument suggests that this dip will be temporary. Analysts believe that by Q3 2026, the combined impact of government spending and new trade tariffs will likely drive up inflation. This would force the Federal Reserve to raise interest rates, which would, in turn, push the value of the US Dollar higher.

Despite the predicted uptick in the US Dollar, the currency will still face many roadblocks, such as dealing with the massive debt limit, a potential AI bubble burst and increasing challenges from member nations of BRICS***

***BRICS – Is an intergovernmental agency and is an acronym for Brazil, Russia, India, China, (all joined in 2009) followed by South Africa in 2010 as the original participants. Today, membership has grown to include Iran, Egypt, Ethiopia, the United Arab Emirates and Saudi Arabia, with Thailand and Malaysia on the cusp of joining. Russia sees BRICS as continuing its fight against Western sanctions, and China, through BRICS, is increasing its influence throughout Africa and wants to be the voice of the ‘Global South’. Several commentators feel that as the years progress, BRICS will become an economic and geopolitical powerhouse and will represent a direct threat to the G7 group of nations. Currently, this group represents 44% of the world’s crude oil production, and the combined economies are worth in excess of USD28.5 Trillion equivalent to 28% of the global economy.

The Euro – EUR

In 2025, the Euro managed to record one of its strongest rallies since 2016 against the sterling and the US Dollar, its strongest rally since 2017. President Trump’s tariff policy proved to be extremely beneficial for the Euro*, and despite several interest rate cuts, the ECB’s (European Central Bank) boosting of the local economy was considered most beneficial. Some analysts favour another rate cut in 2026, but most appear to favour the ECB remaining on the sidelines as ECB President Christine Lagarde and her board of governors seem content with both the outlook for growth and inflation.

US Tariffs Beneficial to the Euro – Whilst tariffs were not inherently beneficial to the Euro (they often hurt EU exporters), they could indirectly strengthen the Euro by making EU goods reactively more expensive for U.S. buyers or causing US consumers to buy cheaper EU goods when tariffs were applied to other countries –  thus improving the competitive field for EU products in the US market leading to potential Euro strength.

A number of analysts have a bullish stance for the Euro in 2026, expecting the currency to gain against most currencies, except those in Scandinavia, with reservations against the pound sterling. Exchange experts have predicted that by year-end 2026, the EUR/USD will stand at 1.22, expecting the majority of US Dollar weakness to emerge after Q1, whilst projections for sterling and Japanese yen are EUR/GBP 0.84 and EUR/JPY 189. Analysts suggest that positive impacts on the currency will emerge post Q1, such as German fiscal policy, Chinese stimulus measures and currency hedging activities.

Adding to the bullish sentiment for the Euro, experts advise that foreign investors have returned to the European equity and bond markets, and with the ECB currently happy with inflation, 2026 should see a continuation of the inflow of capital. Analysts suggest that the inflow should increase if Russia and Ukraine manage to sign a peace accord to end the war. On 23rd February 2025, a German government coalition was formed, and later they passed a Euro 1 trillion spending package, which experts feel will continue to support the Euro. One downside is France and the country’s ongoing political turmoil, which did limit gains in 2025, and analysts believe this will carry on into 2026.

Japanese Yen – JPY

Currency experts advise that the demand for Yen in 2026 will remain modest, leaning towards tepid in response to the BOJ’s (Bank of Japan) raising interest rates by 25 basis points to 0.75% (the highest level since September 1995) on 19th December 2025. Currency experts suggest that the soft response to the increase in interest rates is that financial markets are worried about Japan’s fiscal sustainability, especially as they feel there is an unfavourable policy mix of expansionary fiscal policy with loose monetary policy, which continues in real terms to keep yields low in Japan.

Some analysts suggest that the narrowing interest rate differential between Japanese bonds and their counterparts in the United States represents a fundamental driver in 2026 for an increase in the strength of the Japanese yen. If the Federal Reserve proceeds with expected interest rate cuts in 2026 and the BOJ proceeds with expected interest rate hikes, analysts advise that there should be downward pressure on USD/JPY during 2026. Financial markets are also aware of Yen carry trades, and sharp currency movements in either direction could precipitate an unwinding of these positions, currently valued by some analysts at USD 1 trillion.

Swiss Franc – CHF

The outlook for the Swiss Franc in 2026 is that investors will still view the currency as a very strong haven in times of global economic volatility and geopolitical upheavals. However, some experts suggest that if global economic and geopolitical conditions begin to stabilise in 2026, the currency could gradually weaken against the Pound Sterling and the Euro, especially if interest rate differentials come into play.

Other key drivers for the CHF  are economic growth divergence, where analysts forecast that the Euro may appreciate slightly against the CHF if, during 2026, a modest recovery occurs in the Eurozone and other key trading partners, reducing the premium on Switzerland’s haven status. Monetary policy divergence is another driver, and analysts advise that the SNB will probably keep interest rates low or even move to 0.00%, whilst the Federal Reserve and maybe the ECB will adjust their policies, which in turn can affect exchange rates.

Overall, the main arguments in favour of the Swiss Franc are low inflation, low debt, political stability, a high current account surplus and a highly innovative economy. Couple the above with the recent agreement on tariffs with the Trump administration, which has eliminated a serious threat to the country’s competitiveness, the Swiss Franc stands out as a top safe-haven currency. Several forex analysts predict that in 2026, the EUR/CHF will edge higher, whilst it is felt that the USD/CHF may stabilise around the 0.78 mark.

Chinese Renminbi  – CNY

A number of experts and analysts have forecasted a slight appreciation of the Renminbi against the US Dollar in 2026, with the USD/CNY ending the year in a range of 6.85 and 7.05. Such predictions are based on a persistently large current account surplus, the PBoC’s (People’s Bank of China) priority on currency stability and narrowing yield differentials with the USA. With regards to currency stability, the PBoC is expected to utilise policy tools such as the daily fixing, which manages volatility and to continue with gradual monetary easing, which includes rates and RRR (Reserve Requirement Ratio)* cuts in order to support domestic growth.

*Reserve Requirement Ratio – This represents the portion of deposits that banks in China must hold in reserve, and ifthe  PBoC cuts the RRR, it will boost liquidity and support economic growth. Interestingly, the RRR is not uniform, with larger banks having a RRR of 9% and smaller banks 6%.

On the domestic front, challenges like the current property market downturn, deflationary pressures and weak consumer demand could negatively impact appreciation pressures on the currency, whilst geopolitical pressures such as trade tensions between China and the United States (currently enjoying what may be a temporary truce*) could also put negative pressure on the Renminbi. However, further fiscal policy will be seen by the issuance of front-loaded 2026 bonds in Q1 of this year, plus the implementation of two RMB 500 billion stimulus packages introduced at the end of Q3 and beginning of Q4 last year.

*Trade Truce – The current trade tensions between the United States and China are currently enjoying a one-year sabbatical, which could be thrown into disarray as President Trump is threatening 25% tariffs on goods from all countries that trade with Iran.

Australian Dollar – AUD

Experts suggest a fairly positive outlook for the Aussie Dollar in 2026, with potential appreciation against a number of currencies, especially the US Dollar, with drivers suggested as strong commodity prices and diverging monetary policies. The RBA (Reserve Bank of Australia) has, amid upward inflationary pressures, adopted a somewhat hawkish stance with financial markets pricing in an early rate hike in 2026, whilst the Federal Reserve are again expected to implement one or two rate cuts this year with experts predicting a negative impact on the US Dollar and a positive impact on the Australian currency.

On the commodity front, the AUD and commodity exports are closely tied together (e.g. Iron Ore $116 Billion, Oil and Gas $82.5 Billion, LNG $72.6 Billion, Coal Mining $71.4 Billion), and significant support for the currency is expected to come from continuing strength and an across-the-board recovery in global commodity prices. Furthermore, the health of China’s economy is an important driver of the AUD (not the primary driver that it used to be) as it is Australia’s biggest trading partner. Foreign exchange experts are predicting that by the close of business in 2026, AUD/USD is expected to be near the 0.68 level.

Canadian Dollar – CAD

Along with the United States, both countries are signatories to the US-Mexico-Canada Trade Agreement (USMCA – replaced the North American Free Trade Agreement – NAFTA in July 2000), which is up for renegotiation this year, with President Donald Trump threatening to withdraw even though it makes up 25% of trade with the USA. Whilst no one can predict the outcome of the review, this is a potential wild card that can impact both the Canadian and Mexican currencies.

Analysts expect the Canadian Dollar (AKA the Loonie*) to strengthen against the US Dollar if, as expected, the Federal Reserve continues its monetary easing cycle by cutting rates again in 2026, whilst the BoC (Bank of Canada) has signalled the possibility of halting monetary easing in 2026. As a result, several forex analysts have suggested that at the end of Q2, the USD/CAD could be sitting at 1.3488 and at the end of 2026, it is projected to sit at 1.3507.

*The Loonie – The Canadian Dollar is also affectionately referred to as “the Loonie” because in 1987 a popular $1 coin was introduced into the monetary system featuring a “common loon” (a distinctive waterbird) on its reverse side.

Experts are expecting the Canadian economy to enjoy a modest positive impetus in 2026, projecting a growth of circa 1.4% with support coming from government investment/spending initiatives, plus a potentially improving trade outlook, giving the Canadian Dollar a boost in Q3 and Q4. A negative review of the USMCA could result in an escalation in current trade tensions, weighing negatively on the currency, whilst a fall in oil prices is expected to have the same effect.

Mexican Pesos – MXN

In 2025, the Mexican Peso closed out the year 22% higher than the beginning of the year against the US Dollar, and underlying the increase were higher interest rates in Mexico, whilst the Federal Reserve engaged in monetary easing, and companies exporting to the USA moved their manufacturing base to the United States. Further positive impacts on the Peso were strong wage growth, new records for international visitors and tourism and stable economic conditions under the current President, Claudia Sheinbaum Pardo.

Experts advise that continued high rates relative to interest rates in the United States into 2026 will make Mexican Assets attractive under the carry trade scenarios, which will provide a positive impact for the Peso especially if the Federal Reserve continues on its dovish monetary path. If continued international tourism increases, plus ongoing nearshoring* together with continued FDI (Foreign Direct Investment) into Mexico, such factors will continue driving strong demand for the currency. According to a number of analysts in the peso arena, they expect the currency to remain around 19 pesos per dollar in 2026, though there are those analysts who predict that the peso will end the year in the upper 17-peso range.

*Nearshoring – is a business strategy where a company moves its base of manufacturing or services usually to a country that is geographically close or shares a border with the country the company is exporting to, e.g. Mexico/USA.

Emerging Market Currencies Overview

Experts from emerging markets (EM) suggest the outlook for currencies in 2026 is fairly positive, with the expectation that they will appreciate against the US Dollar due to a dovish Federal Reserve monetary policy. Capital inflows into EM assets will be encouraged by the anticipated Federal Reserve interest rate cuts, improving EM economic fundamentals and moderating inflation. Currently, EM assets are trading at a discount to their counterparts in the developed economies, which is attracting capital inflows, especially as investors seek yield and portfolio diversification.

What are the Consequences of a United States Invasion and Takeover of Greenland?

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A Shift from Rhetoric to Reality

Once unthinkable, today the staggering reality is that the United States of America, under the leadership of President Donald Trump, could actually invade and claim ownership of Greenland, a country owned by its European ally, the Kingdom of Denmark. Last Friday, 9th January, President Trump increased his rhetoric by saying, “I would like to make a deal, you know, the easy way. But if we don’t do it the easy way, we are going to do it the hard way.” In other words, he is willing to secure the territory by abusing international law by marching into Greenland and taking over.

The Shadow of Venezuela and the NATO Crisis

In the past, the musings of President Trump about taking over Greenland were not taken seriously by his European allies (members of NATO* – North Atlantic Treaty Organisation). The recent invasion of Venezuela has brought home the stark reality that President Trump could easily live up to his word and invade Greenland. As usual, when it comes to geopolitical and global economic surprises, the leaders of the EU (European Union) have been found wanting. Indeed, Mette Frederiksen, Prime Minister of Denmark, said an attack by the United States on Greenland could spell the end of NATO.

*NATO – the North Atlantic Treaty Organisation is a political and military alliance of 32 countries from Europe, North America and Great Britain. Founded in 1949 for collective security and mutual defence against aggression, NATO was created primarily to counter Soviet aggression, with its core principle being Article 5: an attack on one member is an attack on all, obligating members to assist. NATO provides a forum for defence consultation and cooperation, managing crises and ensuring the security of its members. Today, we have a scenario where the strongest member (the United States) potentially attacks a weaker member; the consequences to geopolitics and global economics are potentially devastating.

Strategic Objectives: Security and Resources

Experts now suggest that since the invasion of Venezuela, President Trump is now willing to deploy the U.S. military to achieve his foreign policy goals, with Greenland currently top of the President’s shopping list. In both his presidential campaigns, Trump’s table-thumping mantra of “America First” has never been more pertinent to both his enemies and his allies, but what is it about Greenland that has given President Trump his thirst for invasion? Experts say that the President wants America to own Greenland for national security reasons and not for rare earth minerals; however, in recent years, both Russia and China have become interested in the minerals that can be found in Greenland, not to mention the potential bonanza of oil and gas reserves.

The China-Russia Security Threat

In the United States, many Republican lawmakers agree with President Trump that China and Russia pose a significant security risk—a threat that would increase dramatically if either country gained controlling influence over Greenland. Consequently, experts foresee two potential paths: President Trump could reach an economic agreement with Denmark for joint control, or he could simply leverage the military might of the United States to secure the territory, given that few could realistically stand in the way.

The European Response and Territorial Integrity

However, the Danish Prime Minister, Mette Frederickson, has warned that any attempt to take over Greenland would result in the end of the long-standing transatlantic alliance. Furthermore, she recently announced on Danish TV that Greenland belongs to Greenlanders, whilst European leaders have urged President Trump to respect the island’s territorial integrity and said it falls under the bloc’s collective security umbrella. 

The consequences of a move to Greenland by the United States will be far-reaching. Currently, in Europe, political analysts advise that the continent is paralysed, with no set strategy to address the threats from President Trump. Experts suggest that if the situation deteriorates even further, with one member of NATO turning against another, NATO will not survive. The EU (European Union) is not designed to step in militarily if NATO collapses. 

The “Donroe Doctrine” and Global Instability

President Trump has already deposed the President of Venezuela (citing the Munro Doctrine*), citing influence from Russia and China, plus drug flows, as his reasons. The United States has coveted Greenland on and off for over 150 years, and as President Trump ups the ante over Greenland, one expert suggests that transatlantic relations are now on the brink of a fundamental breakdown. On top of this, the Prime Minister of the United Kingdom, Keir Starmer, has suggested putting British troops into Greenland. Imagine two NATO allies in direct conflict over Danish territory; the geopolitical implications are unthinkable.

*The Munro Doctrine – Declared by President James Munro in 1823, this was a U.S. foreign policy stating that the Americas were no longer open to European colonisation and warned against European interference in the Western Hemisphere, whilst the U.S. pledged non-interference in European affairs, establishing distinct spheres of influence and becoming a cornerstone of centuries of U.S. foreign policy. Key tenets include non-colonisation, non-intervention in European politics and separating American and European political systems and later expanded to justify intervention in “Latin America”.

Global Repercussions: Russia and Taiwan

On the global front, experts suggest that the United States/Greenland saga must be music to the ears of Russia’s President Putin, and not only will it legitimise in his eyes the Russian invasion of Ukraine, but also embolden him to further increase military and political pressure on the country’s leaders, hoping that they will sue for peace. Elsewhere, and as most people know, China’s leaders have always thought that the independent and sovereign state of Taiwan belongs to China, and the potential takeover by the United States of Greenland will surely embolden them to invade Taiwan. Several experts have agreed that these scenarios are a distinct possibility, and with the President of Venezuela already deposed, both China and Russia may view the potential invasion of Greenland as a green light for their own political ambitions.

The Semiconductor Crisis and the Cost of “America First”

Interestingly, Taiwan manufactures over 60% of the world’s semiconductors and more than 90% of its most advanced chips. Some experts suggest that, emboldened by President Trump’s actions in Venezuela or a potential move into Greenland, China may decide to invade Taiwan. Such a move would grant China control over nearly 90% of the global microchip supply, effectively making the United States and Europe dependent on China for everything from mobile phones and electric vehicles to basic household appliances like washing machines and tumble dryers. 

Analysts suggest that in order to compensate for this, the United States would have to develop increased chip-making facilities, which would need circa 50 critical minerals. Yes, Greenland has about 30 of these minerals, but with no industrial infrastructure or workforce, how long would it take the United States to catch up? All in all, President Trump’s ‘America First’ may well turn out to be a pyrrhic victory with China holding the trump cards on critical minerals and semiconductors/microchips. What concessions will then have to be made by the West to the potential upcoming political demands from China?

Lukoil Declares Force Majeure in Iraq

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Russian oil major Lukoil has declared a force majeure at its Iraqi oilfield West Qurna-2, as it struggles under the recently imposed sanctions by the United States. The declaration marks the most significant fallout from the sanctions as President Trump continues his efforts to broker peace between Russia and Ukraine. Lukoil, which has considerable exposure to international markets, has already failed in its attempt to sell its foreign assets to Gunvor (a Swiss commodity trader), after the United States signalled its opposition to the deal.

West Qurna-2, located approximately 40 miles (65 kilometres) northwest of the port city of Basra, is considered the jewel in the crown of Lukoil’s assets and is among the world’s largest oilfields. The company has maintained a global presence through upstream oil and gas projects, as well as refining and fuel retail networks across Europe, the Middle East, the Americas, and Central Asia. Outside Russia, Lukoil accounts for around 0.5% of global oil output, equivalent to approximately 500,000 barrels per day (BPD).

Lukoil owns 75% of West Qurna-2, which, according to data released in April this year, was producing about 480,000 BPD. However, following the declaration of force majeure, Lukoil now has the right to suspend contractual obligations. Experts note that the field will not be shut down entirely, as operations have been handed over to two state-run Iraqi companies. Indeed, SOMO (Iraq’s State Oil Marketing Company) has already cancelled three Lukoil cargoes scheduled for loading in November. Furthermore, Iraq has halted all crude and cash payments to Lukoil since the new sanctions came into force.

Analysts report that, according to an unnamed Iraqi official, if Lukoil fails to resolve the force majeure conditions within six months, the company will be required to cease production and withdraw from the project entirely. Lukoil’s ongoing difficulties have prompted what experts describe as a scramble across Europe to maintain operations at the company’s assets ahead of the 21st November deadline, when all dealings with Lukoil must cease. In Bulgaria, for example, the government has taken steps to assume full control of the country’s largest refinery to safeguard jobs. Several countries have also requested that Washington issue licences allowing them to continue operating Lukoil’s assets beyond the November cut-off date.

Despite Lukoil’s declaration of force majeure in Iraq, crude oil prices opened lower today, with analysts observing that market sentiment remains largely bearish due to projections of oversupply. Many oil market commentators suggest that with OPEC production increasing, global demand slowing, and economic growth weakening across major oil-consuming nations, bearish sentiment continues to dominate the supply side.

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