Only One Trade Matters: Oil

What does Europe, a continent starved for commodities, do when it faces future shortages of critical minerals and energy?

According to European Commission President Ursula von der Leyen, the decision is straightforward. Make things even harder!

According to von der Leyen: “It is time to turn off the tap” on Russian LNG.

Last September, the European Union made the critical (perhaps fateful) decision to cut off LNG imports into Europe one year earlier than planned.

By taking this bold decision, EU leaders believed they would cut off “Russia’s war economy.”

So, will it make a difference to
the Russian war machine?

Within days of the announcement, Russia secured a new buyer for its vast natural gas reserves…

A long-term deal with China that includes 50 billion cubic meters of gas being exported each year from Russia’s remote Siberian frontier.

It’s known as Power of Siberia 2.

The mechanics of the deal are straightforward: more energy for China, and substantial financial benefits for Russia.

The new gas pipeline is estimated to contribute up to 36% of China’s total gas imports… This will thrust Russia into becoming China’s most important energy supplier.

But for energy-deprived Europe, a crucial cutoff date is now approaching… Even faster than before.

Kaja Kallas, the EU’s foreign policy chief, said that the new proposal aimed “to speed up the phase-out of Russian liquefied natural gas.”

But is this merely hastening Europe’s energy poverty?

Something that could have a broader impact on global markets.

60 years of uninterrupted
supply set to end soon

For over half a century, Russia has consistently supplied Europe with abundant natural gas. And that’s despite decades of tense Cold War frictions.

Russia’s vast natural resources have been a gift for Western Europe.

Initially, it helped to stabilise shattered European nations following the devastation of World War II.

However, it also fueled Western Europe’s economic advantages in the years that followed, making it the world’s premier hub for high-end manufacturing.

Cheap, reliable gas from Russia was the seed that sowed Europe’s Post-War growth and today’s luxuriant standards of living.

European countries often rank among the highest in average salaries worldwide. Many countries across the continent also lead the world in public education and healthcare.

Yet, all of that BEGINS with secure, cheap, reliable and abundant energy.

Whether they understand it or not, that’s what EU leaders are putting at stake as they “turn off the tap.”

It’s part of the reason why I believe the oil and gas market (in particular) is especially vulnerable at this point in time.

Whereby countries that control supply will use it as the ultimate grand bargaining chip in getting what they want.

If you want to move ahead of that risk, I suggest building exposure to the investment class set to benefit the most: oil and gas producers.

Call it a hedge… A cushion for your portfolio against unknown events in 2026.

You can find out more here.