The US-Russia Oil Cartel Is Closer Than You Think

Energy is made up of ‘haves’ and ‘have-nots.’

On one side of the ledger sit the buyers: Europe and Asia.

On the other side sit the sellers: the US, Russia, and Saudi Arabia. These three countries make up almost half of global oil and gas production.

But despite decades of conflict, embargoes, and blockades, very little has changed in this key dynamic.

The ‘have-nots’ have always found willing oil producers to support their thirst for energy.

But a reordering of the global energy trade is underway. And as I outlined to my paid readership group, that was evident well before the war in Iran took shape.

Europe: Doubling down on
energy vulnerability

Last year, the EU pledged to terminate its decades-long energy trade with Russia.

Cheap Russian gas has been a major tool in powering post-World War II Europe. Fuelling European manufacturing and giving birth to some of the world’s most iconic brands, think BMW, Audi, and Bosch.

So, given the events unfolding in the Middle East, you’d think the European region would be looking to do all it can to secure oil supply?

And perhaps roll back some of its push-back against Russian energy?

Well, that doesn’t seem to be the case at all.

Over in the UK, the defence secretary is preparing British forces to detain Russian vessels operating in defiance of oil sanctions.

Bizarrely, despite facing an imminent energy crisis, the UK is doubling down on its efforts to make oil supply even more difficult.

And that’s the reckless trend that’s been unfolding all across the West in recent years, well before events kicked off in Iran.

Over the past several years, Europe has been gradually pivoting AWAY from cheap pipeline gas from Russia and toward high-cost LNG shipments from the US.

It’s all part of Europe’s pledge to cut off Russia’s war revenue in the conflict against Ukraine. A moral tick in its own eyes.

But as I’ve pointed out previously, the only loser in this is Europe.

LNG requires significant additional infrastructure and processing capacity to transport and export overseas.

Pivoting to US gas means higher energy prices for Europe. But it also makes it more reliant on a SINGLE supplier.

And that’s perhaps the biggest danger.

The Only Winners: Oil Producers

Meanwhile, as the UK and Europe double down on their pivot away from Russian gas, Russia has found a willing buyer on its southern border: China.

But that’s not necessarily a positive long-term solution for China.

In fact, it may be sitting on a similar trajectory to oil-starved Europe.

You see, Russia’s share of China’s gas market is expected to reach 36% once a major pipeline, Power of Siberia-2, comes online later this decade.

And with potentially long-term instability of Middle Eastern oil flows, China could become even more reliant on Russian energy.

Clearly, Russia is emerging as a dominant player in China’s energy security. And that could make the relationship more tenuous in the years (or months) to come.

Notice the trend…

Both China and Europe are increasingly relying on a single supplier.

According to Reuters, the United States will supply at least 70% of Europe’s LNG from 2026. Staggering.

Meanwhile, China is leaning more heavily on Russia, and that reliance is deepening given the events in the Middle East.

So, what’s the consequence?

Energy-reliant nations are leaning into extreme dependence.

As I’ve outlined in the past, I believe we’re in the midst of a major switch in the global energy trade.

And as more power falls into the supplier’s hands… And AWAY from the buyer… The potential for friction grows.

How that looks in the months and years ahead, no one can predict.

But the key point is this: Energy is the most critical element in our modern economy. The lifeblood that sustains manufacturing, defence, farming and transportation.

Energy markets have operated harmoniously over decades, thanks to a relatively stable era of global trade.

But that delicate dance is rapidly unwinding.

As the war in the Middle East persists, major oil and gas importers, chiefly China and Europe, are increasingly relying on a single source for their imports.

And that’s putting more power into the ‘haves’ over the ‘have-nots.’

Clearly, oil producers hold all the chips in today’s economy: chiefly Russia and the US.

So, could these two foes, who share significant common ground in terms of their energy dominance, be shifting towards some kind of powerful alliance?

That’s the ridiculous idea I put to my paid readers earlier in the year as we doubled down on our oil and gas positions.

But given what’s unfolded in the Middle East this month, in my view, a US-Russia global oil cartel is looking even more likely.

This could be a disturbing outcome for oil-dependent nations, and we’ll explore it further in our next edition.

Stay tuned.