Oil Market Faces Historic Bearish Wave from Investors

France and the United Kingdom have reportedly agreed to deploy troops to Ukraine once a ceasefire with Russia is achieved. While similar unconfirmed reports involve Washington, President Trump has not formally approved such a plan.

Moscow would almost certainly reject any such deployment, viewing it as a direct threat from NATO forces operating on its border. This geopolitical tension formed the backdrop of a recent Paris conference hosted by French President Macron. Despite strong rhetoric from European leaders, Ukrainian President Zelenskyy later complained that a finalized agreement on security guarantees remains ambiguous and unconfirmed.

When asked directly about Western security guarantees against a future Russian attack post-truce, Zelenskyy was blunt: "I am asking this very question to all our partners and I have not received a clear, unambiguous answer yet."

Figure 1: Ukrainian President Volodymyr Zelenskyy with European Union officials. Despite public shows of support, Zelenskyy has voiced frustration over the lack of concrete security guarantees.

Mixed Signals From Washington

The messaging from the United States has been particularly inconsistent. Following the summit, President Trump's envoy, Steve Witkoff, claimed "significant progress" had been made.

"We have made significant progress on several critical workstreams, including our bilateral security guarantee framework and a prosperity plan," Witkoff stated on X. "We agree with the Coalition that durable security guarantees and robust prosperity commitments are essential to a lasting peace in the Ukraine."

However, this optimistic tone contrasts with the intentionally vague rhetoric from Washington. This has been a source of ongoing frustration for Zelenskyy, who receives robust verbal commitments from European allies while the U.S. appears to drag its feet. The result is a cycle of bickering among Western partners without any final, signed agreements.

Furthermore, President Trump is unlikely to support any measure that could be perceived as violating his campaign promise of no American "boots on the ground" in Ukraine.

Figure 2: The 'Coalition of the Willing Summit' in Paris, where leaders discussed long-term support for Ukraine. The meeting highlighted the gap between political rhetoric and finalized commitments.

The Growing Pressure for Elections

Adding another layer of complexity, President Trump has been pushing for Zelenskyy to hold elections. The issue is included in a 20-point peace plan developed between Washington and Kyiv.

In response, Ukraine's parliament has approved a cross-party working group to draft legislation for holding elections under martial law. On January 8, the group met for the second time, with the Central Election Commission (CEC) presenting its proposals.

However, Zelenskyy has outlined his own requirements for an election, including a short-term truce to allow for voting. This presents a major obstacle, as Russia would first have to agree. Moscow has consistently resisted short-term ceasefires, pushing instead for a permanent political resolution to end the conflict.

If Zelenskyy continues to test Washington's patience on these issues, he risks losing the very security guarantees he is trying to secure.

The US seizure of a Russian-flagged oil tanker, the Marinera, in the North Atlantic marks a significant escalation in Washington's naval blockade of Venezuela. This action directly challenges a Kremlin strategy to protect its "shadow fleet" by reflagging ships and amplifies tensions with Moscow.

The move follows a clear pattern. According to maritime intelligence firm Windward, 21 previously flagless vessels adopted the Russian flag after the US seized another shadow fleet tanker, the Skipper, in the Caribbean on December 10. The seizures are part of a broader blockade announced by US President Donald Trump targeting sanctioned oil tankers moving in and out of Venezuela.

The seizure of the Russian-flagged Marinera tanker signals a more aggressive US stance against sanctions-evading shadow fleets.

Why Russia's Flag Offered No Protection

Under international maritime law, a flagged ship typically cannot be boarded without permission from the flag-granting country, while a flagless vessel has no such protection. However, despite warnings from Moscow, US Coast Guard helicopters boarded and took control of the Marinera, which had recently been renamed from Bella 1.

"This individual action threatens to undermine the security and sanctuary that registering or re-registering in Russia might otherwise create," John Burgess, a senior fellow at Tufts University's Center for International Law and Governance, told RFE/RL on January 7.

The Marinera adopted the Russian flag on December 30, shortly after a previous US boarding attempt near Venezuelan waters. Burgess noted this made the tanker's legal status "ambiguous," rendering its new flag—which the crew had painted onto the hull—ineffective. "Ships are not supposed to change flags for convenience. There's supposed to be a substantive reason," he explained.

Washington's position was blunt. "The vessel was deemed stateless after flying a false flag," stated White House Press Secretary Karoline Leavitt, dismissing Russian claims that the seizure was a violation of maritime law or even "piracy."

A New Template for Sanctions Enforcement

The shadow fleets used by Russia, Iran, and Venezuela to circumvent international sanctions are estimated to comprise around 1,000 vessels. These fleets have grown as the nations work to maintain oil sales crucial to their state budgets. The ships are often old, poorly maintained, and uninsured, with hundreds blacklisted by the US, the European Union, and others.

Maritime analysts believe recent US actions, along with Ukrainian drone strikes on sanctioned ships in the Black Sea, signal a tougher era for the shadow fleet. The seizure of the Marinera takes this a step further.

"US regulators are watching. More seizures are likely," said Michelle Bockmann, a senior maritime intelligence analyst at Windward, during a January 7 webinar.

Bockmann suggested the operation provides "a template" for Baltic Sea nations concerned about the safety, security, and environmental threats posed by falsely flagged tankers. "The US has shown that it is possible to interdict and to seize and to deal with tankers," she added.

The operation was also a coordinated effort. The UK's Defense Ministry confirmed that its air force provided surveillance and naval refueling to support the US mission. Defense Secretary John Healey stated that US forces were permitted to use UK bases for the operation, justifying it under international law because the Marinera was part of "a Russian-Iranian axis of sanctions evasion which is fueling terrorism, conflict, and misery from the Middle East to Ukraine."

Geopolitical Fallout and the Crew's Fate

This seizure adds another layer of complexity to the geopolitical landscape. It comes as Washington engages in delicate negotiations with Russia, Ukraine, and European allies over ending the war in Ukraine, with proposed security guarantees for Kyiv that Moscow finds unacceptable. The incident also deals a blow to Moscow's prestige, following a US raid that led to the detention of key Kremlin ally and ousted Venezuelan leader Nicolas Maduro.

The immediate consequences continue to unfold. Russia's Foreign Ministry has demanded that the US ensure "humane and proper treatment of Russian citizens aboard the Marinera" and allow for their prompt return home. Washington, however, has indicated that the seafarers could face trial in the United States, setting the stage for further diplomatic conflict.

The United States government is actively considering an investment in critical minerals mining projects in Greenland, according to Amaroq CEO Eldur Olafsson. The discussions precede high-stakes talks between Washington and Danish officials over the strategic future of the Arctic island.

Amaroq is a mining company focused on South Greenland, where it is exploring and extracting deposits of gold, copper, germanium, and gallium, among other key minerals.

Washington Considers Direct Investment in Amaroq Projects

In an interview, Amaroq's CEO Eldur Olafsson confirmed that discussions with U.S. government bodies about potential investment opportunities are ongoing, though no final agreements have been reached.

Olafsson detailed that a potential deal could involve several forms of U.S. support, including:

• Offtake agreements

• Infrastructure support

• Credit lines

He declined to specify which projects have attracted U.S. interest.

When asked for comment, a U.S. State Department spokesperson stated, "The United States is eager to build lasting commercial relationships that benefit Americans and the people of Greenland." The spokesperson also noted that "President Trump reiterated the importance of Greenland to U.S. defense and underscored his commitment to the relationship by designating Governor Landry as Special Envoy to Greenland."

The Export-Import Bank of the United States (EXIM) did not respond to a request for comment.

Greenland's Strategic Role in US National Security

These investment talks are unfolding as U.S. President Donald Trump has increased his focus on acquiring Greenland, which he views as vital to national security. The renewed interest follows a recent military operation to seize Venezuelan President Nicolas Maduro.

European governments have been working to formulate a response to the escalating rhetoric from the U.S., which has not ruled out military action. Adding to the urgency, U.S. Secretary of State Marco Rubio is scheduled to meet with Danish officials next week to discuss the future of Greenland, which is a self-governing Danish territory.

The Race for Critical Minerals and China's Dominance

For the White House, Greenland's vast mineral deposits represent a strategic opportunity to challenge China's control over the global supply of critical minerals.

Earlier this week, rare earth companies with projects in Greenland saw their stock prices surge following U.S. comments about acquiring the island. While President Trump has recently framed the issue around national security, former national security advisor Mike Waltz clarified in January 2025 that the U.S. fixation on the island was primarily about "critical minerals."

Is Arctic Mining Economically Viable?

Despite the strategic interest, some experts have raised concerns that extracting minerals from Greenland is not economically feasible due to the island's harsh conditions and lack of infrastructure.

However, Amaroq's CEO, Eldur Olafsson, argued that mining is realistic with careful planning and logistics. He drew parallels to major mining operations in Russia and Alaska, which were developed under similar challenging conditions.

Olafsson noted that while transporting minerals over long distances on land is a major hurdle for many mining projects, Greenland offers a unique advantage. Many of its mineral deposits are located near "deep fjords," which could significantly simplify the process of shipping them to global markets.

Furthermore, climate change is altering Greenland's landscape. Melting ice has exposed wetlands, shrub areas, and barren rock, making some of the island's strategic mineral reserves more accessible to mining companies.

U.S. Treasury yields rose on Thursday as investors braced for two pivotal events: the release of December's employment data and a potential Supreme Court decision on key tariffs.

Yields ticked higher across the curve by less than three basis points, rebounding from earlier lows. The move was supported by fresh economic data showing improved productivity and weekly jobless claims holding near recent lows. A rise in oil prices after a two-day slide also contributed to the upward pressure on yields.

Despite the sell-off, some analysts believe the Treasury market has a "strong underlying bid" that could cushion the impact of strong economic news, according to Andrew Brenner, vice chairman at Natalliance Securities. Brenner noted that a ruling on tariffs "could send rates in either direction," highlighting the uncertainty facing bond investors.

Fed Rate Cut Expectations Hinge on Jobs Data

The upcoming December employment report is the main event for market participants, as it could reshape expectations for Federal Reserve interest rate policy in the year ahead.

Last year, the Fed delivered three rate cuts in response to signs of a weakening job market. However, with some central bank officials now signaling a desire to pause due to inflation risks, the new data carries significant weight.

Currently, traders of short-term interest rate products are pricing in minimal odds of a rate cut at the Fed's next meeting on January 28. The market is, however, anticipating two cuts by the end of the year. In a notable move in the options market on Thursday, one trader purchased a $7.5 million call option on 10-year note futures, a position that protects against a rally in bond prices (a fall in yields).

Supreme Court Tariff Decision Poses Fiscal Risk

Investors are also closely watching the Supreme Court, which could rule on the legality of tariffs implemented by the current administration. These tariffs have become a source of revenue that helped narrow the U.S. budget deficit in fiscal 2025.

An abrupt end to this revenue stream could trigger a negative knee-jerk reaction in the Treasury market, reflecting concerns over the nation's fiscal health. A similar market response was observed in early November when the court heard oral arguments on the case, even though the White House has alternative legal options available.

Heavy Bond Supply Adds to Market Pressure

Supply dynamics are also playing a crucial role in pushing yields higher. This week is shaping up to be one of the largest on record for new investment-grade corporate bond sales, which directly compete with Treasuries for investor capital. A staggering $88.4 billion in corporate debt was sold in just the first three days of the week.

Adding to the supply pressure, the Treasury Department is scheduled to auction new three-year and 10-year notes on Monday. All of next week's auctions have been scheduled earlier than usual to ensure they conclude by their January 15 settlement date.

Source: Bloomberg Europe

WASHINGTON, Jan 8 (Reuters) - U.S. worker productivity grew at its fastest pace in two years in the third quarter as businesses invested heavily in artificial intelligence, depressing labor costs.

Nonfarm productivity, which measures hourly output per worker, accelerated at a 4.9% annualized rate, the Labor Department's Bureau of Labor Statistics said on Thursday.

That was the quickest pace since the third quarter of 2023 and followed an upwardly revised 4.1% growth rate in the second quarter. Economists polled by Reuters had forecast productivity would grow at a 3.0% rate after a previously reported 3.3% pace of expansion in the April-June quarter.

The report was delayed by the 43-day federal government shutdown.

Productivity grew at a 1.9% rate from a year ago. Businesses are spending on AI, which economists said could further boost productivity. The jump in productivity helps to explain the gap between strong gross domestic product growth and a lackluster labor market. The economy grew at a robust 4.3% rate in the third quarter. In contrast, private job gains averaged 55,000 per month in the three months through October.

Unit labor costs - the price of labor per single unit of output - decreased at a 1.9% rate in the third quarter. That followed a 2.9% pace of decline in the April-June quarter. Labor costs increased at a 1.2% rate from a year ago.

Source: Investing