Oil News: Iran Tensions Lift Crude Oil—Can Geopolitics Override Surplus Fears?

Commodity

Summary:

Crude oil surges 6.78% on geopolitical risk and inventory draws, yet structural surplus of 0.75-3.5 million bpd could cap gains near consensus $60 target.

Key Points:

· WTI futures surge 6.78% to $65.21 on Iran tensions and U.S. inventory draws—sixth consecutive weekly gain for crude oil.

· Persian Gulf supply risk escalates as Iran announces military drills near Strait of Hormuz—20% of global oil flows threatened.

· Analysts forecast Brent at $62 and WTI at $58.72 for 2026—global oversupply of 0.75-3.5M bpd threatens current rally momentum.

WTI Surges on Iran Tensions — But Oversupply Threatens the Rally

Nearby WTI futures settled at $65.21 last week, up $4.14 or 6.78%—marking the sixth straight weekly gain. Traders are feeding off escalating U.S.-Iran tensions and tighter U.S. inventories, pushing both WTI and Brent to multi-month highs. But analyst consensus is screaming oversupply.

War Premium Is Real — Persian Gulf Risk Is Pricing In

The biggest catalyst? Geopolitics. President Trump warned Tehran it faces military action unless it accepts a new nuclear deal. The U.S. deployed additional naval assets to the Persian Gulf, and Iran just announced live-fire military drills in the Strait of Hormuz next week. Roughly 20% of global seaborne oil flows through that chokepoint.

Traders are pricing in disruption risk even without actual barrel losses. Stack that with drone strikes on Russian tankers in the Black Sea and tightening U.S. sanctions on Russian fuel exports to Asia, and you've got a risk premium that's hard to ignore.

U.S. Inventories Are Tightening — For Now

The latest EIA report showed a 2.3-million-barrel draw in commercial crude stocks. At 423.8 million barrels, U.S. inventories are sitting about 3% below the five-year seasonal average. That shift from earlier January builds is giving buyers confidence that near-term demand is absorbing supply.

But the Oversupply Math Isn't Going Away

Here's where bulls need to be careful. A recent Reuters poll of 31 economists and analysts forecasts Brent averaging just $62.02 per barrel in 2026, with WTI projected at $58.72—both well below current levels. Global oil markets face a structural surplus ranging from 0.75 to 3.5 million barrels per day this year.

OPEC+ paused production hikes for Q1 2026 after raising output targets by 2.9 million barrels daily last year. Analysts expect the group will watch consumption patterns closely before making any big moves.

What Traders Should Watch Next Week

Geopolitical risk premiums could extend if Iranian tensions escalate or we see actual supply disruptions—potentially pushing prices into the low-to-mid $70s. On the flip side, any clear de-escalation signals or a surprisingly bearish inventory report could trigger profit-taking back toward consensus forecast levels near $60. For now, the war premium is underpinning the rally, but the fundamental backdrop of excess supply capacity says don't get too comfortable chasing this move.

Weekly Light Crude Oil Futures

Technically, both the weekly swing chart and the 52-week moving average are signaling an uptrend, but the market is facing headwinds inside a key retracement zone. Traders will also be monitoring a long-term pivot for direction.

The breakout over the 52-week moving average at $60.64 triggered the huge rally. This is understandable since it had been capping gains since late September. This is the support.

The next surge was fueled by a recovery of the long-term pivot at $63.62. This indicator will determine the strength of the trend.

The intermediate range is $75.12 to $54.70. Its retracement zone at $64.91 to $67.31 is potential resistance. Buyers tested this zone last week before stopping at $66.48.

For longer-term traders, the 52-week moving average has to continue to hold as support. Short-term traders need to see a support base built over the pivot at $63.62. Enough momentum then has to build to trigger a breakout over the top of the retracement zone at $67.32.

If enough buyers don't show up to overcome the retracement zone then we're likely to become rangebound with the 52-week moving average the floor and the zone the ceiling.

Source: FX Empire

Risk Warnings and Disclaimers

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Gerik

Economic

Trump Signals Willingness to Engage Havana

On January 31, US President Donald Trump announced that the United States has begun negotiations with Cuban leaders, voicing confidence that the two sides could eventually reach an agreement. While the president did not disclose details regarding the scope or timing of the talks, his remarks marked a notable rhetorical opening after years of strained bilateral relations.

The statement suggests a tentative diplomatic overture, though its practical substance remains unclear. By withholding specifics, the administration appears to be testing political reactions while retaining flexibility over the direction and pace of engagement.

Negotiations Overshadowed by New Economic Measures

Trump’s comments came just two days after he signed an executive order imposing higher tariffs on countries that supply oil to Cuba. This move effectively tightened economic pressure on the Caribbean nation and reinforced Washington’s leverage at the outset of any potential dialogue.

The sequencing of these actions points to a strategic pattern rather than coincidence. The initiation of talks coinciding with punitive economic measures indicates a bargaining posture in which sanctions function as leverage rather than as instruments of isolation alone.

Cuba Condemns What It Calls Aggressive Policy

Cuban Foreign Minister Bruno Rodríguez sharply criticized the new US executive order, characterizing it as an aggressive act against both the Cuban government and its population. He emphasized that the measures come on top of nearly 65 years of US economic sanctions, which Havana describes as the longest and most severe embargo imposed on any country.

From the Cuban perspective, the renewed pressure reinforces a historical narrative of economic coercion rather than constructive diplomacy. This framing complicates prospects for trust building, even if negotiations formally proceed.

Energy Dependence and the Venezuela Factor

Since the imposition of US sanctions in 1962, Cuba has relied heavily on imported oil, primarily from Venezuela. However, recent US military action against Venezuela earlier this year, coupled with the arrest and transfer of Venezuelan President Nicolás Maduro and his spouse to the United States for trial, has significantly disrupted Caracas’s operations.

President Trump has previously stated that oil shipments from Venezuela to Cuba would be suspended until a separate agreement is reached. The combination of sanctions enforcement and regional instability has therefore altered Cuba’s energy supply dynamics, leaving the island increasingly exposed.

Fuel Shortages and Domestic Impact in Cuba

The tightening of sanctions and the blockage of oil flows have intensified Cuba’s fuel shortages, with visible consequences for its national electricity system. Power generation has been severely affected, leading to frequent outages and compounding economic and social pressures on the population.

In this context, Washington’s optimism about a potential deal contrasts sharply with the immediate humanitarian and infrastructural challenges facing Cuba. The relationship between sanctions and negotiations is therefore not merely rhetorical but materially linked, as energy constraints heighten Havana’s vulnerability.

A Narrow Diplomatic Window

Taken together, the developments suggest that while the United States is signaling openness to dialogue, negotiations are unfolding under asymmetric conditions shaped by economic pressure. Whether this approach leads to compromise or entrenches confrontation will depend on how both sides interpret the balance between coercion and engagement.

For now, Trump’s optimism points to a possible diplomatic opening, but the broader trajectory of US–Cuba relations remains uncertain, constrained by longstanding mistrust, regional instability, and the immediate realities of Cuba’s deepening energy crisis.

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Economic

Political

Russia’s Strategic Rationale Behind Reviving RIC

According to the South China Morning Post, Russia has renewed its call to reactivate the trilateral Russia–India–China mechanism, commonly known as RIC. In early January 2026, Russian Foreign Minister Sergey Lavrov emphasized Moscow’s close bilateral ties with both New Delhi and Beijing, framing RIC as a historical pillar of emerging multipolarity and an intellectual precursor to BRICS.

The idea of RIC was originally proposed in 1998 by former Russian prime minister Yevgeny Primakov as a framework to balance Western dominance and encourage Eurasian coordination. Despite its longevity as a concept, the mechanism has never evolved into a substantive platform, largely because of deep seated geopolitical divergences, most notably between India and China.

At a Russian diplomatic briefing on January 20, Lavrov reiterated that a multipolar world order is inevitable, describing Russia–India relations as uniquely strategic and Russia–China ties as unprecedented in depth and policy alignment. From Moscow’s perspective, reviving RIC would help preserve diplomatic flexibility and reduce isolation under ongoing sanctions pressure.

India’s Reluctance Rooted in Structural Mistrust

Analysts widely agree that India assigns RIC only marginal importance. Persistent mistrust between India and China remains the central obstacle. Since the deadly 2020 clashes in the Galwan Valley, tensions along the Line of Actual Control have not been fully resolved. Although limited disengagement has taken place, friction continues in areas such as Depsang Plains and Demchok, while ongoing troop deployments and infrastructure expansion continue to erode strategic confidence.

This unresolved security environment shapes India’s assessment of trilateral cooperation. Without a minimum threshold of trust, any attempt to expand RIC beyond symbolic dialogue encounters structural limits. As a result, New Delhi views the mechanism as a diplomatic channel rather than a framework capable of producing binding outcomes.

The Pakistan Factor and Compounding Security Concerns

The outlook for RIC has further dimmed following reports regarding China’s alleged role during India’s Sindoor military operation, which New Delhi framed as a response to attacks linked to Pakistan backed militant groups. According to Indian and US sources, Beijing reportedly supplied advanced weapons, intelligence support, and information operations to Pakistan, actions that India perceives as directly undermining its security posture.

Whether interpreted as causation or correlation, these developments reinforce Indian skepticism toward Beijing’s strategic intentions. The closer China–Pakistan alignment becomes in security matters, the narrower India’s political space to engage in a trilateral structure that includes China.

Avoiding the Perception of a Western Counterweight

From a strategic positioning perspective, India continues to pursue a pragmatic, non committal approach to RIC. Analysts at the Takshashila Institution argue that New Delhi does not wish to be seen as part of an arrangement implicitly positioned against the United States and its allies, even while rhetorically supporting multipolarity.

This reflects India’s long standing emphasis on strategic autonomy. Rather than anchoring itself within a fixed bloc, New Delhi seeks flexibility across partnerships, especially as its economic, technological, and defense cooperation with Western countries deepens.

Economic Corridors and Overlapping Strategic Interests

Divergent economic priorities also constrain RIC’s development. Facing potential US sanctions risks, India may scale back its role at Iran’s Chabahar Port while prioritizing the International North-South Transport Corridor with Russia. However, this corridor overlaps geographically and logistically with China’s Belt and Road Initiative, particularly in Russia and Central Asia.

These intersections create both coordination opportunities and latent competition. While technical cooperation is possible, conflicting interests over routes, standards, and influence limit the scope for deeper alignment under a trilateral framework.

Energy Trade, Sanctions Pressure, and US Leverage

India’s continued imports of discounted Russian oil remain another sensitive issue. The United States has criticized these purchases, arguing they indirectly fund Russia’s war in Ukraine, and has imposed 50 percent tariffs on certain Indian goods. New Delhi counters that affordable energy imports are essential for economic stability and growth.

This situation illustrates a clear strategic trade off. Reducing Russian oil imports could ease US trade pressure but risk higher energy costs, while maintaining them sustains diplomatic friction. Some analysts suggest that if India curtails oil purchases to secure concessions from Washington, Russia–China ties may tighten further, leaving Moscow with stronger incentives to promote RIC as a sanctions mitigation tool.

Payment Systems and Divergent Monetary Agendas

Another frequently cited area of potential cooperation involves linking financial messaging and payment systems among Russia, China, and India. Yet analysts caution that India does not actively support de dollarization, whereas China is pushing for greater internationalization of the renminbi. These differing monetary objectives limit the strategic depth of any financial integration under RIC, confining cooperation to narrowly defined transactional use rather than systemic transformation.

India is also closely monitoring the stance of US President Donald Trump before making any strategic commitments related to RIC. According to research from the University of Oxford, any visible expansion of Russia–India cooperation could trigger renewed pressure from Washington.

At the same time, India has strengthened ties with the European Union, including finalizing a bilateral trade agreement that European Commission President Ursula von der Leyen described as the “mother of all deals.” This deepening engagement with Europe further constrains India’s willingness to elevate RIC into a central foreign policy pillar.

Taken together, India’s cautious stance reflects a consistent priority to safeguard core interests while preserving strategic autonomy. RIC may continue to exist as a dialogue channel useful for signaling and managing perceptions, but the absence of trust between India and China, combined with competing geopolitical and economic incentives, makes it unlikely to evolve into a substantive strategic framework. In an era of intensifying great power rivalry, RIC’s revival appears more symbolic than transformative.

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Edward Lawson

Commodity

Energy

Remarks of Officials

Economic

Middle East Situation

Political

Geopolitical uncertainty is rattling global energy markets as the US administration's unpredictable stance on Iran leaves both Tehran and traders guessing. With a US armada positioned off the Iranian coast, the lack of a clear strategy has injected significant volatility into oil and gas prices.

Oil prices climbed above $70 per barrel on Thursday, reaching a high not seen since last July. While this surge is partly fueled by fears of a US-Iran conflict, it's also propped up by temporary supply disruptions. Recent winter storms have interrupted US output, and fires at Kazakhstan's key Tengiz field have caused a sharp drop in its supply.

This tension extends to the natural gas market. European prices rose sharply last month due to a prolonged cold spell that depleted storage reserves. The freeze in the US has further complicated the situation, forcing Europe to confront its potential over-reliance on American liquefied natural gas (LNG) just as it sought to reduce its dependence on Russian pipelines.

A High-Stakes Game of Threats and Diplomacy

The war of words has escalated, amplifying market jitters. President Donald Trump issued a warning, posting, "The next attack will be far worse! Don't make that happen again," as the USS Abraham Lincoln carrier group remains near Iran.

In response, Ali Larijani, secretary of Iran's national security council, stated from Moscow that "structural arrangements for negotiations are progressing," dismissing the tension as a "contrived media war." Simultaneously, Tehran announced plans for a live-fire military exercise in the Strait of Hormuz, while attributing several domestic explosions to gas leaks.

Meanwhile, regional powers including the UAE, Saudi Arabia, and Qatar have consistently advocated for a diplomatic solution over military conflict.

Mapping the Potential Conflict Scenarios

The current standoff could unfold in several ways, ranging from a quiet de-escalation to a major regional conflict.

• Limited Strikes: The confrontation could end with minor US military strikes on Iranian missile or nuclear facilities, leaving the country's energy sector untouched, similar to the brief conflict last June.

• Targeting Energy Infrastructure: The US and/or Israel could attack Iran's domestic energy grid, focusing on gas, electricity, and fuel distribution systems.

• Regime-Change Campaign: Following Iran's suppression of recent protests, Washington might launch a prolonged military campaign or an oil export blockade designed to destabilize or topple the regime.

• Iranian Retaliation: Tehran could strike back by targeting regional energy assets, as it did last year when it damaged a refinery in Haifa, Israel. Other potential targets include Israeli offshore gas platforms that supply Egypt and Jordan.

• A Negotiated Deal: In the face of an attack, Iran might be pushed to the negotiating table, possibly after a change in leadership.

This wide spectrum of outcomes makes it difficult for energy markets to price in the risk accurately. The situation is far more complex than the one-way bet on Venezuelan oil at the start of the year, where exports had little direction to go but up.

The Real Impact on Global Oil and Gas Supply

Iran's role in the global oil market means any disruption would have a significant impact. The country currently exports between 1.5 million and 1.7 million barrels per day (bpd) of crude oil and condensate, along with 0.5 million bpd of refined products. A sudden halt to these exports could drive oil prices higher by about $15 per barrel.

However, several factors could cushion the blow. OPEC's spare capacity, held primarily by Saudi Arabia and the UAE, is more than sufficient to cover the shortfall. Furthermore, China—Iran's largest customer—could slow the filling of its strategic petroleum reserves or purchase more discounted Russian oil.

While Iran is the world's third-largest natural gas producer, it is not a major exporter. Its main customer, Turkey, has other options, including increasing LNG purchases or buying more gas from Russia.

Beyond the "Close Hormuz" Threat

The most severe risk—though one with low probability—is an interruption of energy transit through the Gulf. The often-repeated threat from Tehran to "close Hormuz" is largely seen as a last resort, as such an act would be almost suicidal for the regime.

A more plausible scenario involves asymmetric warfare. Houthi forces in Yemen have demonstrated how a campaign of missile, drone, and mine attacks can effectively disrupt shipping in a critical waterway. A similar strategy in the Gulf would not stop oil and LNG transit entirely, but it would severely limit it and cause shipping and insurance premiums to skyrocket.

What a Diplomatic Breakthrough Would Mean

If diplomacy prevails, the market dynamics would shift dramatically. The geopolitical risk premium would evaporate from oil prices. An easing or suspension of sanctions could allow Iran to boost its exports by 300,000 to 500,000 bpd, bringing its total output to around 3.8 million bpd.

A deal would also be a financial windfall for Tehran. By gaining access to customers beyond China, Iran could end its reliance on a "shadow fleet" of tankers and stop offering deep discounts, saving an estimated $8 to $10 per barrel.

Iran's Long-Term Production Challenges

Even if a political agreement is reached, a surge in Iranian oil production is unlikely. International oil companies have historically found Tehran a difficult place to operate, and the country's aging fields require massive investment just to offset natural decline rates.

Iran also lacks sufficient natural gas to inject into its fields for crucial enhanced oil recovery projects. Under the most favorable conditions, a realistic production target is 4.5 million bpd by 2030—a moderate increase, but not a game-changer for global supply.

For now, the balance of risk points toward higher oil and gas prices. While a peaceful resolution would loosen the market, it wouldn't fundamentally reshape it. The key players have yet to reveal their next move, leaving the world's energy markets waiting in suspense.

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Gerik

Economic

From Experimental Tool To Global Creative Infrastructure

AI powered video generation has evolved at remarkable speed, moving beyond novelty and experimentation to become a practical production tool for professional creators, marketers, and media organizations. In this increasingly competitive landscape, Kling has emerged as one of the most closely watched new entrants, positioning itself alongside Google Veo and OpenAI Sora in the global race for AI driven video technology.

Launched in June 2024, Kling has quickly become a strategic growth engine for Kuaishou, a firm that has long competed in the shadow of ByteDance in China’s short video market. The speed at which Kling has scaled suggests that AI video generation is no longer a peripheral experiment but a core pillar of future content ecosystems.

User Adoption Signals A Structural Shift

Within just a few months of launch, Kling attracted approximately 12 million monthly active users. This rapid uptake reflects a broader transformation in how generative AI is being consumed. AI created videos, once viewed as technical demos or curiosity driven content, are now deeply embedded in everyday digital consumption across social media platforms.

Animated animals, cinematic science fiction scenes, and AI generated virtual presenters have become familiar to online audiences. While concerns persist about low quality AI content flooding digital spaces, Kling’s growth indicates that demand is increasingly shaped by usefulness and creative control rather than novelty alone.

Why Kling Stands Out In A Crowded AI Market

The breakout success of Kling raises an important question for the broader AI industry: why has this platform gained traction while many similar tools struggle to reach scale. The answer appears to lie in Kling’s alignment with real world creative workflows. Instead of positioning itself purely as a technological showcase, Kling integrates generative capabilities with practical needs such as speed, stylistic flexibility, and commercial usability.

This approach suggests a causal relationship between product design and adoption. Platforms that successfully translate AI complexity into intuitive creative outputs are more likely to achieve sustained engagement, rather than experiencing short lived viral attention.

Commercial Performance Reinforces Market Credibility

Kling’s financial performance further strengthens its position. Company disclosures and market estimates indicate that the platform generated more than 20 million USD in revenue in December alone, contributing to an annual total of roughly 140 million USD. This figure exceeded Kuaishou’s internal target of 60 million USD for early 2025 by more than double, underscoring how quickly monetization has accelerated.

Looking ahead, growth momentum has carried into the new year. In January, Kling’s average daily revenue rose by around 30 percent compared with the previous month. This trend points to increasing willingness among users to pay for AI video services, especially as output quality and reliability improve.

Implications For The Global AI Video Race

Kling’s rise highlights a broader recalibration in the global AI landscape. Innovation is no longer concentrated exclusively in Western technology hubs, and Chinese platforms are increasingly capable of competing at the highest technological and commercial levels. While comparisons with Google Veo and OpenAI Sora often focus on model sophistication, Kling’s advantage lies in execution speed and market integration.

Rather than signaling a short term surge, Kling’s performance suggests that AI video generation is entering a more mature phase. In this phase, success depends not only on model capability but on the ability to convert technological breakthroughs into scalable, revenue generating creative infrastructure.

As AI generated video continues to reshape digital storytelling, Kling’s trajectory indicates that the next chapter of global AI competition will be defined as much by adoption and monetization as by raw technical power.

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King Ten

Economic

India and the European Union have finalized a long-awaited free trade agreement (FTA), a landmark deal that arrives at a critical moment for global commerce. As economies across Asia seek to diversify their export markets beyond the United States, this agreement provides significant momentum. The pact is being hailed as the "mother of all deals" for its sheer scale and its potential to reshape global trade alignments.

The deal underscores the EU's pragmatic approach to accommodating India's economic sensitivities—a flexibility that some argue has been missing in negotiations with the US. For India, this agreement is a milestone in its trade diversification strategy. Here’s a breakdown of what the FTA means for the country's economy.

Unpacking the India-EU Trade Agreement

Under the terms of the new agreement, India will gain preferential access to 97% of EU tariff lines, which covers an estimated 99.5% of its trade value. A significant portion of these goods will be eligible for immediate duty elimination, particularly benefiting labor-intensive sectors that contribute nearly 2% of India's GDP in exports.

The economic relationship is already robust. India maintains a net exporter status with the EU in both goods and services. Bilateral merchandise trade reached approximately $137 billion in fiscal year 2024–25, with India’s exports to the EU totaling $76 billion. The services trade is equally strong, hitting $83 billion in 2024.

Five Major Advantages for India's Economy

The FTA offers India several clear advantages, from tariff elimination on goods to a major boost for its world-class services sector.

1. Pivoting Beyond the US Market

The EU is already India's second-largest export destination, accounting for 17% of its total exports, just behind the United States at 21%. The EU's share has grown by three percentage points since the pandemic. Since India's export mix to both markets is similar (with the exception of petroleum products having a larger share in EU exports), the new FTA allows India to strategically pivot toward the European market if high US tariffs persist. This move can effectively reduce its reliance on a single major trading partner without requiring a major overhaul of its export industries.

2. Boosting Jobs in Labor-Intensive Industries

The agreement will eliminate EU tariffs on a wide range of Indian products, including:

• Marine products (especially shrimp)

• Leather and footwear

• Textiles and garments

• Handicrafts

• Gems and jewellery

• Plastics and toys

These sectors are highly labor-intensive and represent areas where India competes directly with China, Bangladesh, and Vietnam. Having faced pressure from US tariffs in recent years, these industries now gain a meaningful advantage in the EU market, which can spur job creation in some of India’s largest employment sectors.

3. Strategic Access in Protected Sectors

While securing broad market access, India successfully protected its most sensitive domestic sectors, such as agriculture and dairy. At the same time, it agreed to reduce tariffs on other key goods like food, beverages, and automobiles. This balanced approach allows India to expand its export opportunities without compromising its core domestic industries.

4. Attracting More Foreign Direct Investment (FDI)

Deeper economic integration with the EU is expected to drive stronger foreign investment into India. The EU already accounts for about 15% of India's FDI inflows, led by the Netherlands, Germany, Belgium, and France. Historically, EU investment has concentrated in the services sector, particularly IT and software.

With India’s net FDI inflows softening recently, the FTA could revive investment momentum. This is especially true for manufacturing industries like automobiles, chemicals, and construction, which have previously lagged. Over time, increased FDI can fortify India's supply chains and strengthen its external financial balances.

5. Expanding India's Dominant Services Sector

The benefits of the FTA extend well beyond goods. India already exports services equivalent to about 1% of its GDP to the EU and maintains a surplus of around 0.2% of GDP. The new agreement includes "broader and deeper" commitments from the EU across 144 services subsectors.

This covers key areas where India is globally competitive, including:

• IT and Information Technology Enabled Services (ITeS)

• Professional services

• Education

• A wide range of business services

The deal creates a more stable and predictable policy environment for Indian service providers, while giving EU businesses and consumers better access to India's high-quality, cost-efficient service offerings.

Key Hurdles Ahead for the FTA's Success

Although the agreement marks a significant step, its formal signing is still several months away pending legal vetting. Its long-term success will ultimately depend on two critical factors.

First, India's manufacturing sector must meet the EU's stringent health, safety, and product standards. This may require substantial upgrades, especially for smaller manufacturers who may not be fully prepared to comply with these requirements.

Second, the ease of doing business remains a crucial factor. While India has made progress in liberalizing FDI, it continues to rank relatively high on the FDI Regulatory Restrictiveness Index. Further reforms to streamline approvals and regulatory processes will be necessary to fully unlock the potential benefits of this historic trade agreement.

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Gerik

Economic

The Emergence Of A Global Sell America Trade

Entering early 2026, global financial markets are witnessing a notable strategic pivot. Investment approaches that long relied on the structural dominance of the United States are increasingly being recalibrated. The direction is becoming clearer: a gradual but broad based reduction in exposure to US assets rather than an outright exit, driven by risk management and portfolio diversification concerns.

This sentiment first took shape after the tariff shock in April last year, when both US equities and government bonds fell sharply. Since then, the idea of reallocating capital away from the US has gained traction, moving from a defensive hedge into a more explicit allocation strategy.

From Diversification To Market Impact

According to Lauren Goodwin, economist at New York Life Investments, the ex America investment theme dominated discussions at the firm’s recent global investment meeting. European investors were reportedly surprised by how open US based investors had become toward diversifying beyond domestic markets.

Crucially, this strategy is framed as a response to rising market risks rather than a wholesale withdrawal from the US. Even so, its effects have been tangible. Over the past month alone, selling pressure has contributed to a weaker US dollar, restrained equity market performance, higher government borrowing costs, and a sharp rise in precious metals prices.

Dollar Volatility And Policy Signals

The nomination of Kevin Warsh as the next chair of the Federal Reserve, together with a last minute budget funding agreement, briefly supported the dollar in late January. Despite this rebound, the dollar still ended the month down 1.2 percent against a basket of major currencies including the euro, pound sterling, and Japanese yen.

Measured over a longer horizon, the decline is more striking. The US dollar has fallen around 10 percent over the past 12 months, an unusually large move for a currency that typically anchors global financial stability. In this environment, gold and silver have both reached new highs. Even after a sharp correction on January 30, gold and silver remained up 24 percent and 19 percent respectively for January, while gold has surged roughly 75 percent over the past year.

Equities Repriced Through A Currency Lens

US equity markets have lost momentum since the start of the year, particularly when returns are translated into foreign currencies. Adam Turnquist, chief technical strategist at LPL Financial, notes that the relationship between the dollar and US stocks has fundamentally shifted. Previously, rising dollar strength amplified US equity returns for foreign investors. That dynamic has now reversed, making US assets less attractive on a currency adjusted basis.

This shift is especially visible to international investors, for whom currency movements directly influence realized returns. The adjustment does not imply an immediate collapse in US equities but signals a rebalancing of relative attractiveness across regions.

Political Messaging And Investor Confidence

Further unease emerged when Donald Trump publicly welcomed a prolonged period of dollar weakness, arguing that it would improve the competitiveness of US exports. Markets reacted nervously, as investors have long associated US economic policy with support for a strong and stable currency.

The following day, Treasury Secretary Scott Bessent attempted to reassure markets that the government remains committed to a strong dollar and to the principle of American exceptionalism that has underpinned investment strategies for more than a decade. While these assurances helped limit immediate volatility, they did not fully dispel concerns about policy consistency.

Why US Assets Are Losing Some Of Their Shine

Fundamentally, the United States remains the backbone of global growth, with unmatched market depth and liquidity. The dollar continues to dominate global trade and finance. However, the shift away from US assets reflects deeper structural anxieties. Investors are increasingly uneasy about geopolitical risks, political pressure on independent institutions, expanding public debt, and questions surrounding the durability of the legal and institutional framework.

Despite political promises to address living cost pressures, many analysts argue that trade tariffs and unchecked government spending are exacerbating inflationary and fiscal risks. This concern is mirrored in the bond market. The yield on 10 year US Treasury bonds has climbed to 4.25 percent from below 4 percent in October 2025, an increase comparable to a standard interest rate hike by the Fed and contrary to the administration’s preference for lower borrowing costs.

Bond Yields And The Cost Of Confidence

The administration has partly attributed rising yields to bond selloffs in Japan spilling over into US markets. Investors, however, remain focused on domestic political risk as a key driver. As Steve Englander, currency strategist at Standard Chartered, observes, a weaker dollar combined with higher interest rates is a problematic mix. If this also dampens demand for US equities, the broader signal becomes negative rather than stimulative.

Over the past decade, one dollar invested in US equities has roughly quadrupled in value, while European equities delivered about half that return based on the Stoxx 600. This persistent outperformance has dramatically increased the weight of US stocks in global benchmarks. Today, US equities account for around 70 percent of the MSCI All World, up from roughly 50 percent ten years ago.

This concentration has made global portfolios highly sensitive to US market movements. With valuations elevated and expectations increasingly tied to artificial intelligence driven growth, some investors view diversification not as optional but as necessary risk control.

Gold As The Primary Beneficiary

Unlike previous periods of dollar weakness, no major fiat currency has emerged as a clear alternative beneficiary. Instead, capital has flowed decisively into gold and other precious metals. Earlier versions of the sell America strategy were largely confined to central banks seeking to reduce dependence on US assets after Russian reserves were frozen following the Ukraine conflict.

According to Ryan McIntyre, president of Sprott Inc., the perceived safety of US assets is now being reassessed. Data from the US Treasury shows that China’s holdings of US Treasuries have fallen steadily from 1.1 trillion dollars to below 700 billion dollars over the past decade. Brazil and India have also reduced their holdings, with the pace accelerating recently.

Selling Treasuries reduces the need to hold dollars, placing additional pressure on the currency. In parallel, data from the World Gold Council indicates that central bank gold purchases nearly doubled after the seizure of Russian assets and accelerated again late last year. More recently, strong inflows into gold exchange traded funds have opened this safe haven to retail investors seeking alternatives to US assets.

Taken together, these developments suggest that selling US assets is no longer a niche hedge but an evolving structural trend, one that carries meaningful implications for currencies, capital markets, and the future balance of global financial power.

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Oil News: Iran Tensions Lift Crude Oil—Can Geopolitics Override Surplus Fears?

Key Points:

WTI Surges on Iran Tensions — But Oversupply Threatens the Rally

War Premium Is Real — Persian Gulf Risk Is Pricing In

U.S. Inventories Are Tightening — For Now

But the Oversupply Math Isn't Going Away

What Traders Should Watch Next Week

Weekly Light Crude Oil Futures

Source: FX Empire

Washington Signals Openness to Cuba Talks Amid Escalating Sanctions Pressure

Trump Signals Willingness to Engage Havana

Negotiations Overshadowed by New Economic Measures

Cuba Condemns What It Calls Aggressive Policy

Energy Dependence and the Venezuela Factor

Fuel Shortages and Domestic Impact in Cuba

A Narrow Diplomatic Window

A Fragile Outlook for Russia’s Push to Revive the RIC Mechanism

Russia’s Strategic Rationale Behind Reviving RIC

India’s Reluctance Rooted in Structural Mistrust

The Pakistan Factor and Compounding Security Concerns

Avoiding the Perception of a Western Counterweight

Economic Corridors and Overlapping Strategic Interests

Energy Trade, Sanctions Pressure, and US Leverage

Payment Systems and Divergent Monetary Agendas

US-Iran Standoff: What's Next for Oil Prices?

A High-Stakes Game of Threats and Diplomacy

Mapping the Potential Conflict Scenarios

The Real Impact on Global Oil and Gas Supply

Beyond the "Close Hormuz" Threat

What a Diplomatic Breakthrough Would Mean

Iran's Long-Term Production Challenges

China’s Kling AI Sparks a Global Wave as AI Video Creation Enters a New Phase

From Experimental Tool To Global Creative Infrastructure

User Adoption Signals A Structural Shift

Why Kling Stands Out In A Crowded AI Market

Commercial Performance Reinforces Market Credibility

Implications For The Global AI Video Race

India-EU Trade Deal: 5 Key Wins for a Rising Economy

Unpacking the India-EU Trade Agreement

Five Major Advantages for India's Economy

Key Hurdles Ahead for the FTA's Success

Selling America: Why a Global Portfolio Shift Is Turning Into a Structural Risk

The Emergence Of A Global Sell America Trade

From Diversification To Market Impact

Dollar Volatility And Policy Signals

Equities Repriced Through A Currency Lens

Political Messaging And Investor Confidence

Why US Assets Are Losing Some Of Their Shine

Bond Yields And The Cost Of Confidence

Gold As The Primary Beneficiary

Risk Disclosure