Oil Prices Retreat as Geopolitics and Data Collide

Mexican officials are navigating a diplomatic minefield, exploring ways to send essential fuel to Cuba without triggering punishing tariffs from the United States. According to four sources familiar with the discussions, high-level talks are underway to find a solution that balances humanitarian support with economic reality.

The core of the issue is an executive order from U.S. President Donald Trump threatening tariffs against any country supplying fuel to the island nation. Mexican officials have been in frequent contact with their U.S. counterparts to understand the full scope of this threat and determine if any exemptions for aid are possible.

High-Stakes Talks Over Cuban Fuel Shipments

The outcome of these negotiations remains uncertain. When asked about the situation, the White House pointed to earlier remarks from President Trump, who told reporters on Monday he believed Mexico would cease oil shipments to Cuba, though he did not specify why.

The Mexican presidency and the U.S. State Department did not immediately provide comments, while Mexico's Foreign Ministry stated it had no information on the matter.

"There are talks happening almost every other day," said one source, who spoke on the condition of anonymity. "Mexico doesn't want tariffs imposed, but it is also firm in its policy of helping the Cuban people."

Three of the sources indicated that the talks are progressing, expressing hope that a resolution can be found. If an agreement is reached, two sources noted that Mexico could dispatch a tanker with gasoline, food, and other supplies classified as humanitarian aid within days.

Cuba's Deepening Energy Crisis

The need for fuel in Cuba is critical. The country imports two-thirds of its energy and is currently facing severe power outages and long lines at gas stations.

The crisis intensified after a U.S. blockade of Venezuelan tankers in December, followed by the capture of President Nicolas Maduro in early January, which halted oil shipments from Venezuela. This left Mexico as Cuba's largest supplier, but that relief was short-lived.

In mid-January, the Mexican government stopped its own shipments of crude and refined products following pressure from the Trump administration. Washington then issued its tariff threat, justifying it by claiming Cuba poses an "extraordinary threat" to U.S. national security—a charge Havana denies.

In response to the shortages, the Cuban government announced on Thursday that it was developing a plan to address "acute fuel shortages," with more details expected next week.

Humanitarian Concerns and Political Pressures

The situation has drawn international attention. U.N. Secretary-General António Guterres warned this week that Cuba could face a humanitarian "collapse" if its energy needs are not met.

Domestically, Mexican President Claudia Sheinbaum is facing pressure from her own coalition. The ruling Morena party has long-standing ideological and historical ties to Cuba, and there is a strong desire within the party not to abandon Havana in its time of need.

Sheinbaum herself highlighted the potential human cost of the U.S. policy. "Imposing tariffs on countries that supply oil to Cuba could trigger a far-reaching humanitarian crisis, directly affecting hospitals, food, and other basic services for the Cuban people," she stated last Friday. "A situation that must be avoided through respect for international law and dialogue."

The United States and Argentina have finalized a new trade and investment agreement that gives preferential market access to American goods, establishes rules for digital trade, and deepens cooperation on critical economic and security issues.

The deal, signed by U.S. Trade Representative Jamieson Greer and Argentine Foreign Minister Pablo Quirno, builds on a framework first established on November 13. According to the U.S. Trade Representative's office, the agreement is set to significantly reduce or eliminate tariffs on a wide range of U.S. products.

US Exports Gain Broad Market Access

Under the terms of the agreement, Argentina will lower trade barriers for numerous American industries. The tariff cuts will apply to a diverse list of U.S. goods, including:

• Medicines and medical devices

• Chemicals and machinery

• Motor vehicles

• Information technology products

• A wide range of agricultural products

In a key move, Argentina has also agreed to accept U.S. safety and regulatory standards for imported goods like automobiles and medical devices. This alignment extends to food safety, with Argentina committing to recognize U.S. Department of Agriculture standards for meat and poultry.

A Breakthrough for American Agriculture

The agreement delivers several specific wins for the U.S. agricultural sector. Within a year, Argentina will open its market to American poultry and poultry products. It will also work to simplify bureaucratic processes for U.S. exporters of beef and pork.

Furthermore, Argentina has committed not to restrict U.S. exporters' use of certain cheese names, such as "asiago," "feta," or "camembert." This addresses a long-standing issue where the European Union seeks to label these as geographic indications exclusive to its own regions.

Digital Trade and Strategic Cooperation

The pact also addresses modern economic challenges. Argentina has pledged not to impose customs duties on cross-border data transmissions or implement a digital services tax aimed at U.S. technology companies.

On the security front, the agreement calls for closer cooperation on enforcing export controls for sensitive dual-use items that could have military applications. The two nations will also work together to ensure the integrity of Argentina's telecommunications infrastructure. While not naming China directly, the U.S. Trade Representative's office stated the deal would enhance cooperation in fighting the unfair trade practices of third countries.

Focus on Critical Minerals

A major component of the deal involves strategic resources. Argentina has committed to facilitating investment by U.S. companies in its critical mineral projects, including copper and lithium. The country will also prioritize the United States as a trading partner for these minerals over "market manipulating economies or enterprises," another implicit reference to China.

Political Context and Reactions

This trade agreement deepens the economic partnership between the administrations of U.S. President Donald Trump and Argentine President Javier Milei. The deal follows a $20 billion currency swap line launched by the U.S. Treasury in October to help stabilize the peso. At the time, President Trump hailed Milei's party's election victory as a key step in Argentina's economic recovery.

"The deepening partnership between President Trump and President Milei serves as a model of how countries in the Americas... can advance our shared ambitions and safeguard our economic and national security," Greer said in a statement.

Quirno echoed this sentiment in a social media message, calling the agreement a "great achievement" for both nations.

However, the financial support underpinning this relationship faces some scrutiny. Earlier on Thursday, U.S. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, called on Treasury Secretary Scott Bessent to end the $20 billion currency swap, arguing it was intended as a temporary measure.

After a long period of disagreement, Canada's federal government and the oil-producing province of Alberta are now aligned on a new vision for the country's energy exports. A significant shift in trade relations with the United States has catalyzed federal support for a new oil pipeline from Alberta to Canada's West Coast, a project designed to ship nearly 1 million barrels per day (bpd) of crude to Asia and tap into the world's fastest-growing energy market.

A Strategic Shift Away from the U.S. Market

Canada is actively diversifying its trade relationships in response to tariffs and ongoing trade threats from the Trump Administration, which have strained the historically close partnership. The government, led by Prime Minister Mark Carney, aims to establish Canada as an energy superpower by increasing seaborne crude exports from Alberta to Asia.

This move is critical for reducing Canada's heavy reliance on the U.S., which currently purchases over 95% of all Canadian oil exports. The expanded Trans Mountain pipeline (TMX) is, for now, the only route shipping landlocked Albertan crude to tankers on the West Coast.

The Trans Mountain Pipeline's Success Story

For years, Alberta has advocated for more coastal pipeline access to capitalize on its increasing crude oil supply. The province's oil production reached a new record in 2025, averaging 4.1 million bpd—a 4.2% increase of 166,000 bpd from 2024. Oil sands accounted for 84% of this output.

The TMX expansion was a game-changer, tripling the pipeline's capacity from 300,000 bpd to 890,000 bpd. This expansion directly fueled Alberta's record production and opened the door for significant exports to Asia.

According to ATB Economics, the value of Alberta's oil exports to Asia climbed from zero to over US$804 million (C$1.1 billion) by October 2025, following the TMX expansion. While analysts expect pipeline enhancements to support production growth in 2026 and 2027, they warn that capacity could become a constraint again as early as 2028 without another new pipeline.

Pushing the Limits of Existing Infrastructure

The demand for Canadian crude is already testing current limits. Trans Mountain Corporation recently sought approval from the Canada Energy Regulator to boost oil flows by 10% using drag-reducing agents (DRA). The company stated this project would not increase vessel traffic beyond what was previously approved for the expansion.

Alberta's Premier Danielle Smith welcomed the move, stating, "Alberta is happy to see TMX working on increasing oil exports by 10%." She added, "The world needs our energy exports, notably Asian markets. We will continue pushing for more export capacity, including a new pipeline to the Canadian northwest coast."

Planning the Next Big Pipeline Project

The federal government is now firmly behind this push. As early as last July, Prime Minister Carney suggested a new oil pipeline to the Pacific coast was "highly likely" to be designated a project of national interest. This policy shift was solidified during a visit to China, where Carney signed a strategic energy and trade cooperation agreement, signaling "a new era" in relations.

In November, the governments of Canada and Alberta signed an agreement to boost oil exports to Asia, reduce investment uncertainty, and address emissions. This accord paves the way for a new, Indigenous co-owned pipeline.

The project, provisionally named the West Coast Oil Pipeline, is currently in a preliminary assessment phase, with a technical advisory group evaluating potential routes. Alberta's government plans to submit the project to Canada's federal Major Projects Office by July 2026.

In a recent interview with Bloomberg, Premier Smith confirmed that five potential West Coast ports are under consideration. The port of Prince Rupert in northwest British Columbia appears to be a leading candidate due to its less congested location, which could also facilitate exports of other high-value products.

While the project will inevitably face complex negotiations with First Nations and the government of British Columbia, the unified support from both Alberta and the federal government marks a decisive step toward diversifying Canada's energy future and reducing its dependence on the U.S. market.

Australia's central bank has made it clear that curbing demand is essential to control inflation, with its governor signaling a hawkish stance just days after delivering the first interest rate hike in two years.

Speaking on Friday, Reserve Bank of Australia (RBA) Governor Michele Bullock warned that stronger-than-expected demand growth combined with supply issues is fueling persistent inflationary pressures. The central bank's key challenge is to slow the economy enough to bring prices back under control.

The Renewed Fight Against High Inflation

The RBA reversed course this week, raising its benchmark interest rate by 25 basis points to 3.85%. The move follows three rate cuts last year that failed to contain rising prices.

Consumer inflation has now surprised to the upside for two consecutive quarters, running well above the RBA's target band of 2% to 3%.

Underlying inflation, a key metric for the central bank, hit an annual pace of 3.4% in the fourth quarter—the highest in over a year. The RBA projects this figure will climb further to 3.7% by mid-year and only return to its target range in 2028. This forecast was based on assumptions of at least two rate rises this year, even before Tuesday's decision.

Focus Turns to Economic Capacity Constraints

Governor Bullock stated that the RBA board is intensely focused on whether the current inflation is temporary or a sign that the economy is running beyond its sustainable capacity.

"The Board will be closely monitoring the incoming data and continually assessing the extent of capacity constraints," Bullock said, indicating that future policy decisions will be highly data-dependent.

She also noted that the global economy has been more resilient than anticipated, though geopolitical and trade risks remain significant uncertainties.

Strong Economic Data Supports a Hawkish Stance

Recent economic indicators reinforce the argument that Australia's economy is operating at or near its limits, suggesting that financial conditions may not be restrictive enough. Key data points include:

• A Tightening Labor Market: The unemployment rate unexpectedly fell to a seven-month low of 4.1%, suggesting renewed tightness in the job market.

• Robust Consumer Spending: Households continue to spend, fueling demand across the economy.

• Record-High Housing Prices: The property market remains hot, contributing to wealth effects and spending power.

• Easy Credit Conditions: Access to credit for both households and businesses remains relatively easy.

Reflecting this economic strength, financial markets are now pricing in an additional 38 basis points of tightening by the end of 2026, equivalent to more than one standard rate hike.

A wave of buying from Chinese speculators — from individual investors to large equity funds venturing into commodities — lifted metals from copper to silver to fresh records over the past month. A massive premium for the country’s only pure-play silver fund even prompted the issuer to send out near-daily risk warnings and halt subscriptions.

The sudden and sharp decline in precious metals also weighed on sentiment in base metals markets, with copper falling as much as 2% to slip below $13,000 a ton on Thursday. Meanwhile, spot gold dropped as much as 4.1% in choppy trading.

What Bloomberg’s Strategists Say...

Source: Bloomberg

The world entered a new era of geopolitical uncertainty on Thursday as the New START treaty, the last remaining nuclear arms control pact between the United States and Russia, officially expired. The treaty's final active day was February 4, leaving no formal limits on the nuclear arsenals of the world's two largest atomic powers.

While hopes for a replacement agreement persist, there are currently no intensive, legally binding international arms control talks underway.

The Clock Runs Out on a Landmark Arms Pact

Russian state media confirmed the treaty's expiration on Thursday. According to a report from TASS, a proposal from Russian President Vladimir Putin in September 2025 to continue observing the treaty’s quantitative limits for another year went unanswered by Washington.

With no provision for another formal extension like the one in 2021, the agreement regulating strategic stability between the US and Russia has now passed into history. As of February 5, both nations are technically free to expand their nuclear stockpiles without restriction.

A 1971 photo of the Licorne nuclear test in French Polynesia illustrates the destructive power at the heart of now-expired arms control treaties.

Secret Talks Hint at an Informal Extension

Despite the official expiration, last-ditch diplomatic efforts have been happening behind the scenes. An Axios report on Thursday revealed that the US and Russia are nearing a deal to continue observing the treaty's terms, citing three sources familiar with the discussions.

A US official confirmed the effort, stating, "We agreed with Russia to operate in good faith and to start a discussion about ways it could be updated."

The report noted that these negotiations took place in Abu Dhabi over the last 24 hours. However, sources cautioned that any draft plan would still require final approval from both presidents. For now, the two sides appear to have an informal understanding to abide by New START's terms for another six months, but this arrangement is not legally binding.

Why Washington Let the Treaty Expire: The China Factor

The White House's rationale for allowing New START to lapse was clarified in a Wednesday statement by Secretary of State Marco Rubio. He emphasized the need to include China in any future arms control framework.

"Obviously, the president's been clear in the past that in order to have true arms control in the 21st century, it's impossible to do something that doesn't include China because of their vast and rapidly growing stockpile," Rubio stated.

This position reflects a long-standing complaint from the Trump administration, which has consistently argued that existing arms control agreements are insufficient without China's participation.