OPEC+ Ramps Up Production Cuts Amid Global Oil Glut

LAYOFFS REMAIN HISTORICALLY LOW

Source: Reuters

White House Confirms Military Option on the Table

The White House has confirmed that President Donald Trump reserves the right to use military force to secure American oil interests in Venezuela. Press Secretary Karoline Leavitt stated Wednesday that while diplomacy remains the preferred approach, military action is a possibility if necessary.

When asked if the president would deploy troops to protect U.S. oil workers, Leavitt affirmed that Trump would act in the best interests of the American people and its energy industry. She clarified that the U.S. does not currently have troops on the ground in Venezuela.

This statement follows the Trump administration's recent military buildup in the Caribbean, which included the deployment of the USS Gerald R. Ford carrier strike group. Despite the increased presence, President Trump told NBC News on Monday that the United States is not at war with Venezuela.

Oil Giants Summoned for Venezuela Strategy Talks

The administration is actively engaging with top energy firms to rebuild Venezuela's oil sector. President Trump has called for U.S. oil majors to invest billions and is scheduled to meet with industry executives at the White House on Friday.

According to sources who spoke with CNBC's Brian Sullivan, the CEOs of ExxonMobil and ConocoPhillips, along with a representative from Chevron, are expected to attend.

Separately, Energy Secretary Chris Wright is set to speak with oil executives on Wednesday at Goldman Sachs' annual energy conference in Miami. Chevron is currently the only major U.S. oil company operating in Venezuela, doing so under a special license.

US Takes Control of Venezuelan Oil Sales

The U.S. government plans to manage Venezuela's oil sales for the foreseeable future. Energy Secretary Wright announced Wednesday that the U.S. will market all crude coming out of the country, starting with 30 million to 50 million barrels of stored, sanctioned oil.

"We're going to market the crude coming out of Venezuela," Wright said at the conference. "First this backed up stored oil and then indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace."

He explained that this control is a strategic tool. "We need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela," the energy secretary stated.

Ouster of Maduro Sets Stage for US Investment

These developments follow the ouster of President Nicolas Maduro in a U.S. military raid over the weekend. Maduro was subsequently taken to New York City to face federal charges related to a drug-trafficking conspiracy.

Energy analysts note that U.S. oil companies will require assurances about security and governmental stability before committing to major investments in the country.

Venezuela holds the world's largest proven crude oil reserves, according to the U.S. Energy Information Administration. Data from energy consulting firm Kpler shows the nation was recently producing approximately 800,000 barrels per day.

Leading economists from Canada’s largest banks are sounding the alarm, arguing that Prime Minister Mark Carney’s latest budget investments fall short of what’s needed to make the country competitive. Their consensus: without fundamental tax reform, the new spending plans won't be enough to drive meaningful growth.

"I don't think it's enough," Beata Caranci, chief economist at Toronto-Dominion Bank, stated at a recent Economic Club of Canada event. "What we've seen is a good first step, but really what they've done so far is unwind previous bad policy."

A C$1 Trillion Goal Under Scrutiny

The November budget outlined an ambitious goal to attract C$1 trillion ($723 billion) in public and private investment over five years, fueled by tax incentives and targeted spending on housing, infrastructure, and defense. However, many of the corporate tax changes were simply carried over from the previous government.

Jean-François Perrault, chief economist at Bank of Nova Scotia, described the C$1 trillion target as "completely unrealistic," noting that it would require Canada to double its current investment levels. Despite this, he acknowledged that the country stands to benefit from the push, even if it is only partially successful.

How Tax Policy Holds Back Business Growth

According to the panel of economists, the core issue lies within Canada's tax structure, which they argue actively discourages growth.

Caranci highlighted how the system can stifle higher earnings. For example, small businesses lose their preferential tax rates once they surpass C$500,000 in income. This creates a "bunching" effect where a large number of firms hover just below that threshold, hesitant to expand.

Her recommendation is to, at a minimum, index that figure to inflation. "You're artificially keeping companies smaller," she explained.

Perrault echoed this sentiment, adding that many businesses are not focused on maximizing profit growth because they view the tax system and regulatory environment as significant disadvantages.

The Vicious Circle of Productivity and Investment

This reluctance to invest feeds into a larger problem flagged by the Bank of Canada: a "vicious circle" where weak productivity leads to reduced investment, which in turn perpetuates weak productivity.

While Carney's government has worked to clear some regulatory hurdles for new west coast pipelines to export more oil to Asia, no company has yet committed to building one. Even if a project moves forward, the construction—and its economic benefits—would be years away.

This timeline is not aggressive enough for Stéfane Marion, chief economist at National Bank of Canada. "We need to be a little bit more aggressive in terms of building it, and hopefully we can do it in less than 10 years," he said.

Global Oil Markets and Fading Urgency

Recent geopolitical shifts are adding to the pressure. U.S. President Donald Trump's efforts to access Venezuelan crude have reinforced calls for Canada to diversify its energy export markets. The urgency was underscored this week as prices for Canadian heavy oil grades fell after the capture of Venezuelan President Nicolas Maduro.

However, Caranci believes the more immediate threat for Canada is the existing global supply glut, arguing that unlocking Venezuelan oil will require many years and substantial investment.

Ultimately, the economists warned that Canada is at risk of losing the momentum it gained after President Trump imposed tariffs and made other threats.

"I'm worried that as much as we want to seize the moment, that we don't," Perrault concluded.

Source: Bloomberg

President Donald Trump's suggestion of military action to annex Greenland is being framed by his Republican allies on Capitol Hill as a hardball negotiation tactic, echoing the deal-making style he championed in his 1987 book. This defense comes as Trump refuses to rule out force, a stance that has alarmed European leaders and many in Washington.

The GOP has largely supported Trump following a recent strike he ordered to capture Venezuelan leader Nicolas Maduro without congressional approval. Now, as attention shifts to Greenland, some Republicans argue the president's aggressive posture is merely a bluff to secure greater U.S. influence over the strategic Arctic island.

The "Art of the Deal" Defense

Supporters of the former president claim his threats are part of a calculated strategy to bring Denmark to the negotiating table.

"He's from New York, he's one of the best negotiators and how he negotiates sometimes is everything is on the table," Rep. Ryan Zinke, a Montana Republican who served as Trump's first-term Secretary of the Interior, told CNBC.

Zinke added that he believes Secretary of State Marco Rubio is correct to downplay the idea of a military invasion. "I'd be supportive of negotiating a deal with Denmark to make sure that it stays influenced in the West," he said.

This perspective is shared by other Republicans who believe Trump's rhetoric is primarily about leverage.

"To Trump, everything is a deal, everything is a negotiation, a lot of things come down to leverage," said Rep. Nick LaLota, a New York Republican. "I think his administration is comfortable with the term about not taking any options off the table, I hope we don't read too much into that."

Rep. Mike Lawler (R-NY) argues that while Greenland is strategically important, there is strong bipartisan opposition to using force.

Rep. Mike Lawler, another New York Republican, acknowledged the island's importance but drew a clear line against military action. "Obviously there is strategic national security importance to it with respect to the Arctic, with respect to NATO, with respect to combating Russia," he said. "If you can enter into negotiations with Denmark, with Greenland, great. The idea of taking it by force, no... there is strong bipartisan opposition to any use of force with respect to Greenland."

White House Keeps Military Option Open

Trump has long expressed interest in Greenland, a self-governing territory of Denmark, a NATO ally. He argues that U.S. control is a national security imperative for countering Russian and Chinese ambitions in the Arctic. His focus on the island has intensified following the raid that captured Maduro, who now faces drug charges in New York.

Former Interior Secretary Ryan Zinke, a Trump ally, suggests the President's aggressive posture on Greenland is a negotiation tactic.

The White House has not dismissed the possibility of using force.

"The President and his team are discussing a range of options to pursue this important foreign policy goal, and of course, utilizing the U.S. Military is always an option at the Commander in Chief's disposal," White House Press Secretary Karoline Leavitt said in a statement Tuesday.

Bipartisan Backlash and European Alarm

The administration's stance has rattled European leaders and angered Denmark, which, along with Greenland, has consistently rejected Trump's proposals.

"Greenland belongs to its people. It is for Denmark and Greenland, and them only, to decide on matters concerning Denmark and Greenland," Danish Prime Minister Mette Frederiksen, French President Emmanuel Macron, German Chancellor Friedrich Merz, British Prime Minister Keir Starmer, and the leaders of Italy, Spain, and Poland declared in a joint statement.

In Washington, Democrats have warned that an invasion of Greenland would shatter the NATO alliance.

• Sen. Ruben Gallego (D-AZ) announced he plans to introduce a War Powers Resolution to block Trump from ordering military action.

• Rep. Jim McGovern (D-MA) stated he is working on a similar resolution in the House, telling CNBC, "The people around him need to stage an intervention... He wants to destroy and blow up our NATO alliances."

Some Republicans have joined Democrats in condemning the rhetoric.

• Rep. Don Bacon (R-NE) called Trump's actions "appalling," adding, "It's creating a lot of long-term anger and hurt with our friends in Europe. I feel like we have a bunch of high school kids playing Risk."

• Sen. Thom Tillis (R-NC) and Sen. Jeanne Shaheen (D-NH) issued a joint statement affirming that any suggestion of coercion against a NATO ally "undermines the very principles of self-determination that our Alliance exists to defend."

The Stakes for NATO

Even Trump's allies concede that military action against Greenland would require congressional approval, unlike the Venezuela operation, which they characterized as a law enforcement function. "This would require congressional authorization," Zinke said.

Trump himself cast doubt on the alliance's value in a Truth Social post on Wednesday, writing, "RUSSIA AND CHINA HAVE ZERO FEAR OF NATO WITHOUT THE UNITED STATES, AND I DOUBT NATO WOULD BE THERE FOR US IF WE REALLY NEEDED THEM." He added, "We will always be there for NATO, even if they won't be there for us."

For now, influential House Republicans are standing by the president, maintaining that his threats are a means to an end. House Foreign Affairs Committee Chair Rep. Brian Mast, R-Fla., insisted the "post World War 2 order is not over in any way whatsoever."

"There's not a goal to break up NATO right now," Mast said. "There's looking to say, is there a good deal that can be made for what is a very strategic location, not just for the United States of America, but for others."

A long-standing debate over Canada's oil export strategy has taken a sharp turn. British Columbia Premier David Eby recently argued that Ottawa should focus on building domestic refineries instead of new export pipelines, reframing a conversation that has dominated the nation's energy politics for years.

Eby’s proposal comes as U.S. policy shifts regarding Venezuela create new uncertainties in global oil markets, highlighting Canada's heavy reliance on the United States as its primary customer for crude. The premier suggests that rather than simply shipping raw oil to the coast for export, Canada should invest in its own refining capacity to capture more value and reduce its dependence on foreign fuel processors.

Currently, Canada is not self-sufficient in refined fuels. The country exports most of its oil as raw crude while importing much of the fuel consumed in Eastern Canada and British Columbia. Building new refineries, Eby argues, would keep more jobs and revenue within Canada and make its energy system more resilient to external disruptions.

The Unresolved Pipeline Question

This push for domestic refining clashes with ongoing efforts by Ottawa and Alberta to develop a privately financed pipeline to the Pacific Coast. This plan, introduced late last year, aims to diversify Canada's trade away from the U.S. but has struggled to gain traction.

So far, no private company has committed to building the pipeline. Furthermore, opposition from Indigenous groups and coastal communities remains a significant obstacle, particularly concerning the potential increase in oil tanker traffic.

Figure 1: Pipeline projects remain a central, yet contested, part of Canada's energy export strategy.

Analyzing the Market: Profits and Pitfalls

Globally, refining has become more profitable. Margins in North America, Europe, and Asia have climbed as refinery closures, outages, and sanctions have tightened the supply of processed fuels. While crude oil supply is expected to be sufficient into 2026, the availability of gasoline and diesel is much tighter, boosting the value of refining capacity.

However, Canada's existing refining infrastructure is aging and primarily designed to serve the domestic market, not global exports.

Building new refineries presents its own set of substantial challenges:

• High Upfront Costs: New facilities would require billions in initial investment.

• Regulatory Hurdles: The permitting process would likely take years and involve navigating complex regulations.

• Political Coordination: Such projects demand a level of political alignment rarely seen in Canadian energy policy.

• Market Risk: Critics warn that Canada could invest heavily only to face weaker-than-expected demand or intense competition from newer, low-cost refineries in the Middle East and Asia.

The Venezuela Factor: A New Competitive Threat

The situation is further complicated by U.S. policy toward Venezuela. The Trump administration has signaled its intention to help revive Venezuelan oil production, with much of that volume potentially heading to U.S. refiners.

Many of these American facilities, particularly on the Gulf Coast, are already configured to process heavy crude—the same type produced in Canada's oil sands. A flood of Venezuelan oil into this market would directly compete with Canadian exports, potentially putting downward pressure on prices and sales volumes.

Federal officials in Canada have downplayed this risk, expressing confidence that Canadian oil will stay competitive even if Venezuelan output recovers. Ottawa continues to support the oil sands industry through initiatives like carbon capture projects and regulatory adjustments, all while maintaining its commitment to climate targets.

Canada's Strategic Crossroads

Ultimately, Canada faces a decision that goes beyond a simple choice between pipelines and refineries. The core question is whether the country can successfully move up the energy value chain in a way that withstands political shifts, market cycles, and trade volatility.

With refining markets tight, U.S. trade policy unpredictable, and Venezuelan oil potentially re-entering the picture, Canada's next move will be critical. It will determine not only its economic future but also its long-term position in the global energy system.