US-Argentina Trade Deal Cuts Tariffs, Targets Minerals

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.

For years, speculation has swirled around the idea of "peak demand" for hydrocarbons as the world transitions its energy mix. The debate reignited this week with new data showing a 4.4% dip in Asian seaborne coal imports in 2025 from the previous year's all-time high.

While this drop might seem significant, a closer look suggests that declaring "peak coal" is premature.

Decoding Asia's 2025 Coal Import Dip

Data from Kpler revealed that Asian buyers imported 1.09 billion metric tons of coal in 2025, down from 1.14 billion tons in the prior year. Reuters columnist Clyde Russell pointed to this as a potential signal that demand in the world's largest coal-importing region has peaked.

However, focusing solely on imports misses the bigger picture. In the same year that imports fell, China’s domestic coal production soared to a record high of 4.83 billion tons. This surge in local supply was a major reason for its weaker import appetite, which stood at 490 million tons.

Meanwhile, India’s coal production saw a modest 0.64% decline in the first three quarters of its current fiscal year. This wasn't due to flagging demand but was primarily the result of weather-related disruptions.

China and India Double Down on Coal Power

The actions of Asia's two largest economies signal continued reliance on coal. China, despite being a global leader in wind and solar power, plans to commission 85 new coal-fired power generation units this year. This move comes even after the country's coal-fired power generation declined in 2025, thanks to higher output from sources like hydropower.

India is also reconsidering its long-term energy strategy. The government had previously planned to halt all coal capacity expansion after 2035. Now, officials are contemplating pushing that deadline to 2047. This reflects deep uncertainty about whether wind and solar can reliably replace coal, which currently generates over 70% of India's electricity, according to the International Energy Agency.

Price Signals and Renewable Headwinds

The economics of the coal market also played a role. Last year, thermal coal prices hit a four-year low in June before rebounding. Australian coal prices gained 16%, while Indonesian coal rose 12%. Higher prices naturally tend to curb import demand, which likely contributed to the overall decline in Asian imports.

At the same time, the expansion of renewable energy is facing challenges. A recent report from Rystad Energy noted that the addition of new wind and solar capacity is slowing down. While the firm predicts that global electricity output from all renewables—including hydro and geothermal—could overtake coal for the first time this year, producing 11,900 TWh, this forecast comes with caveats.

The prediction is based on the assumption that new demand will be met by renewables and that coal generation has "plateaued." Yet, the aggressive capacity expansion in both China and India suggests this plateau may not last. Building expensive new coal plants only makes sense if you expect to use them, indicating that both nations anticipate burning more coal in the coming years.

Why Import Data Tells an Incomplete Story

Ultimately, relying on import data alone to gauge total demand can create a misleading picture. Both China and India are actively working to reduce their reliance on foreign energy supplies.

India, for instance, has announced a goal to attract $100 billion in investments for its domestic oil and gas production by 2030. This push for energy self-sufficiency means that domestic production trends are becoming just as critical—if not more so—than import volumes when analyzing the future of coal demand.

The last major nuclear arms control treaty between the United States and Russia has expired, after US President Donald Trump rejected a Russian proposal to voluntarily extend its limits for another year. The move dismantles a cornerstone of post-Cold War security, fueling warnings from arms control advocates of an accelerated global arms race.

On his Truth Social platform, Trump dismissed the idea of extending the New START treaty. "Rather than extend 'New START' ... we should have our Nuclear Experts work on a new, improved and modernized Treaty that can last long into the future," he wrote.

Opponents of the pact in the U.S. argue it limited America's ability to counter nuclear threats from both Russia and China. However, the treaty's expiration now leaves the world's two largest nuclear powers without verifiable limits on their arsenals for the first time in decades.

Russia's Last-Minute Offer Rejected

The standoff came after Russian President Vladimir Putin proposed that both nations continue to adhere to the 2010 accord's cap of 1,550 warheads on 700 delivery systems—including missiles, aircraft, and submarines—for one year.

New START was the final pillar in a series of arms control agreements dating back more than 50 years. It allowed for a single five-year extension, which Putin and former U.S. President Joe Biden agreed to in 2021.

Trump labeled New START "a badly negotiated deal" and claimed it was "being grossly violated." This appears to reference Putin's 2023 decision to suspend on-site inspections, a key verification measure. Putin had cited U.S. support for Ukraine in its war against Russia as justification for the suspension.

Despite the treaty's collapse, both sides have signaled a willingness to talk. Kremlin spokesman Dmitry Peskov stated Russia remains ready for dialogue if Washington responds constructively. Similarly, White House spokeswoman Karoline Leavitt confirmed that the U.S. would continue talks with Russia.

Global Security Enters a New, Uncertain Era

Security analysts warn that without a replacement for New START, the world is entering a more dangerous and unpredictable phase. The treaty’s inspection regimes provided a critical level of trust and transparency between the nuclear adversaries.

Without these guardrails, both the U.S. and Russia may feel compelled to operate on worst-case assumptions, creating an incentive to expand their arsenals. Key concerns include:

• A higher risk of miscalculation in a crisis.

• A loss of transparency and predictability, which underpins strategic stability.

• Increased pressure to build up nuclear forces.

This dynamic is complicated by China's rapidly growing nuclear arsenal. Trump has insisted that any new treaty must include Beijing, but China has consistently refused to join negotiations with Washington and Moscow. It argues its arsenal is a fraction of theirs, with an estimated 600 warheads compared to around 4,000 each for Russia and the U.S. On Thursday, China called the treaty's expiration regrettable and urged the U.S. and Russia to resume dialogue.

Diplomatic Channels Remain Open

Negotiations were reportedly held in Abu Dhabi in the 24 hours leading up to the expiration, though they failed to produce an agreement. According to a report from Axios, it was unclear if any temporary adherence to the treaty's terms would have been formalized.

However, the talks were not a total failure. The U.S. military's European Command announced on Thursday that the U.S. and Russia had agreed in Abu Dhabi to resume a high-level military-to-military dialogue. Separately, Ukrainian President Volodymyr Zelensky noted that U.S.-backed peace talks with Russia would also continue after a round of discussions in the city.

In Moscow, the Russian Foreign Ministry declared the treaty no longer applied, freeing both sides to choose their next steps. While warning it was prepared to take "decisive military-technical countermeasures," the ministry affirmed it was also open to diplomacy. This warning seems directed at the possibility that the U.S. could now expand its own nuclear deployments by reversing steps taken to comply with New START.

A bipartisan U.S. commission recommended in 2023 that the country prepare to fight simultaneous wars with Russia and China and consider reloading some or all of its reserve warheads.

Ukraine, embroiled in war since Russia's 2022 invasion, condemned the treaty's demise. It described the event as a consequence of Russian efforts to "fragmentation of the global security architecture" and "another tool for nuclear blackmail."

Strategic nuclear weapons are long-range systems designed to strike an opponent's homeland in a full-scale war. Without an agreement, experts estimate both Russia and the U.S. could deploy hundreds of additional warheads within just a few years. As Karim Haggag, director of the Stockholm International Peace Research Institute, noted, "Transparency and predictability are among the more intangible benefits of arms control and underpin deterrence and strategic stability."