Why world markets are shrugging at Trump's oil wars |
We are just days into the new year and Donald Trump has already declared the clock will be turned back by a couple of centuries.
Late in 1823, US President James Monroe articulated the foreign policy doctrine that would later be named after him. It was, for its time, an anti-imperial stance by the United States towards the great powers of the day — the mighty Europeans. But it would become entwined with the 19th century era of gunboat diplomacy as the United States began asserting its own imperial desires across the Americas and beyond.
Fast-forward to these jarring early days of 2026 and Donald Trump has resurrected the doctrine, decapitating the Venezuelan regime and brazenly declaring his objective of dominance through oil. It is now, he claims, to be known as the “Donroe Doctrine,” and Venezuela will only be buying “American Made Products, with the money they receive from our new Oil Deal.” The first tributes will arrive in barrels — up to 50 million barrels of oil, for starters.
Those barrels would be worth up to US$3 billion at current prices. Not chump change, but nowhere near the value they would fetch if the price of oil weren’t hovering as low as it is. And that’s one of the mysterious aspects of this recent chaos. Every geopolitical upheaval sends the oil price wizards scrambling to their screens to ascertain the risks and potential for arbitrage. As you’ve probably heard repeatedly by now, Venezuela claims the largest oil reserves on the globe. And a good many of the world’s big petrostates are involved in conflicts. In the past few months, Trump has bombed not just Venezuela, but also Iran and Iraq (which vie for the fourth largest oil reserves) and Nigeria (11th).
As you well know, Trump is threatening some form of annexation of Canada (third in the world). He has ordered air strikes in Somalia (13th). Russia (eighth) is at war and its oil and gas industry under sanctions. Iran is roiled with domestic protests. Saudi Arabia (second) and the United Arab Emirates (sixth) are on opposing sides in Yemen (which Trump has also bombed). And yet the world oil markets have responded with a shrug.
Why the price........