CANADA

Packaged goods entrepreneurs network to 'rise up' and face U.S. protectionism

By The Canadian PressFebruary 07, 2025 at 5:23PM EST

Tara Tomulka, chief executive of Rawcology, is shown in this undated handout photo at her plant. Her company, headquartered in Toronto, makes organic granola bars and snack foods sold at 1,500 location across Canada and the U.S., with about a third of its products shipping to the south. 

THE CANADIAN PRESS/HO-Rawcology *MANDATORY CREDIT*

HALIFAX — Vancouver businesswoman Karen Danudjaja put out a casual social media call on Monday for a “roundtable” on how entrepreneurs could survive the potential hit of 25 per cent U.S. tariffs.

Then the owner of Blume observed with surprise and delight as interest grew, and about 1,000 people accepted her webinar invitation to hear a panel of experts discuss “pivoting” to fresh markets.

U.S. President Donald Trump agreed late Monday to delay by 30 days the imposition of tariffs on Canada, but the Canadian business community is still preparing for the worst. As Prime Minister Justin Trudeau hosted a summit of business, labour and industry leaders in Toronto on Friday, Danudjaja was preparing for her grassroots webinar with guests expected to include investor and television personality Arlene Dickinson, entrepreneur and co-founder of Manitoba Harvest Hemp Foods Mike Fata and B.C. Food and Beverage CEO James Donaldson.

“It’s about diversifying our supply chain as much as we possibly can in order to be ready if the tariffs hit,” said the Vancouver-based businesswoman, who ships about 450,000 packages of her SuperBelly probiotic powder monthly to Canadian and U.S. retailers. “I really see this community rising up to overcome this obstacle,” she said in an interview Thursday.

Tara Tomulka, chief executive of Rawcology, is among those who signed up. Her company, headquartered in Toronto, makes organic granola and snack foods sold at 1,500 location across Canada and the United States, with about a third of its products shipping to the south.


Tomulka relies on getting ingredients such as organic banana purée or tapioca syrup from the U.S. market, but she says that since Monday, the company is “trying to shift and pivot to find local suppliers.”

There are challenges in the details of each potential new relationship. In one case, the firm sourced a potential purchase of Canadian frozen peach purée, but the minimum quantity was simply too large for her to store in her facility, she said.

The Plan B that companies like hers are considering also involves creating fresh products tied to what can be found within the country.

“(Canadian) oats are definitely going to be one of the main ingredients in a new product, and we’re also looking at other unique Canadian-grown ingredients such as hemp protein powders,” she explained.

The positive side of the tariff threat is that Canadian retailers are now also looking for healthy, locally sourced Canadian packaged goods, she added. Over the last week, she counted five new retailers in Canada making inquiries about selling her family’s products.

Sheena Russell, president of Made With Local Snack Foods Inc., said her firm’s online sales of the organic snack bars made at its Windsor, N.S., plant rocketed after Trump’s tariff declarations.

“The last couple of days, the volume of sales has tripled online compared to what it typically would be this time of year,” she said Wednesday.

Still, there are some mixed emotions. Just weeks ago, the Nova Scotia company had been contemplating launching a separate line of products into the U.S. northeast. Russell says that is “on hold” due to the uncertainties created by Trump.

Linda Best, founder of a community economic development investment fund in Nova Scotia that aims to encourage farming startups, said packagers seeking suppliers face a decline in smaller Canadian farms over the past 60 years.

Best cites Nova Scotia Federation of Agriculture research estimating that in her province, less than 10 per cent of the average household’s food budget is spent on locally grown agriculture, a sharp drop from decades earlier.

Statistics Canada indicates that as a result of industry consolidation and the aging of farm operators, the number of farms in the country dropped from about 193,000 in 2016 to about 190,000 farms in 2021.


“We need more farmers, we need more processors and we need them now,” Best said in an interview Thursday.

“In Nova Scotia, (suppliers) aren’t there at this point. That’s what has been driving me nuts for so many years. Yes, we export fish, blueberries and cranberries .... I can think of all kinds of people in Nova Scotia who could be making great products,” she said.

This report by The Canadian Press was first published Feb. 7, 2025.

Michael Tutton, The Canadian Press

CANADA

Saputo CEO doesn't see supply management at risk in trade talks

By Rosa Saba, 

The Canadian Press

February 07, 2025 

Dairy cows stand in a field outside of a milking barn at the U.S. Department of Agriculture's National Animal Disease Center research facility in Ames, Iowa, on Tuesday, Aug. 6, 2024. (AP Photo/Charlie Neibergall,File)


Saputo president and CEO Carl Colizza says he doesn’t think Canada’s dairy supply management system will be up for negotiation despite the tense trade talks with the U.S.

“I think we’ve heard now two ministers come out publicly and state that supply management is not a negotiating component and is not on the table at this point,” said Colizza on a conference call discussing Saputo’s third-quarter fiscal 2025 results.


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“We believe the Canadian government understands the importance of supply management in the Canadian landscape, and we don’t think it’s going to be a negotiating element here as we move forward.”

Canada’s supply managed dairy sector is a sore spot for U.S. President Donald Trump, who says the American industry should have more access to the Canadian market.

Some experts have said the issue is likely to come up in trade negotiations between the two countries. The Canada-United States-Mexico Agreement, which was signed in 2018 under the last Trump administration, is up for review next year.

That deal saw Canada agree to let U.S. dairy farmers have access to about 3.5 per cent of the domestic market, but the U.S. has accused Canada of breaking that pact.

However, Canadian politicians have said they will defend dairy producers and protect the decades-old system that regulates production, farm-level prices and trade.

Supply management — which covers not only dairy but also poultry and eggs — isn’t only contentious in international relations.

Its homegrown critics argue it leads to higher prices for Canadians while stifling innovation and export opportunities. Proponents, including industry leaders, say it protects the sector from volatility and keeps retail prices stable.

Though Colizza doesn’t think Canada will give up supply management in trade talks with the U.S., he didn’t appear overly concerned with how Saputo would adapt if the system were to be dismantled.

“At the end of the day, it works for Canadians, and it works for Canada, and we work well within that system,” he said.

“Should the decision be made to move away from that, we’ll also adapt our platform accordingly.”

Trade is generally top of mind for businesses and investors right now, so Colizza was predictably asked what possible tariffs from the U.S. could mean for Saputo. Canada and the U.S. are in a month-long pause from tariffs and retaliation, but uncertainty over what comes after remains.

Colizza assured investors that Saputo’s American business is “very autonomous,” with few links between the two arms on a daily basis.

“So when I take a look at the potential tariff applications that are still lingering, from a direct perspective, there’s not a lot of impact, and that is because of the limited amount of movement we have between Canada and the U.S. and vice versa,” he said.

He added that some business inputs, like packaging materials or chemicals, could be affected but not in a way that drastically affects the overall company.

Saputo reported a loss of $518 million during the quarter ended Dec. 31, compared with a loss of $124 million a year earlier.


On an adjusted basis, earnings rose slightly to $167 million from $163 million.

Revenues were $5.0 billion, up 17 per cent from $4.3 billion a year earlier. It reported its diluted loss per share was $1.22, compared with a loss of 29 cents, while adjusted earnings per share were 39 cents, up from 38 cents.

— With files from Maura Forrest

This report by The Canadian Press was first published Feb. 7, 2025.

Boeing to Lay Off About 400 Workers on Moon Rocket Program

By Eric Johnson and Julie Johnsson

February 07, 2025 

NASA's Space Launch System (SLS) rocket with the Orion spacecraft attached rests on launch pad 39B as final preparations are made for the Artemis I mission at NASA's Kennedy Space Center on November 15, 2022 in Cape Canaveral, Florida.

 (Kevin Dietsch/Getty Images)

(Bloomberg) -- Boeing Co. expects to lay off hundreds of workers on its SLS moon rocket program, fueling speculation that NASA’s marquee space exploration initiative is poised for a shake-up under a second Donald Trump administration.

The US aerospace company cited revisions to NASA’s Artemis program and cost expectations in a brief statement that cited the potential for roughly 400 fewer positions by April 2025.

“We are working with our customer and seeking opportunities to redeploy employees across our company to minimize job losses and retain our talented teammates,” a Boeing spokesperson said by email on Friday.

The exact number of jobs impacted hasn’t been determined, though 400 positions amounts to more than one-third of the staff assigned to the Space Launch System program.

Boeing’s future in space has been in question as NASA undergoes a leadership change under President Trump and close advisor Elon Musk, the SpaceX chief who’s been given unprecedented oversight power. The aerospace manufacturer is culling thousands of jobs and paring its holdings under new Chief Executive Officer Kelly Ortberg.

The Artemis program was officially formed under Trump’s first administration, after he signed a policy directive to send humans back to the moon for the first time since the Apollo program ended more than a half century ago. The program has been beset for years by cost overruns, technical problems and a complicated mission plan, though it supports thousands of jobs across the US.

In November 2022, the SLS rocket made its launch debut after more than a decade of development, sending an uncrewed capsule around the moon as part of the first major test flight for the Artemis campaign. The rocket has come under repeated criticism for its delays and ballooning budget, which is expected to cost as much as $23.8 billion through 2025.

A NASA spokesperson didn’t immediately respond to a request for comment.

Trump has hinted at his desire to send astronauts to Mars in recent years. He has also forged a close relationship with Musk, who founded SpaceX with the goal of starting a settlement on the Red Planet and is developing a powerful new rocket to get there.

“We will pursue our manifest destiny into the stars, launching American astronauts to plant the Stars and Stripes on the planet Mars,” Trump said at his inauguration.

The SLS layoff announcement comes about a week after Boeing unveiled a leadership change on its Starliner astronaut capsule. The program has racked up more than $2 billion in cost overruns after a string of setbacks, including a botched June test flight that left two US astronauts stuck at the International Space Station.

Subscribe to Business of Space: The inside stories of investments beyond Earth, from satellite networks to moon landings. Delivered weekly.

(Updates with details on the SLS rocket in sixth paragraph, Boeing’s space business in ninth.)

©2025 Bloomberg L.P.

Iraq Targets 7M Bpd, But Smarter Strategy Could Unlock Much More

By Simon Watkins - Feb 04, 2025

Iraq’s Oil Ministry has reaffirmed its goal of reaching 7 million barrels per day (bpd) within five years.

The failure to implement the CSSP, critical for water injection and sustaining production, has stalled Iraq’s oil expansion.

Iraq’s reputation for corruption, lack of transparency, and political instability has deterred Western oil majors.

It seems that every now and again someone in Iraq’s Oil Ministry realises how much oil the country has left undeveloped and what a good idea it would be to increase production and sell more of it. The latest chap from the Ministry to make such a discovery (last Wednesday apparently) -- Undersecretary Ali Maarij – concluded that Iraq could boost its oil production to 7 million barrels per day (bpd) within the next five years. In fact, with one key adjustment to Iraq’s broad operating procedure in the sector, its oil production could reach 12-13 million in around the same time. So, how could it be done, and what is the problem in doing it?

In 2012, then-Iraq Prime Minister Nouri al-Maliki received a confidential report on his desk showing exactly how Iraq could increase its oil output from just over 3 million bpd at that point to a plateau of 13 million bpd in the ‘High Production’ scenario by 2017. The ‘Medium Production’ scenario plotted a course to 9 million bpd plateau by 2020, while the ‘Low Production’ scenario planned for 6 million bpd by 2025. The report was called the ‘Integrated National Energy Strategy’ (INES) and concluded an 18-month exhaustive study in large part funded by the World Bank, whose senior staff were also instrumental in the analysis. Further assistance came from renowned management consultancy firm then-Booz & Company. Around a year later, a limited-circulation report by the International Energy Agency (IEA) reached similar conclusions about Iraq’s oil production potential.

The cornerstone assumption of both was that Iraq’s true oil reserve number was much higher than previously thought and this remains the case. Officially, Iraq holds a very conservatively-estimated 145 billion barrels of proved crude oil reserves (nearly 18 percent of the Middle East’s total, and the fifth biggest on the planet). Unofficially, it is extremely likely that it holds much more oil than this. In October 2010, around the same time as producing the official reserves figures, the Oil Ministry stated that Iraq’s undiscovered resources amounted to around 215 billion barrels. This was also a figure that had been arrived at in a 1997 detailed study by respected oil and gas firm, Petrolog. Even this figure, though, did not include the parts of northern Iraq in the semi-autonomous region of Kurdistan. This meant, as highlighted by the IEA, that most of these oil sites had been drilled during a period before the 1970s when technical limits and low oil prices gave a narrower definition of what constituted a commercially successful well than would be the case later. Overall, the IEA underlined that ultimately recoverable resources across all of Iraq (including the Kurdistan region) totalled about 246 billion barrels (crude and natural gas liquids).

So far so good, then, especially as Iraq has the world’s equal lowest oil production cost along with Saudi Arabia and Iran of just US$1-2 per barrel. The focus of the INES and IEA key reports – and others that were to follow – was basically three things. First, prioritise the development of Iraq’s ‘Big Four’ fields of West Qurna (1 and 2), Rumaila, Zubair, and Majnoon. At the time these constituted around three-quarters of all Iraq’s incremental oil production. Second, expedite the Common Seawater Supply Project (CSSP). This project involves taking and treating seawater from the Persian Gulf and then transporting it via pipe­lines to oil production facilities to maintain pressure in oil reservoirs to optimise the longevity and output of fields. To reach and then sustain the higher levels of Iraq’s increased oil production profiles, it will need water injection equating to around 2% of the combined average flows of the Tigris and Euphrates rivers or 6% of their combined flow during the low season. And third, ensure that the connecting infrastructure from wellheads to the trunk pipelines was built to a well-organised and regimented plan with clear financial expenditure linked to precise project objectives.


In the wake of these reports, two things happened which encapsulate the Iraq dilemma. First, Iraq Prime Minister started out by doing the right thing in trying to secure one of the very few companies in the world who could handle the size and complexity of the crucial CSSP – the U.S.’s ExxonMobil, as analysed in full in my latest book on the new global oil market order. Talks in 2012 failed but in 2015 the American energy supermajor agreed to take part in the project, in partnership with the China National Petroleum Corporation. Second, in 2018 ExxonMobil requested to withdraw from the project. According to sources who work closely with the Oil Ministry spoken to exclusively by OilPrice.com at the time, the central problem for ExxonMobil was that the risk/reward elements of the CSSP contract as laid out by Iraq’s Oil Ministry were profoundly unbalanced. In terms of the general risk/reward matrix that formed the basis of these negotiations, there were three key elements: ‘cohesion’, ‘security’ and ‘streamlining’. Cohesion related to ensuring that building the facilities connected to the CSSP were completed in full and in order. Security related not just to the on-the-ground security of personnel but also to the soundness of the basic business and legal practices involved in the agreement. Streamlining meant that any deal should continue as had been laid out in the agreement, regardless of any and all future changes to the government of Iraq. The source added that ExxonMobil was at one stage prepared to continue with the CSSP but only if the contracts were drawn up in a truly transparent manner by lawyers it approved, the accounts were managed and audited by accountants it approved, and the Iraqi authorities also managed their side in a similarly above-board way. Subsequent to this, a senior legal source in Washington exclusively told OilPrice.com that any major agreements signed by big U.S. oil and gas firms in Iraq will have to be agreed in full by U.S. lawyers, all accounts will have to be checked by U.S. accounting firms, working processes will have to be checked by U.S. project consultancy firms, and security issues of any nature will have to be worked through and then monitored on an ongoing basis with U.S. security organisations.

Further light on precisely why ExxonMobil believed it necessary to put these safeguards for its own reputation and that of the U.S. in place might be inferred from independent non-governmental organisation, Transparency International (TI), in its ‘Corruption Perceptions Index’. Iraq, which at the time regularly featured in the worst 10 out of 180 countries for its scale and scope of corruption, was described as: “Among the worst countries on corruption and governance indicators, with corruption risks exacerbated by lack of experience in the public administration, weak capacity to absorb the influx of aid money, sectarian issues and lack of political will for anti-corruption efforts.” TI added: “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state-building and service delivery.” It concluded: “Political interference in anti-corruption bodies and politicization of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption.”

As it now stands, French energy behemoth TotalEnergies has taken over the driving seat for the West in the CSSP, as part of a US$27 billion four-pronged deal in Iraq, which also includes oil and gas field production work and projects to reduce associated gas flaring. That this firm also faced the same initial problems as ExxonMobil was evident when it refused to go ahead with the deal when faced in 2022 with the prospect that Iraq would resuscitate its rightly-buried Iraqi National Oil Company (INOC). Widely regarded as one of the most corrupt organisations to operate in any field anywhere in the world ever, INOC was immediately a deal breaker for TotalEnergies. Having set a precedent in its flat refusal to countenance such shenanigans, the French firm appears to have established a solid position from which to move forward on its four-tier project. If Iraq manages to keep some of its questionable operating practices in check for the duration of TotalEnergies’ four projects, then it may yet see a lot more of its oil production potential realised.

By Simon Watkins for Oilprice.com

Rare Earth Supply Chain Faces New Challenges as Trade War Escalates

By Metal Miner - Feb 05, 2025, 2:00 PM CST

The U.S. has imposed a 10% tariff on all Chinese goods, including rare earths, and China has retaliated with export controls on critical minerals.

Conflict in Myanmar has disrupted the supply of rare earths from the country's mines.

Businesses are exploring strategies to mitigate the effects of tariffs and potential supply shortages, including diversifying supply sources and investing in alternative materials.



The Rare Earths MMI (Monthly Metals Index) held sideways from January to February, moving up a slight 2.88%. Rare earths prices have proven more volatile in the past year than other metal products like steel. Now, it seems the rare earth market could witness more volatility in 2025.

President Trump recently imposed a 10% tariff on all Chinese goods, which includes rare earths. Meanwhile, the Kachin Independence Army (KIA) remains in extensive control of Myanmar’s valuable rare earth mines, severely limiting the Burmese government’s control over this sector. Get weekly updates about these rare earth shifts in MetalMiner’s Weekly Newsletter.


Trump’s Promised Tariffs – Time to Worry?

In early February, President Trump enacted a 10% tariff on all Chinese imports, intensifying global trade tensions and raising concerns about its potential impact on industries reliant on rare earth elements. China currently supplies between 85% and 95% of the global demand for rare earth elements, granting it significant influence over global supply and pricing.

As reported by Reuters, China announced export controls on critical minerals, including rare earths, in retaliation to the U.S. tariffs. This signals the country’s readiness to leverage its dominant position in the sector.

Potential Impacts on the Global Rare Earths Market


These tariffs have led to concerns about supply chain disruptions and increased costs for industries dependent on rare earth elements. Because of these developments, manufacturers in sectors such as electronics, automotive, and defense could face challenges securing necessary materials. Reuters states that this could lead to production delays and higher prices for consumers.
Assessing the Panic

Some analysts argue that the level of concern may be disproportionate to the actual threat. They argue that the global market has previously navigated similar challenges.

For instance, during past trade disputes, companies adapted by diversifying their supply chains and investing in alternative sources of rare earths. Additionally, the current export controls by China are targeted and leave room for negotiation, suggesting that a complete cutoff of rare earth supplies is unlikely.
Various Mitigation Strategies

There are several strategies businesses can utilize to mitigate the effects of tariffs and potential supply shortages. One way to reduce dependence on a single supplier and increase resilience to geopolitical disruptions is to diversify the supply of rare earth elements across multiple sources.

Another way of balancing the world’s supply of rare earths is to invest in exploration and development in places like Australia. Nations can also decrease their reliance on primary sources by supporting technologies that concentrate on producing alternative materials or recycling rare earth elements from goods that have reached the end of their useful lives.

Myanmar Mine Woes Continue into 2025

In the past year, Myanmar’s rare earth mining sector has faced significant upheaval due to escalating conflicts involving armed ethnic groups. This stems from moves by the Kachin Independence Army, an ethnic insurgent group, which has seized control of key mining hubs in Kachin State. Most notable are those located in Panwa and Chipwe, which are critical suppliers of rare earth oxides to China.

Historically, these mining areas were controlled by the New Democratic Army-Kachin, a militia allied with Myanmar’s junta government. However, recent KIA offensives have altered this dynamic. Analysts suggest that while the KIA may intend to resume rare earth operations, negotiations with China could delay any quick restart, potentially tightening global supply and increasing prices.
Looking Ahead

The topic is sure to remain complicated going forward. Due to the KIA’s control over important mining regions, the worldwide supply chain for rare earths will remain unpredictable. Though talks between the KIA and Chinese firms may allow mining operations to resume, there is no clear timetable. Moreover, there is always the chance of more conflict.

Meanwhile, the international community is sure to watch these advances carefully, as they have important ramifications for industries worldwide.

By Jennifer Kary

Norway Considers Energy Export Curbs, Sending Shockwaves Through Europe

By Haley Zaremba - Feb 05, 2025

The rapid expansion of renewable energy in Europe has destabilized the energy market and led to soaring prices in neighboring Norway.

Norway's government collapsed due to internal conflict over how to respond to the EU's energy policies and the resulting high energy prices for Norwegian citizens.

Norway is considering restricting energy exports to the EU, which would have a significant impact on Europe's energy security.



Europe’s energy rules have caused chaos in Norwegian politics – and now the chaos in Norwegian politics is going to create chaos in European energy markets. The negative feedback loop comes at a critically bad time for Europe, as the continent’s energy security continues to falter three years after Russia’s invasion of Ukraine.

Over the past few years Europe has supercharged its renewable energy transition in order to boost energy independence and security. When Russia invaded Ukraine in February of 2022, Europe was enormously reliant on the Kremlin to keep the lights on and the economy running. As of 2020, Europe relied on Russian energy imports for a whopping 20% of the continent’s energy use. And even more starkly, more than half of the natural gas and a third of the oil consumed in Germany, Europe’s largest economy, came from Russia.

“The energy appeared cheap, but it exposed us to blackmail,” Ursula von der Leyen, president of the European Commission, which serves as the European Union’s executive branch, said at the World Economic Forum in January 2025.

In a frantic attempt to relieve Russian leverage on European politics and economics while also making major inroads toward meeting the European Union’s climate goals, EU countries have massively ramped up their renewable energy capacities, shattering records for solar and wind deployment. But it now seems that these markets may have grown too much, too quickly, and European energy markets are now reeling from the fallout.

Relying on variable energies for the bulk of a bloc’s energy mix is great for the climate, but can be dangerous for grid stability if mismanaged. Today, “the German electricity grid is today more weather dependent than ever,” reads a recent op-ed for Bloomberg. “Without sufficient baseload generation running 24/7 and dispatchable plants, which can be activated on demand, Berlin relies on imports from neighboring countries to fill the gap during long stretches of winter when it’s dark and windless.”



This, in turn, has wreaked havoc on neighboring Norway’s energy markets. As more and more of Norway’s energy flows to German grids, Norwegian energy prices are climbing ever higher for locals. Norway has cheap and abundant energy thanks to prodigious hydropower resources, and locals are none too happy about sacrificing their cheap energy prices to keep German lights on.

“Nordic countries increasingly feel they are paying the cost of a failed German energy policy — one they weren’t consulted on,” Javier Blas wrote for Bloomberg.

This discontent has led to serious fracturing in the Norwegian government. Norway, which is not part of the EU, has recently seen its coalition government collapse under the weight of deciding how to respond to EU energy measures. Norway’s Eurosceptic Centre Party has pulled out of the coalition government entirely, leaving Norway’s prime minister Jonas Gahr Støre to lead a minority government.

“The price contagion through the last two cables gives us high and unstable prices, and the EU prevents us from implementing effective measures to control electricity exports out of Norway,” said the Centre Party’s leader and finance minister Trygve Slagsvold Vedum in a statement calling for Norway to “take back national control” of electricity prices.

The Norwegian government is now considering a control mechanism to limit exports. If Norway decides to limit or completely curtail its energy flows to the European Union, it would be catastrophic for the bloc. Norway was the continent’s third biggest energy exporter last year.


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“If we lift our gaze and look forward to what is happening around the North Sea, there is a strong emphasis on renewable power from all countries,” says Norway’s Prime Minister Jonas Gahr Store. “But then every country has to sit down and consider what is their share of such a possibility and there is no one who is going to do something that is not in their interests.”

It is inevitable that major energy shifts will result in clashes and uncertainties like those playing out in Europe. This is not necessarily a bad thing. It’s part of a learning process for an unprecedented and ultimately necessary transition. Watching how European leaders resolve the tensions, reconfigure regulations, and move forward with their energy transition ambitions will offer key learnings and insights to the rest of the world as we continue to foray into the decarbonization era.

By Haley Zaremba for Oilprice.com

There’s No Magic Solution To The Slowdown In U.S. Output Growth

By Alex Kimani - Feb 05, 2025

Standard Chartered analysts: Trump's assumptions about U.S. oil’s fungibility and supply elasticity are flawed.

U.S. oil production growth is expected to continue slowing, with non-OPEC supply growth staying below 1 mb/d over the next few years.

Analysts predict renewed sanctions enforcement will heavily impact Iran’s oil sector, with Trump likely tying Iranian crude restrictions to his broader China trade agenda.


An executive order signed by President Trump titled ‘Unleashing American Energy’ signed on 20 January detailed oil’s importance in restoring U.S. economic and military security. The executive order describes oil as an abundant low-cost resource that has been held back by regulations, and that can now be freed to fuel a renaissance in manufacturing thanks to the cost advantage of cheap oil.

Commodity analysts at Standard Chartered have pointed out that Trump’s view of U.S. oil hinges on several assumptions: that oil is fungible and hence, for example, substitution between foreign heavy crude refined in Illinois and light sweet Permian Basin crude is easy, and the supply curve for unconstrained U.S. oil is highly elastic with a low marginal cost. StanChart says these assumptions are flawed, arguing that the U.S. oil supply curve is likely to remain stubbornly high and steep rather than low and flat.

Last year, a survey by law firm Haynes Boone LLC revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of Trump’s new term driven by increased U.S. output. The survey of 26 bankers showed that they expect WTI prices to drop to $58.62 a barrel by 2027, nearly $13 lower than the intraday price of $71.22 at 12.30 pm ET on Wednesday. However, StanChart has predicted that the dramatic slowdown in U.S. oil production growth that we witnessed in 2024 will continue over the next two years.

According to the experts, last year witnessed a sharp slowdown in non-OPEC+ supply growth from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, primarily caused by a reduction in U.S. total liquids growth from 1.605 mb/d in 2023 to 734 kb/d in 2024. StanChart expects this trend to continue, with U.S. liquids growth expected to clock in at just 367 kb/d in 2025 before slowing down further to 151 kb/d in 2026.

Stanchart says the U.S. slowdown and a long tail of declines will keep non-OPEC supply growth well below 1 mb/d over the next couple of years despite some areas of solid growth in Brazil, Canada and Guyana. In other words, there’s no inevitable supply glut coming as many traders feared in 2024.

Stopping Iranian Oil Exports

Earlier, StanChart pointed out that that U.S. policy, and particularly the degree to which restrictions are enforced, has been the key determinant of Iranian output levels.

Indeed, the five main turning points in Iran’s output trajectory have all been associated with changes in U.S. policy. For the past three years, Iran’s exports have been allowed to climb by the Biden administration, with Washington seeing them as a price moderator after the imposition of sanctions on Russia. However, Trump’s US administration is less likely to accept any trade-offs in the enforcement of sanctions, and has vowed to drive Tehran's oil exports to zero. Well, this might not be the usual Trump bluster: Iran’s output fell from 3.8 million barrels per day (mb/d) to slightly below 2.0 mb/d in the last two years of the first Trump presidency, taking exports close to zero. StanChart says to expect similar downward pressure to be exerted in the second Trump presidency.

Last year, Trump revealed he had previously succeeded in cutting Iran’s oil exports in his first term by linking it to trade; “I told China and other countries, if you buy from Iran, we will not let you do any business in this country and we will put tariffs on every product you do send in of 100% or more.” According to StanChart, Iranian oil is likely to play a key role in Trump’s wider China trade policy agenda. China has been importing Iranian oil indirectly via proxies. According to multiple media sources, the transfers involve a dark fleet consisting of a group of aging tankers that rarely have an identifiable insurer. These transfers can be hazardous, including the danger of spills and collisions, with so many low-quality tankers massed in a narrow trade route with their transponders off. For instance, two such vessels caught fire off Singapore after a collision in July.

Iran’s oil exports started shrinking late last year after a ramp-up in sanctions by the Biden administration froze some ships that deliver Iranian oil to China via ship-to-ship oil transfers off Malaysia and Singapore. China's imports of Iranian crude oil and condensate dropped by 524,000 barrels per day (bpd) to a four-month low of 1.31 million bpd in November as the sanctions took effect.

By Alex Kimani for Oilprice.com

Trump’s Energy Boom Leaves Australia Struggling to Compete

By Julianne Geiger - Feb 06, 2025

Woodside CEO Meg O'Neill criticizes Australia’s energy policies for delaying key projects and increasing costs.

The U.S. is attracting energy investment by cutting red tape and boosting fossil fuel production, leaving Australia behind.

Australia faces rising energy prices and increasing uncertainty as it struggles to maintain its position as a reliable energy exporter.


Woodside Energy’s CEO Meg O’Neill isn’t sugarcoating it—Australia is losing ground in the global energy race, and Donald Trump’s aggressive push to ramp up U.S. fossil fuel production is only making things worse. Speaking at the Melbourne Mining Club this week, O’Neill warned that Australia’s regulatory hurdles, environmental red tape, and high costs are pushing investment away, while the U.S. is rolling out the red carpet for energy projects, the FT has reported.

“Australia is not competing,” she said bluntly, pointing to government policies that have delayed key oil and gas projects, making it harder for the country to meet its own energy needs—never mind securing its standing as a major LNG exporter.

Meanwhile, Trump is all about cutting regulations, boosting output, and creating an investment-friendly environment that’s enticing capital away from other countries--like Australia.

The timing stinks. Australia’s energy prices are already on the rise, with some states now being forced to actually import gas--for the first time. Price caps and export controls introduced by Prime Minister Anthony Albanese’s government have added uncertainty, making Australia look like a less reliable supplier to its key Asian customers, including Japan and South Korea.

O’Neill’s warning comes as Woodside itself looks beyond Australia. The company has been expanding into the U.S. where energy projects don’t get stuck in bureaucratic limbo for years. Case in point: Woodside has been waiting for six long years for government approval on a Western Australia project.

With Trump poised to make American energy dominance a cornerstone of his policy, Australia’s sluggish approach to development is putting its own industry—and its economy—at risk. Energy security isn’t just about keeping the lights on. It’s about staying in the game.

By Julianne Geiger for Oilprice.com

OPEC to Trump: We Set the Price, Not You

By Irina Slav - Feb 06, 2025

US President Trump has vowed to ask OPEC to ramp up production.

Lower oil prices will not only impact OPEC, it will also affect US oil producers.

OPEC has a very different agenda than Trump and is not going to do what he wants just because he asks nicely..


One of President Trump’s first orders of business following the initial burst of executive orders was to declare he would ask OPEC to ramp up its oil production to bring down prices. Trump pledged cheap energy to Americans, and he vowed to put a quick end to the Ukraine war, which, to him, would accomplish lower oil prices. Only OPEC had to agree—and it didn’t. It could be Trump’s very first reality check this term.

Trump was speaking at the World Economic Forum in Davos when he said he was surprised that OPEC producers hadn’t taken care of oil prices before the U.S. election in November. “You gotta bring down the oil price,” he said. “That will end that war. You could end that war.”

While plausible on the face of it, this argument is as questionable as the argument that sanctions are working and the Russian economy is in tatters—as evidenced by a 2024 World Bank update on major economies, in which it ranked Russia among high-income countries, and on a per-capita basis, at that, for the first time since 2015.

Yet there are bigger problems with Trump’s idea of having OPEC open up the taps to help him fulfill his campaign promise of cheap energy. For starters, the Saudi Crown Prince may be Trump’s buddy, but he’s got his own priorities, and funding his Vision 2030 is number one on the list—for which he needs higher—not lower—oil prices and continued partnership with Russia.

Then there is the domestic problem: low oil prices are not what U.S. drillers want to hear or see. In fact, U.S. drillers like prices where they are and would not mind seeing them go higher. In other words, Trump’s goals of cheaper energy and more U.S. oil and gas production are at direct and quite sharp odds with OPEC’s priorities. Friendship with Crown Prince Mohammed won’t help—because OPEC doesn’t care about politics. OPEC cares about the oil market.

Amena Bakr, head of Middle East Energy and OPEC research at Kpler, recently detailed the situation with Trump and OPEC in an analysis for Semafor, where she pointed out that OPEC did not respond to Trump’s calls for more production and is unlikely to ever consider responding favorably because “at its core, it remains focused on market management, not political posturing. That includes keeping Russia firmly inside the alliance to maintain maximum clout over global supply.”

This is certainly not something that the U.S. president would be happy to hear, but there is more than one reason for OPEC’s behavior. According to Bakr, in addition to Russia’s importance for the extended group’s clout over global oil markets, there is the matter of maintaining internal cohesion and unity. As she puts it, “member states are wary of any move that could be interpreted as bowing to Trump, particularly if it risks internal fractures or threatens the alliance’s independence and loss of members.”

In other words, OPEC has a very different agenda than Trump and is not going to do what he wants just because he asks nicely. Of course, this most likely means he’ll stop asking nicely at some point, but that is unlikely to change OPEC’s tack. Especially now that it seems Trump has finally found the time to craft his policy towards Iran, which quite unsurprisingly is a return to maximum pressure, aiming to squeeze Iran’s oil exports to zero with the stated aim of preventing the country from developing a nuclear weapon.

According to the International Energy Agency, the rest of OPEC has plenty of spare capacity to cover the potential loss of Iranian barrels. Yet, as usual, the International Energy Agency is quite selective in its observations. OPEC indeed has the spare capacity to offset the loss of Iranian crude supply. What it does not appear to have is the willingness. OPEC has repeatedly demonstrated that it would not follow anyone else’s agenda but its own. This means that the cartel would only start increasing production if it is satisfied with the trajectory of international prices. It really is as simple as that.

There is also an additional challenge, as represented by OPEC’s decision to drop the U.S. Energy Information Administration from its secondary source lists—the outlets it uses to count its oil production. OPEC also dropped Rystad Energy—a formerly pure-play energy consultancy that has, over time, acquired a pro-transition bias not dissimilar to the IEA’s. As for the EIA, the significance of OPEC’s move to drop it as a secondary source of production information does not spell anything good about Trump’s relationship with the cartel.

“Opec probably now sees the EIA as a [direct] US government agency,” one former OPEC official told the Financial Times. “Its numbers were not particularly different from the other monitors, perhaps a little bit higher on the UAE’s production,” the official added, noting that “No one really believes the monthly Opec outlook [production numbers] at this point, though.” Yet they probably would believe energy data analysts such as Kpler, OilX, and ESAI, which OPEC is taking on as secondary sources.

Trump’s relationship with OPEC, then, is going to be rather complicated during his second term. The sooner the new U.S. administration acknowledges the realities of the situation, the easier it will be to cultivate a new relationship on a more equal footing.

By Irina Slav for Oilprice.com

Drought Dims Hydropower's Promise

By Haley Zaremba - Feb 06, 2025, 4:00 PM CST

Hydropower, the leading source of renewable energy, is facing significant challenges due to climate change-induced droughts and environmental concerns.

Droughts have decreased hydropower production in several regions, leading to power shortages and economic losses.

While hydropower is crucial for clean energy development, especially in regions like Africa, its expansion faces hurdles due to environmental impacts and high upfront costs.



Hydropower is the world’s single largest source of green energy. On a global scale, hydropower plants produce more energy than all other renewable power sources combined. However, the growth rate of new hydropower capacity has tapered off in recent years, and the sector is plagued by serious current and future problems, from increased incidents and intensity of droughts in a changing climate, and major negative environmental externalities associated with mega-dams.

Hydropower offers a critical benefit that other renewable energies don’t. It creates energy around the clock unlike solar and wind energy, which are dependent on weather patterns and therefore highly variable. For this reason, hydropower is an extremely attractive option for river-endowed nations that want to boost their clean energy production levels without compromising grid stability or energy security. But in recent years, investment in expanded hydro has dropped off.

“In the last five years the average growth rate was less than one-third of what is required, signaling a need for significantly stronger efforts, especially to streamline permitting and ensure project sustainability,” the International Energy Agency (IEA) reported last year. “Hydropower plants should be recognised as a reliable backbone of the clean power systems of the future and supported accordingly.”

But in recent years hydropower has not proved to be as reliant as its investors had hoped. Widespread droughts associated with climate change have caused rivers to run lower or even dry up entirely, causing seriously negative (literal) downstream effects for hydropower production plants. In 2022, intense droughts in China’s Yangtze River basin slashed developed hydropower potential (DHP) by 26%, causing critical shortages and spurring an uptick in coal-fired power production. In the last few years similar problems have cropped up in Brazil, Ecuador, the United States, and the Mediterranean region, too. Critically, these are not isolated or one-off incidents; the risk of similar extreme droughts in the future rises by nearly 90% in a number of climate change scenarios, notably SSP585.

“Since September, daily energy cuts have lasted as long as 14 hours,” the New York Times recently reported from Quito, Ecuador. “Highways have turned an inky black; entire neighborhoods have lost running water, even internet and cell service.” Not only does this have enormous implications for day-to-day life, these blackouts reverberate through the national economy. It is estimated that for every hour of blackout, Ecuador loses $12 million in productivity and sales.

Climate scenarios are just one of the factors deterring investors away from new hydropower mega-projects. In the United States, investments in large hydropower plants all but drief up due to the simple fact that “there are no suitable river locations in the US for new ones,” according to recent reporting from CleanTechnica. And the ones that do exist are associated with major ecological disruptions, changing flood patterns and blocking salmon runs for tens of millions of fish, among other environmental issues.

“There are certainly rivers in other countries which could be tapped using conventional hydropower technology, but not in the US,” Frederick Hasler wrote for CleanTechnica. “Going forward, current US hydro needs to be maintained, but cannot be significantly increased.”

And there are indeed major projects being planned in the rivers of other countries, but these are not without their own problems. In the Congo, plans for the world’s largest hydropower project have been stalled for years after much enthusiasm at the outset. Some blame the Democratic Republic of the Congo’s poor governance for the Grand Inga dam’s failure to launch, while others point to a revolving door of international partners, a blisteringly high up-front cost of around $80 billion in one of the world’s poorest nations, and “deep concerns about the project's environmental and social impact” according to reporting from the BBC.

But the need for the Grand Inga is enormous and impossible to ignore. Around 600 million people in Sub-Saharan Africa lack access to power completely, making electrification a critical step for economic and social development in the region. But Africa does not have the luxury of emitting greenhouse gases indiscriminately as the developed world has done over the past 150 years. Instead, the continent is under enormous international pressure to “leapfrog” over fossil fuels and straight to the development of clean energy systems. It’s hard to imagine how this will be possible without large-scale hydropower.

By Haley Zaremba for Oilprice.com