A collapsing world order, market chaos, trade wars, and recession fears—JPMorgan Chase put it bluntly: last week delivered “a year’s worth of economic turbulence.”
Some blame Trump. Others see it as the inevitable unraveling of long-building trends. Many still hope it’s just a rough patch, that normalcy will return.
Don’t count on it. This isn’t a correction—it’s a transformation.
We are in the midst of a global upheaval rivaling the aftermath of the World Wars, the Great Depression, decolonization, and the oil shocks of the 1970s. Some mourn the world they knew; others welcome the dawn of something new.
Last week, top energy executives convened in Houston for CERAWeek—the energy world’s equivalent of Davos, the G7/G20 summits, or the Munich Security Conference. Beyond the usual mix of frustration over Trump’s tariffs and enthusiasm for his fossil fuel revival, energy strategist Daniel Yergin captured the moment:
“There’s never been such an abrupt change of direction as we’re seeing now on energy policy.“
The shift is massive. LNG is expanding faster than expected, giving Trump something OPEC never would—leverage. Unlike past presidents, he’s not weighed down by America’s need for imported energy.
Europe, India, and Japan are pledging to buy more U.S. gas. That puts Trump in a unique position—he can push for deals in Gaza and Ukraine without energy dependence as a bargaining chip against him.
“You can lead those discussions from a position of power.”
Amy Myers Jaffe, Director Energy, Climate Justice and Sustainability Lab at New York University
Ripping up old alliances and turning the post-World War II axis on its head would have been impossible for any other U.S. president, she said. Energy made in America is reshaping geopolitics.
Oil discussions at CERAWeek were dominated by talk of Trump’s “drill, baby, drill” push and its impact on oil markets. Prices have fallen nearly 20% since mid-January, weighed down by tariff chaos, spending cuts, and oversupply.
“The industry is over-drilling now, that is clear.”
Gunvor Group Chairman Torbjörn Törnqvist
Former Pioneer CEO Scott Sheffield warns $50 oil makes it hard to survive. With China’s demand peaking and supply rising, he sees $50-$60 as the new floor. “You’ve really got to hunker down. Layoffs may be coming,” he warned.
“When you get below the cost of supply, you can’t ‘drill, baby, drill.’”
Harold Hamm, Continental Resources CEO
Törnqvist made a comment that got little attention when he said that global inventories are low by historical standards. “There are some checks and balances in place so any big dip would be relatively temporary.” Hold that thought.
Geopolitics is the wildcard. Markets just got a preview of the new world order—Trump’s shake-up, Europe rewriting the rules, and a fight for natural resources and defense. The old system is unraveling, and the reset will be painful.
Most still don’t see it yet—the financial and political shift that started with Covid and Ukraine is speeding up. Trump’s U.S. overhaul, rising global tensions, and Europe’s costly rearmament point to economic and political upheaval on a scale we haven’t seen in decades. Brace for impact.
“As the world around us gets geopolitically ‘hotter’, the potential risks are of even larger market dislocations ahead.”
Oil markets caught a break from geopolitical supply threats since October 2024, shifting focus to a weak global economy. That’s pushed prices down 20%, reviving bearish outlooks.
The IEA cut its 2025 demand growth forecast to 1 million bpd, expecting a 600,000 bpd supply surplus this year. The EIA sees Brent averaging $73.60 in 2025, falling to $68.50 next year.
What’s missing? Global oil inventories are at record lows.
Agencies and analysts obsess over future supply and demand, but unless supply totally collapses, that rarely moves prices.
Crude is likely mispriced—low inventories mean tight supply and higher prices ahead.
“Inventories continue to fall, even though demand is not living up to expectations. And so that’s a very, very bullish fact, which validates our view that crude oil today is mispriced.
“We are at least $10 below fair value when we measure inventory divided by demand, and we see that going forward.”
Oil markets aren’t balanced systems—they swing between oversupply and scarcity.
When prices rise, producers over-drill, flooding the market and driving prices down. When prices fall, drilling slows until supply urgency forces a rebound.
Geopolitics is usually the trigger—going back to the 1970s oil shocks. Figure 1 shows 20 years of market cycles, with comparative inventory (C.I.) surplus in blue (oversupply) and C.I. deficit in orange (undersupply).
The figure makes Nuttall’s point—this C.I. deficit is the deepest and longest in 20 years. That means geopolitical risks have a higher chance of pushing oil prices up.
Oil prices respond differently depending on C.I.:
- When C.I. is in deficit or barely in surplus, markets are vulnerable to geopolitical price spikes. This explains every major oil price surge for the last two decades.
- When C.I. is high, markets focus on economic risks, driving prices lower.
Oil prices don’t track supply-demand balance well—the correlation with C.I. is 75%, while supply-demand balance explains only 10%.
A global reset is in motion. The world is in shock, but Trump didn’t create the chaos—he amplified what’s been unraveling since Covid. Few want to admit how much has changed. Markets, including oil, are more fragmented than at any time since WWII.
Trump has set expectations that his brand of power projection can resolve long-standing crises in Ukraine, Gaza, and Iran—where others have failed.
“Many politicians may suspect Mr. Trump grasped these red-hot tongs out of ignorance and childishness. Maybe so. But his political capital and that of the U.S. is now engaged.”
Putin rejected his Ukraine ceasefire, Iran refused his nuclear deal, and no one backs his Gaza plan. Meanwhile, China, Russia, and Iran are meeting in Beijing to strategize on Iran’s nuclear program and U.S. sanctions.
Trump’s trade war is escalating, straining global trade. Tariffs are disrupting relations with Canada, Mexico, and Venezuela.
Trump’s pivot to China focuses on Taiwan, the South China Sea, and Australia, while sparking concerns over U.S. expansion into Canada, Greenland, and Panama.
Europe is ramping up defense spending, piling on debt, and cutting social programs, deepening internal divisions.
Iran is weaker after Israel’s 2024 successes against Hezbollah and Hamas, but the region remains volatile. The Houthis have resumed Red Sea naval strikes, and Syria’s regime change has triggered new power struggles, including Turkish ambitions.
Rwandan-backed insurgents in Congo have seized territory, displacing 400,000 people and raising fears of a regional war.
Fears of a global slowdown are straining an overextended financial system. Gold prices are soaring as investors scramble for safe-haven assets.
These crises aren’t going away. The old assumptions no longer hold—markets are just starting to grasp the scale of the global reset.
“There are decades where nothing happens; and there are weeks where decades happen.”
Vladimir Ilyich Lenin