Trump's Big Purge

As Trump looks to shed reserves in half, where does this leave Canada’s 3.8 million barrels per day of U.S. oil exports? Will an extension to cut OPEC’s supply have an impact on the global price of oil?


What’s up.

The United States Strategic Petroleum Reserve is a 688 million barrel stockpile - enough to cover approximately 140 days of net imports to the country. President Trump has proposed selling off half of its reserves over a 10-year period in an effort to raise $16.5 billion USD.

Broken down.

While this selloff only equates to 94,000 barrels per day, (or 0.1% of the daily oil consumption worldwide) it comes at a time where the Organization for Petroleum Exporting Countries (OPEC) is trying to cut production by 1.8 million barrels per day. With discussions currently taking place for OPEC to extend production cuts into 2018, even Trump flooding an additional 0.1% of oil to the market matters. Oil prices still remain low hovering around $50 per barrel.  

Broken down more.

Trumps announcement undermines OPEC's agreement and shows a high level of confidence and security in the U.S. oil sector. Trump remains committed to moving toward energy independence, and this selloff shows he is headed in the right direction. With Canada supplying almost 40% of US imports, a move towards independence means less reliance on energy trade partners.

As Trump looks to shed reserves in half, where does this leave Canada’s 3.8 million barrels per day of U.S. oil exports? Will an extension to cut OPEC’s supply have an impact on the global price of oil?