No one knows what the endgame will look like, probably not even the man himself, but he is doing no favours for himself, his party, US voters, or the global economy. Oil prices continued their upward journey. The economic warfare against Iran is now coupled with renewed US military attacks on Iranian targets and vice versa after two tankers came under fire on Monday. Details of the latest round of confrontations are sadly irrelevant; oil prices tell the story. Fears of intensifying supply disruptions are rising, particularly in the middle of the barrel, as the CME Heating Oil contract jumped by more than $11/bbl equivalent and its premium to WTI shot back above $100/bbl.

It is a truly scary outlook, which did not go unnoticed among bond investors. Growing government debt in several developed nations is raising fears of unsustainable public spending, and the stubborn rally in energy prices is adding fuel to the seemingly inextinguishable inflationary fire, sending bond yields to levels not seen in a long time. It is, indeed, a wound inflicted by the US on itself and on the rest of the world. The suffering is collective, and so will be the relief, although it is anything but clear when it will come.

An Offer He Cannot Accept, an Offer She Cannot Refuse

The US President has had his fair share of criticism over the last 20 months for his unpredictability, capriciousness, and, very often, impulsive and impromptu policymaking, which has left investors, analysts, and commentators scratching their heads, with no option but to react to the headlines. Just think of how many times the Iranian army has been obliterated since March, yet perennial attacks in the Strait of Hormuz keep oil market players on the edge of their seats. Or consider the hot US economy, which has been struggling with elevated inflationary pressures. One might call it a vainglorious attitude; one might label it the art of the deal. Either way, Mr Trump’s second term is characterised by persistent uncertainty.

Yet, amid the volatile, erratic modus operandi and frequent confusion, one aspect of the incumbent US administration’s foreign policy approach stands out. There appears to be a determined attempt to reinvigorate and reinterpret the 1823 Monroe Doctrine, now aptly re-baptised as the Donroe Doctrine, the Trump Corollary to its predecessor. It lays down the rules for the United States' foreign policy position. It opposes any foreign interference in the Western Hemisphere, and such a move would be deemed a hostile act.

The first such attempt actually came during the first Trump administration, when the idea of annexing or purchasing Greenland, in the name of national security, was floated. The plan was revitalised at the beginning of the President’s second term, together with taking control of the Panama Canal and making the US’s northern neighbour, Canada, its 51st state. These efforts have been intensified and even expanded this year. In the very recent past, renewed trade tensions with Canada and the capturing of part of Venezuela’s oil industry have kept the investment fraternity guessing, while Greenland cannot breathe a sigh of relief either.

The US-Canada trade animosity is, in itself, a curious issue, because the two countries, mutually pivotal trading partners, do have a trade agreement in place, together with the US’s other neighbour, Mexico, called the USMCA, which legally remains fully operational. The latest round of direct talks between the US and Canada abruptly broke down on August 21, just before the finish line, due to last-minute proposed changes that the parties accuse each other of trying to impose. The issue of tariffs had turned into a massive dispute over how much control the US could actually exert over Canadian trade policies. It included US demands for Canada to change its trade strategies with third parties and omit French labelling on its goods. The trade issue became one about patriotic and cultural identity, and, as such, Canada refused to sign the agreement. To paraphrase the famous line from The Godfather, it was an offer the Canadian prime minister could not accept. Uncertainty remains.

If Canada felt a fierce attempt to be subjugated by the US, Venezuela, barely a week later, surely realised what the US’s aims are in that part of its sphere of influence. In fact, this recognition probably came on January 3, when the former Venezuelan president was abducted and is now awaiting trial in the US for drug trafficking. It appeared to be just a matter of time before an offer that Maduro’s replacement, his then-deputy Delcy Rodriguez, the interim Venezuelan President appointed by the US, could not refuse, would arrive.

It came last weekend, and it coincided with reports of Venezuela contemplating leaving OPEC. In a no less dramatic fashion than the capture of the former president, a decent portion of Venezuela’s proven oil reserves, the largest in the world, is now allegedly under US control. According to the White House, a company backed by the US administration, North American Blue Energy Partners (NABEP), has won a 100-year concession to develop 17 oil fields. NABEP, the second-largest oil producer in Venezuela, in return, granted a 35% equity stake in its corporate parent to the Office of Strategic Capital of the US Department of War, CNBC reports. The US government would have the right to purchase a minimum of 20% of current and future production from the fields operated by NABEP, at production cost, and would also have the ‘right of first refusal’ for the balance.

The legal standing of the deal is dubious and fraught with political risks on both sides. While President Trump expressed high hopes that it would tame galloping US forecourt prices, developing oil fields is measured in years and even decades – if there are willing investors. Nonetheless, it is another unmistakable sign of the lengths the US is prepared to go to protect and increase its interests in the region in the political and economic fight for global dominance. Yet the latest Canadian and Venezuelan chapters suggest that predictability will be AWOL from the US government’s priorities over the next two years.

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