Strategic Petroleum Reserve: U.S. Energy Secretary Chris Wright plans to request up to $20 billion to restore the Strategic Petroleum Reserve to near full capacity, an effort that may take years and is aligned with President Trump's goals. The U.S. Strategic Petroleum Reserve (SPR) is the world's largest emergency oil stockpile. The SPR was established in 1975 and has storage sites in Louisiana and Texas. In 2022, the Biden administration released 180 million barrels to address rising fuel prices caused by the Russia and Ukraine war, leaving the SPR at its lowest level in 40 years. Efforts to replenish the reserve have involved purchasing over 55 million barrels at an average price of $76 per barrel, which is lower than the $95 per barrel sale price. However, by November 2024, the funds for further buybacks were exhausted, and future replenishment depends on Congress.

Middle East: Hamas criticized President Trump's threats against Palestinians, claiming they supported Israeli Prime Minister Netanyahu in backing out of the Gaza ceasefire and intensifying the siege on Gaza. President Trump's recent remarks demanded that Hamas release all hostages or face severe consequences, while a Trump envoy held secret talks with Hamas, deviating from the U.S. policy of not negotiating with the group. Despite these threats, Hamas maintained that Israel’s threats would not lead to the release of hostages, and it warned of the possible killing of remaining prisoners if fighting escalates. The ceasefire deal, which is in its second phase, calls for the hostages' release, but Israel seeks to extend the ceasefire without a final agreement, while Hamas insists on moving forward with negotiations for a war-ending deal. Egypt and Qatar have mediated talks between the U.S. and Hamas, and Egypt emphasized upholding the ceasefire to facilitate Gaza's reconstruction.

OPEC+: In April 2025, Russia’s Deputy Prime Minister, Alexander Novak, confirmed that OPEC+ would begin increasing oil production by 138,000 barrels per day, the first hike since 2022. However, Novak also warned that the group might reverse this increase if market imbalances occur, maintaining flexibility in their approach. Kazakhstan, which has often exceeded its OPEC+ quotas, pledged to cut production in March, April, and May, following concerns over its record output. Despite this, Kazakhstan’s energy minister indicated that the country would aim to meet the OPEC+ quota in March, with some cuts in response to pipeline export challenges.

Market Overview: The energy sector is starting out bullish this morning with recent developments that have caused significant fluctuations in crude oil prices, driven by uncertainty around U.S. tariff policies and continued conversations on tariffs for Canada and Mexico, rising production from key oil producers such as OPEC+, and the continued balance of supply and demand. The announcement of a 10% tariff on Canadian energy imports by President Trump has raised concerns about potential gasoline price increases, given that Canada supplies the U.S. with the majority of its oil. Energy futures continuing to be volatile this morning with crude up $0.60 to $66.96, HO is up to $2.2342, and RBOB is up to $2.1208.

President Trump’s announcement that all imports from Canada and Mexico would face a 25% tariff, except for Canadian energy, which will face a 10% tariff, is in current conversation and has been rolled back to April 2nd. This decision reflects the strong energy interdependence between the two countries, with Canada supplying about half of U.S. crude imports. Canada is the world’s fourth largest crude producer and sends 4 million barrels per day to the U.S., accounting for one fifth of U.S. consumption. U.S. refiners rely heavily on Canadian oil, and itis challenging to replace it due to specific refining configurations. Canadian oil producers have adjusted to the tariffs by lowering their prices, while Canada also has the option to export oil through its Trans Mountain pipeline to bypass the U.S. market.

The energy complex saw markets bullish to start out the day, with news of President Trump imposing large U.S. sanctions against Russia trying to get them and Ukraine to work out a peace deal. Oil prices rebounded today after Russia's deputy prime minister indicated that OPEC+ might reverse its decision to increase oil production if market conditions necessitate. Additionally, the U.S. plans to purchase $20 billion worth of oil to refill its Strategic Petroleum Reserve which will take years to fill, further supporting prices, however ongoing concerns over U.S. trade tariffs and potential supply increases from major producers have led to oil prices being on track for their biggest weekly drop since October. To end the week crude oil finished bullish by $0.68 to $67.04 a barrel, HO down to $2.2160, and RBOB up to $2.1087.