Rising Oil Prices Amid Geopolitical Shifts: How Energy Plays are Igniting Now

The U.S. Court of International Trade's May 2025 ruling against Trump-era tariffs has created a seismic shift in global energy markets. By invalidating tariffs imposed under emergency powers, the court has removed a major overhang on oil demand expectations—while leaving supply-side risks and OPEC+ dynamics to fuel price volatility. This is a pivotal moment for energy investors: the stage is set for a surge in oil prices, driven by geopolitical tensions, constrained supply, and a demand rebound unshackled from trade wars. Let's dissect how this unfolds and where to position capital for maximum gain.

The Tariff Blockade: A Catalyst for Demand Rebound

The court's decision to strike down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) has eliminated a key drag on global trade—and by extension, oil demand. Previously, fears of retaliatory tariffs and trade wars had weighed on economic growth projections, particularly in emerging markets. With these tariffs now blocked, the International Energy Agency (IEA) has revised its 2025 oil demand growth forecast upward by 30,000 b/d, as businesses and consumers shed the uncertainty of trade conflicts.

This is a game-changer for energy equities. The removal of trade barriers has already triggered a rally in oil prices, with Brent crude climbing to $65.75/barrel in early May—up 8% in a week. But the real opportunity lies in the sustained demand story. The IEA notes that OECD demand is declining, but non-OECD economies like India and Southeast Asia are compensating with robust growth. Investors should focus on companies exposed to these markets and the energy infrastructure they rely on.

OPEC+: The Balancing Act Between Output and Politics

While the tariff ruling removes demand-side risks, OPEC+ remains the wildcard for oil prices. The cartel's May 2025 decision to increase production by 411,000 b/d (though actual gains may be half that due to compliance issues) highlights its dual mandate: supporting prices without alienating U.S. allies. Here's the critical angle:

• Supply Constraints: Despite the output increase, OPEC+ faces a ceiling. Aging infrastructure in Venezuela, sanctions on Russia, and underinvestment in Saudi Arabia's fields mean many members cannot easily boost production.
• Price Floor: OPEC+ has signaled it will cut production again if prices dip below $70/barrel. This creates a “put option” for investors—a floor beneath which prices are unlikely to stay for long.

The result? A volatile but bullish environment. Prices could spike to $80/barrel by Q4 2025 if supply tightens further—a scenario made more likely by geopolitical risks.

Geopolitical Supply Risks: Venezuela and Russia as Wildcards

Two key supply risks could amplify oil's upward trajectory:

1. Venezuela: Chevron's suspension of Venezuelan crude exports (290,000 b/d offline) and U.S. sanctions have crippled production. Even if sanctions ease, it could take years to restore capacity.
2. Russia: While European buyers remain, U.S. sanctions and logistical hurdles are reducing Russian exports by ~500,000 b/d.

These disruptions are not temporary. They represent a structural reduction in global oil supply—a tailwind for prices.

Investment Opportunities: The Best Plays in Energy

The interplay of these factors creates a clear roadmap for investors. Here's where to allocate:

1. Integrated Majors: Exxon (XOM) & Chevron (CVX)

These giants dominate production in geopolitically stable regions and have refining capabilities to capitalize on demand recovery.

Why Now? Both stocks trade at 5–7x EV/EBITDA, below their historical averages. With oil prices set to rise, their margins will expand sharply.

2. U.S. Shale: Occidental (OXY) & Pioneer Natural Resources (PXD)

Shale producers with low-cost operations and exposure to Permian Basin assets will thrive as prices climb.

Why Now? These companies have reduced debt and are disciplined about capital allocation, ensuring profits flow to shareholders.

3. Energy Infrastructure: Enterprise Products Partners (EPD)

Pipeline and storage operators benefit from rising production and refining activity. EPD's 6.5% dividend yield is a bonus.

4. ETF Plays: XLE & USO

• XLE (Energy Select Sector SPDR Fund): Tracks leading energy stocks like Exxon and Chevron.
• USO (United States Oil Fund): Direct exposure to oil prices via futures.

Conclusion: Act Now—Before the Rally Accelerates

The stars are aligned for energy investors: demand is rebounding, OPEC+ is constrained, and geopolitical risks are tightening supply. The court's tariff decision has removed a major overhang—now is the time to capitalize on this divergence.

Recommended Portfolio Mix:
- 40% in integrated majors (XOM, CVX)
- 30% in shale plays (OXY, PXD)
- 20% in infrastructure (EPD)
- 10% in USO for pure oil exposure

This is not a bet on “if” prices rise—it's about how much. With OPEC+ at capacity limits and geopolitical risks mounting, the next leg higher could be explosive. Position now, or risk missing the ride.

The energy sector is primed for a comeback. Don't let this opportunity slip away.