As the global energy market closes out a tumultuous 2025, the narrative has shifted from a simple supply-and-demand equation to a complex geopolitical chess match. With West Texas Intermediate (WTI) testing the $60 mark—down roughly 12% from this time last year—investors are grappling with a paradox: a market flush with oil but perched on the edge of a supply cliff. Helima Croft, Managing Director and Global Head of Commodity Strategy at RBC Capital Markets (NYSE: RY), warns that while the "geopolitical risk fatigue" of 2024 has kept prices suppressed, the aggressive policy shifts of late 2025 are setting the stage for a volatile 2026.
The immediate landscape is dominated by the aftermath of the "12-Day War" between Israel and Iran and the subsequent "Maximum Pressure 2.0" campaign orchestrated by the Trump administration. According to Croft’s latest strategic analysis, the market is currently in a "show me the barrels" phase, where traders are discounting headlines until physical supply is visibly removed from the water. However, with the snapback of United Nations sanctions in October 2025 and a tightening "pincher movement" against Russian exports, Croft argues that the "geopolitical floor" is much firmer than the current price action suggests.
The 2025 Pivot: From Risk Fatigue to Strategic Deprivation
The final quarter of 2025 has been defined by a fundamental shift in U.S. energy policy, which Croft describes as a dual-track strategy of "energy abundance" and "strategic deprivation." On one hand, the administration has pushed for maximum domestic production to lower prices for the burgeoning AI-driven power sector; on the other, it has weaponized energy sanctions to a degree not seen since the late 2010s. The "12-Day War" in late 2025 served as the catalyst, leading to a total enforcement of sanctions on the Iranian "ghost fleet." RBC estimates this could remove between 750,000 and 1.5 million barrels per day (mb/d) from the market by early 2026.
This escalation comes as Ukraine has pivoted its military strategy to target Russia’s energy heartland with surgical precision. Throughout late 2025, drone strikes have moved beyond refineries to hit critical export terminals like Novorossiysk and major pipelines. This "funding screw" is designed to cripple the Kremlin’s war chest, but it also creates a persistent supply-side vulnerability for global markets. Meanwhile, OPEC+ remains in a "watch and wait" posture. While the group began phasing out voluntary cuts in Q4 2025, Croft notes that meaningful spare capacity is now almost exclusively concentrated in Saudi Arabia (TADAWUL: 2222) and the UAE, giving the "Big Two" immense leverage over the 2026 price trajectory.
Winners and Losers in the New Energy Order
In this environment of "strategic deprivation," the winners are those with the lowest cost of production and the most secure logistics. Saudi Aramco (TADAWUL: 2222) stands as the ultimate arbiter of the market, holding the world’s only significant spare capacity. As Iranian and Russian barrels are squeezed out, the Kingdom’s role as the "Central Bank of Oil" is reaffirmed. Similarly, U.S. supermajors like ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) are well-positioned, benefiting from high domestic production levels and a regulatory environment that prioritizes "abundance."
Conversely, the losers are clearly defined by their geopolitical isolation. Iran and Russia’s Rosneft (OTC: OJSCY) and Lukoil (OTC: LUKOY) face an existential threat to their export revenues as "blocking sanctions" replace the ineffective price caps of previous years. In the corporate sector, high-cost producers and those reliant on aging infrastructure face a squeeze. Furthermore, the aviation sector, represented by giants like Delta Air Lines (NYSE: DAL), remains vulnerable; while $60 oil is a boon for margins today, the looming threat of a sanctions-driven supply deficit in 2026 creates a nightmare for long-term fuel hedging strategies.
The AI Factor and the Weaponization of Energy
The wider significance of Croft’s analysis lies in how energy has become inextricably linked to the global technology race. The massive electricity requirements of AI data centers—dominated by firms like NVIDIA (NASDAQ: NVDA)—have made cheap energy a national security imperative for the U.S. This "AI-Energy Nexus" is driving the administration’s push for lower prices, even as it seeks to deprive adversaries of revenue. It is a delicate balancing act: forcing oil prices down to support reindustrialization while ensuring they remain high enough to keep U.S. shale producers, such as Occidental Petroleum (NYSE: OXY), profitable and incentivized to drill.
Historically, this mirrors the 1980s "oil glut" era, but with a modern twist. The "Weaponization of Energy" is no longer just about embargoes; it is about the sophisticated use of financial sanctions and drone technology to disrupt the "shadow fleet" and the infrastructure that supports it. Croft points out that the transition from globalization to regional energy security is now complete. The market is no longer a single global pool but a series of interconnected reservoirs, some of which are being systematically drained for political ends.
The 2026 Outlook: A Looming Physical Deficit
Looking ahead to the first half of 2026, the primary challenge will be the transition from "paper" volatility to physical scarcity. Croft’s "2026 Look-Ahead" suggests that if the Trump administration’s "Maximum Pressure 2.0" is fully realized, the market will face a physical deficit that could catch traders off guard. The seasonal softness of Q1 might mask these underlying tensions, but by the summer driving season of 2026, the lack of Iranian and Russian "shadow barrels" will likely be felt at the pump.
Strategic pivots will be required for both producers and consumers. U.S. midstream companies like Enbridge (NYSE: ENB) may face volatility as the administration weighs tariffs on Canadian crude as a bargaining chip in broader trade negotiations. For investors, the opportunity lies in identifying companies with "sanction-proof" supply chains and those capable of filling the void left by sanctioned barrels. The risk, however, remains a potential "black swan" event in the Strait of Hormuz, which Croft warns should never be fully discounted, regardless of how "fatigued" the market becomes.
Summary: Watching the Geopolitical Clock
As we enter 2026, the key takeaway from Helima Croft’s analysis is that the current price stability is an illusion. The oil market is operating on borrowed time, supported by a "geopolitical floor" that is being tested by aggressive policy shifts in Washington and escalating conflicts in the Middle East and Eastern Europe. While bearish demand signals from a slowing Chinese economy provide a temporary ceiling, the supply risks are structural and accelerating.
Investors should watch for three critical signals in the coming months: the actual volume of Iranian exports as "Maximum Pressure" intensifies, the frequency of Ukrainian strikes on Russian energy terminals, and Saudi Arabia’s willingness to deploy its spare capacity. The era of "geopolitical risk fatigue" is over; the era of "physical supply reality" is about to begin. In the high-stakes game of energy geopolitics, the next move belongs to the barrels, not the headlines.
This content is intended for informational purposes only and is not financial advice.
