Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Wednesday.
Boy, do I have a story for you today.
Bloomberg is reporting that the United States imported zero barrels of Saudi Arabian oil in July.
Not a single barrel.
The first full month without Saudi oil imports since 1985.
Over 40 years.
To understand how dramatic this is, consider where we were just four months ago.
In March, US refiners were buying 800,000 barrels of Saudi crude per day.
In July, that number went to zero.
And who filled the gap?
Venezuela.
We imported 600,000 barrels per day from Venezuela in July.
Now let me give you the bigger picture.
Going back to 2003 and 2004, the US was importing over two million barrels a day from Saudi Arabia.
For most of the last 25 years, that number stayed between 1.5 and 2.3 million barrels per day.
Then fracking changed everything.
By 2016, imports had dropped to about 400,000 barrels a day.
Even through Biden's term, we were holding around that level.
Then in March of this year we jumped back up to 800,000 barrels.
And now, in July, we're at zero.
That is not an accident.
The Reagan Playbook
A lot of Americans think the Soviet Union collapsed because Reagan outspent them on defense.
The Star Wars missile shield. The military buildup.
That's half true.
The other half of the story — and this is something most people still don't know — is that Reagan flooded the oil market.
He deliberately pushed down the price the Soviets could charge for their oil exports.
And he basically bankrupted them.
I learned this as a young research analyst on Wall Street.
I was working for a brilliant economist — I'll call him Dr. F — and I was his assistant, his gopher really.
And I said to him one day, trying to sound smart, "Reagan really knocked out the Soviet Union."
He looked at me and said, "Oil prices knocked out the Soviet Union."
I said, "What?"
He said, "They just started running a deficit. They couldn't afford to pay for their military buildup when we started playing around in the oil market."
That blew my mind.
I spent decades researching it after that.
Today, on Wall Street, that's conventional wisdom.
What most people still don't know is that Donald Trump has put together a working group modeled almost directly on the one Reagan used.
It operates out of the Eisenhower Building in Washington.
Non-elected officials.
Geopolitical strategists.
Defense analysts.
Some of the best thinkers in the world.
And their job is to find ways to gain a comparative advantage over China — or better yet, to hurt them.
I talk about it in detail here.
The Dots Nobody Is Connecting
All the headlines that seem unrelated — Venezuela, Iran, trade wars, tariff wars — they're not unrelated.
Every one of them traces back to that little group out of the Eisenhower Building.
Think about it.
Venezuela produces oil.
Iran produces oil.
Pushing down the price of oil hurts China's energy-exporting allies.
Flooding the market with American oil and allied supply squeezes China's access to cheap energy.
It's the Reagan playbook.
Applied to the 21st century.
Applied to China.
The zero barrels from Saudi Arabia in July isn't just an energy story.
It's a geopolitical story.
It's a strategy.
And it's one of the most important stories nobody in my business is telling right now.
We just put out a deep-dive report on exactly this — the Eisenhower Building working group, the strategy behind it, and what it means for investors.
I hope you get a chance to read it.
Have a wonderful day.
I'll see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine