Output drops of around 25% are expected as the US aims to shift energy flows, Tom Luongo has said

US President Donald Trump is making "a big move towards controlling the marginal barrel of oil," attempting to shift the world's energy focus from the Persian Gulf region to the Gulf of Mexico, "where oil tankers are now lining up," geopolitical analyst Tom Luongo told RT in an interview on Wednesday.

A sharp drop in OPEC oil production is an expected result of US strategy to reshape global energy flows away from the Strait of Hormuz, he said. Luongo, publisher of the Gold Goats 'n Guns newsletter, warned the fallout would hit countries reliant on Middle East crude the hardest, with Europe being the biggest loser.

According to him, Trump is trying to "rewire the world in some fundamental way" by challenging the reliance on the Hormuz choke point.

"If you can't move the oil, then it can't go anywhere," he said. The market is already saturated, Luongo added, noting "we are sitting on nearly a billion barrels worth of oil just sitting on tankers and storage facilities."

Luongo said Europe was the primary loser, with EU countries the most vulnerable due to their heavy reliance on Middle Eastern oil after sanctioning Russian supplies.

There could be upsides for China and Russia, he claimed, saying that Moscow could rejoin global markets when sanctions are reconsidered.

Bloomberg reported earlier this month that OPEC oil production suffered its steepest monthly drop in at least four decades in March, falling by 7.88 million barrels a day as conflict in the Middle East throttled exports from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.

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(RT.com)