Cuba Libre Coming Your Way

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

Oil, oil, and more oil. Black gold has dominated the narrative of geopolitics ever since the early 20th century, and while today’s picture is far more complex, the narrative remains. But beyond the narrative, it is still very much a decisive commodity. In this edition, we can see how. Oil supply disruptions can do many things, among them, defining former secondary actors as newly emerged protagonists in foreign policy.

But even more importantly, oil supply disruptions are on the brink of both making a president lose midterm elections, as well as overthrowing a 65-year-old communist regime that survived the fall of the USSR, but will probably not live to tell the tale of its oil supply being cut short. Closing the faucet with Venezuela was, in the end, the domino that tipped the whole line. Now, Trump knows that, and the crisis in Iran, as well as the proximity to the midterms, will likely be the reason Cuba can say, at last, that it will be free. We don’t know the day nor the hour, but the revolution will fall.

In this issue, you will find:

• From Tehran to Havana: the Search for a Quick Win

• Investment Dynamics in Global Oil

• Latin America’s Role in Energy Markets: the Petro-Monetary Shield

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The Trump administration is entering the most politically sensitive stretch of its second term with a problem it did not anticipate this early.

In perspective. What began as a show of strength in Iran has gradually turned into a source of political erosion at home, complicating the narrative of control and decisiveness that defined the opening months of the presidency. With midterms now on the horizon, that shift is beginning to reshape Washington’s priorities elsewhere, particularly in Cuba. The situation in Iran is unresolved in the ways that matter politically. While the administration has signaled de-escalation and even framed recent developments as a form of closure, the perception domestically is far less favorable.

• The operation has been costly in terms of resources, prolonged enough to generate fatigue, and, most importantly, it has hit Americans where it always does: at the pumps.

• Rising fuel prices have become the most visible reminder of the conflict, cutting directly into household budgets and eroding support among independents—the bloc that decides midterms in a polarized environment.

• Early polling reflects that shift, with a clear majority of Americans now viewing the intervention as a mistake.

Between the lines. This is where Venezuela enters the picture. The removal of Nicolás Maduro initially gave the administration a major geopolitical victory. It was clean, symbolic, and easy to communicate. It was, after all, one of the most impressive military operations ever. But success in Venezuela is proving harder to sustain as a political narrative. Stabilization is slow, the transition is incomplete, and the economic recovery that would validate the operation is still a work in progress. In electoral terms, that kind of win has a short shelf life. It does not disappear, but it loses salience; it has exited the news cycle. And as Iran continues to dominate headlines for the wrong reasons, Venezuela risks becoming yesterday’s achievement.

• Against that backdrop, Cuba looks different. The island is in crisis, and it is approaching a breaking point. Three months without consistent fuel supplies have pushed the country into near-paralysis.

• Blackouts lasting up to 20 hours a day are no longer exceptional. Hospitals are suspending procedures, schools are closing, and basic services like trash collection are deteriorating to the point of flooding the streets with garbage.

• The social dimension is beginning to shift as well. Protests have multiplied, and in a notable escalation, a Communist Party office has even been attacked—something virtually unheard of in decades. The regime’s ability to manage dissent is being tested in real time.

Hidden in plain sight. At the same time, signals from Washington suggest that Cuba is no longer being treated as a secondary issue. Public rhetoric has hardened, with Trump stating, just yesterday, that, once he intervenes, he will take control of Cuba “almost immediately”. New sanctions were also introduced, declaring that any person or company that operates or does business with Havana will have all their assets in the U.S. frozen. And, crucially, reports indicate that the Pentagon has contingency plans in place should the situation require a more direct response. Whether those plans are intended for execution or leverage is almost beside the point. Their existence shapes expectations on both sides.

• What makes this moment particularly telling is the coexistence of pressure and contact. While Havana publicly rejects U.S. conditions and insists on negotiating on its own terms, there is evidence of ongoing engagement.

• High-level meetings have taken place. Limited cooperation—such as the recent coordination allowing a U.S. government aircraft to land in Cuba for a law enforcement operation—suggests that channels are open and functional.

The incentives. The logic tying all of this together is political. The administration needs a foreign policy success, and it needs one that is fast, visible, and unambiguous. Iran cannot provide that. Even in the best-case scenario, any resolution will be complex, contested, and tied to economic aftershocks that linger. Venezuela, meanwhile, is structurally incapable of delivering quick validation. Its transition will take time, and time is precisely what the electoral calendar does not offer.

• Cuba, by contrast, presents a different profile. The regime is weakened, the crisis is acute, and the geographic factor lowers the operational threshold for U.S. action.

• More importantly, the symbolic payoff is enormous. Ending—or appearing to end—the Cuban question after a 65-year obsession would resonate far beyond the island itself.

• It would speak to decades of unresolved policy, to domestic constituencies with strong views on the issue, and to a broader narrative of restoring control in the Western Hemisphere.

The bottom line. That does not mean a military intervention is inevitable. In fact, the more likely path remains a combination of sustained pressure and negotiated concessions aimed at producing controlled leadership changes, economic openings, and a reframing of the regime without an immediate democratic overhaul. From a political standpoint, that may be enough. What matters is the ability to present it as a decisive shift. Cuba is becoming central to U.S. policy because it fits the moment.

• With Iran weighing down the administration and Venezuela unable to deliver quick returns, the search for a clean foreign policy win is narrowing.

• Cuba, in its current state of crisis, offers something few other theaters do: the possibility—real or perceived—of a rapid, contained, and highly visible outcome.

• Whether Washington can achieve that without triggering a more complex scenario is another question entirely. But as the midterms approach, the incentives to try are only getting stronger.

The recent escalation of geopolitical tensions around the Strait of Hormuz has reignited concerns over the fragility of global oil price management and the security of physical supply routes. As markets navigate this volatility, the strategic focus shifts toward the structural costs of production and the massive capital required to ensure long-term investment viability in a fragmented global landscape.

In perspective. Investment viability in the upstream sector is primarily a function of full-cycle breakeven prices, where a 20% rate of return is typically the benchmark required to make a project desirable for international capital. The data reveals a tiered global cost structure: while the Middle East maintains a low-cost dominance with an average regional breakeven of USD 32/bbl, Latin America occupies a critical middle ground with an average regional breakeven of USD 50/bbl. This positioning makes the region an essential source of supply given geopolitical protection of price stability, as its profitability is highly sensitive to price floors that must stay comfortably above the USD 50 mark to sustain the 20% profit perspective.

• Investment desirability in Latin America is heavily weighed against country risk, where recent political volatility and shifting regulatory frameworks can add a significant premium to the cost of capital if the US does not exert control through foreign policy.

• Operational costs vary significantly based on the type of crude. Extracting Latin America’s mix of light sweet and medium sour requires more complex, costly infrastructure compared to the low-cost Arab light or Basrah medium.

• The perspective on the investment cycle is predominantly long-cycle for these conventional projects, requiring multi-year financial commitments that face increasing scrutiny compared to the flexibility of short-cycle alternatives like US shale.

Capital expenditure. The scale of the current capital deployment is unprecedented, with global upstream capital expenditures expected to surpass USD 600B in 2024, reaching their highest level in a decade. Within this global surge, Latin America has emerged as the largest driver of incremental growth, surpassing North American year-on-year expansion for the first time in over twenty years. This influx of capital is not merely a response to current prices but a mechanical necessity. To meet the 2030 demand horizon, annual upstream investment must rise by an additional USD 135B. The Americas are slated to account for roughly 60 % of this total global increase, signaling a definitive pivot of the industry's center of gravity toward the Western Hemisphere.

• The strategic return of major players like Chevron to Venezuela highlights a shift where dark fleet operations and sanctioned barrels are being integrated back into the Western orbit to ensure supply resilience, even with high breakeven prices.

• The aggregate production capacity of a pro-US Latin American bloc serves as a tactical hedge, providing the spare capacity necessary to stabilize markets during Middle Eastern disruptions. Latin America’s role in non-OPEC supply growth is accelerating, with more than a third of all sanctioned global conventional projects for 2030 located within the region.

• Legal victories for firms like YPF reinforce a climate of investment security, countering country risk premiums that historically hampered deepwater and unconventional exploration in the region.

Between the lines. Disruptions in the Middle East act as a transmission mechanism for global instability, carrying immediate inflationary pressure across the globe by driving up the cost of energy and transportation. In response, the US has initiated a long-term geopolitical hedging strategy that seeks to consolidate a pro-market, right-leaning alignment across Latin America to secure massive capital investments at key strategic points. This shift aims to bypass the impossibilities of OPEC’s cartelization and price stabilization efforts, effectively turning the capacity to manage market supply into a strategic weapon. By fostering a new distribution of oil production with a 2035 horizon, the US is attempting to architect a hemispheric energy fortress that is insulated from Eurasian shocks.

• A cumulative USD 4.3T in investment is required between 2025 and 2030 to prevent a supply shortage, even as the global economy moves toward an eventual demand plateau.

• Long-term consolidation of right-wing governments in major producing nations provides a unified regulatory front that could establish a horizon for geopolitical risk management of oil investments in the region.

• The 2035 horizon reflects a deliberate plan to redistribute global supply, ensuring that the Western Hemisphere can act as an independent arbiter of price and volume in a fragmented international order.

In conclusion. The success of this hemispheric energy strategy depends on the sustained flow of capital and the continued political alignment of Latin American nations with Washington’s long-term security goals. While the risk of underinvestment has receded in the short term, the requirement for trillions in cumulative capex reminds us that energy security is an expensive and permanent commitment, especially in foreign policy.

• Navigating the path to 2035 will require balancing the immediate need for price stability against the inherent volatility of a global market in transition.

• Failure to meet these investment thresholds risks a disorderly energy market where price shocks and geopolitical friction become the new structural norm.

The global energy landscape is undergoing a structural shift as the United States recalibrates its supply chains through aggressive nearshoring and domestic production. This transition represents a pivot from market-driven globalization toward a geoeconomic strategy centered on energy as a primary tool of geopolitical containment. By securing its energy foundations, the U.S. seeks to limit the expansionist capacity of rival states while insulating its internal economy from external shocks.

The architecture of supply. For decades, the global energy market has been anchored by the OPEC+ framework, a cartelized structure designed to manage price volatility through strict production quotas. By dictating the output levels of member states, this arrangement grants a concentrated group of nations the power to influence global inflation, industrial predictability, and the fiscal health of importing states. This centralized control creates an inherent vulnerability for non-members, as the invisible hand of the market is frequently replaced by the strategic hand of political negotiation.

• The US views the OPEC model as a strategic liability, a realization sharpened now due to supply disruptions in the Strait of Hormuz and the use of energy as a weapon of diplomatic leverage.

• The recent Hormuz crisis has damaged critical energy infrastructure in the Middle East, a positive externality of the war for the US given its inclination towards long-term price establishment without a negotiation with OPEC’s internal parties.

• The shale revolution, fracking and horizontal drilling propelled the US to the status of the world’s leading producer, a shift aimed at asserting energy hegemony and ensuring the capacity to supply global markets during crises.

The dollar nexus. The global energy market serves as the structural backbone of the US dollar’s status as the global reserve currency, acting as a mandatory proxy for international liquidity. As the US manages a historic fiscal deficit, the requirement for energy transactions to be settled in greenbacks generates a consistent demand that shields the domestic economy from the inflationary pressures of its own monetary expansion. This mechanism effectively forces oil-exporting nations with underdeveloped financial sectors to recycle their surpluses back into American capital markets, transforming global energy wealth into a direct subsidy for US sovereign debt.

• Energy-denominated dollar demand allows the US to maintain its deficit spending by ensuring a constant global bid for the currency, effectively exporting potential domestic inflation.

• The lack of depth in Middle Eastern capital markets incentivizes the reinvestment of petrodollars into US Treasuries and capital markets, making energy exporters the primary holders of American liabilities.

• Strategic recent US debt buybacks represent a preemptive geoeconomic hedge, designed to strengthen the balance sheet against a possible long-term decline in dollar demand as rival blocs test non-dollar settlement systems.

Between the lines. The U.S. strategy involves a dual-track approach that combines regional reserve containment with domestic tactical flexibility. By driving peak capital expenditure into upfront, long-term projects through Latin American allies, Washington ensures that massive hydrocarbon and mineral reserves remain tethered to the Western geoeconomic sphere. This serves as a denial mechanism, preventing rival powers from securing the self-supply chains necessary for autonomous expansion, as seen in the strategic interest surrounding Greenland’s resources and the continued isolation of Venezuelan output. Simultaneously, the US maintains its unique status as a high-speed producer, utilizing the Permian Basin as a geoeconomic faucet to discipline global markets.

• The US plans to establish a market-making energy production infrastructure through nearshoring in its area of influence, consolidating its hegemony over countries that fully depend on oil for its industrial development.

• Long-term cycle commitments in Latin America function as a geopolitical anchor, locking regional energy infrastructure into the US supply chain to block Indian or Chinese integration.

• High-risk upfront investments in domestic shale act as a strategic weapon, enabling the US to flood or cut supply, affecting global prices if necessary to erode the fiscal stability of energy-dependent rivals given that short-cycle shale production only requires months to consolidate.

In conclusion. Latin America is increasingly projected as the critical upstream provider for the Western Hemisphere, functioning as a strategic hedge against the rise of yuan-denominated energy contracts and the reactivation of Middle Eastern production infrastructure. By fostering deep regional alignment, the United States seeks to consolidate a monopoly over energy infrastructure to solve a dichotomously-layered dilemma: securing global geopolitical leverage while maintaining the dollar-demand necessary to suppress domestic inflation.

• The long-term stability of this arrangement depends on Washington’s ability to prevent the emergence of alternative energy-clearing architectures that could bypass the American financial shield.