Crude Drops as Trade War Tensions Increase

Jul. 11, 2018 04:10PM PST

American crude inventories took the first hit dropping to a two-year low over the last week, with surplus US crude shrinking by 12.6 million barrels, in what analysts believe will be a long series of hits to the sector.

As the trade war between the US and China continues to escalate, the crude market appears to be the first casualty in what is being dubbed the largest trade war in economic history.

WTI crude was down 4.78 percent on Wednesday (July 11) to US$70.82 while Brent crude was also down 6.26 percent sitting below US$75 a barrel.

“There’s no doubt that uncertainty continues to weigh, not only on the crude oil markets, but really all markets,” Brian Kessens, energy asset manager at Tortoise told Bloomberg.

Less than one week after the US levied duties of US$34 billion on Chinese imports, the Asian nation has issued its own retaliatory 25 percent tariffs, particularly on soybeans. China is the world’s largest consumer for soybeans and gets roughly 30 percent of all its beans from America.

China is also expected to add a 25 percent tariff on crude oil and other energy commodities when the Trump administration imposes a 25 percent levy on US$16 billion in additional Chinese goods.

China’s new crude tax would further weaken the already unstable crude market.

As Kessens noted, other markets are also being affected by mounting pressure between China and the US.

Most recently, Washington issued 5,238 additional tariffs against China on Tuesday (July 11). The 194 pages of items that will now be taxed an additional 10 percent ranges from a variety of food products, to buttons and hair clippers all the way to tungsten, cobalt and rare earth elements.

The high tech minerals included in rare earths are used in a plethora of technologies like smart phones and electric vehicles and are an important component in creating super alloys for the aircraft manufacturing sector.

China is the leading global producer of rare earths and has used the status to its advantage. In fact, less than ten years ago America, in collation with a number of other countries, solicited the WTO to intervene on their behalf to get China to increase production of the technologically critical minerals.

In 2017, China produced more than 80 percent of the world’s rare-earth metals and compounds, according to the US Geological Survey. China holds about 37 percent of global reserves and supplied 78 percent of US demand.

Citing a 2017, 200-page report released last year, which investigated China’s technology and intellectual property transfer, US Trade Representative Robert Lighthizer issued a statement.

“On Friday (July 6), in response to unfair Chinese practices, the United States began imposing tariffs of 25 percent on approximately US$34 billion worth of Chinese imports. These tariffs will eventually cover up to US$50 billion in Chinese imports as legal processes conclude. The products targeted by the tariffs are those that benefit from China’s industrial policy and forced technology transfer practices,” said Lightizer.

Oxford Economics, an English economic consultancy firm, estimates that the tariffs between the two powerhouse nations will knock around 0.1 to 0.2 per cent off each country’s growth rate this year.

That may sound infinitesimal, but given the size of the US economy, last year was US$19.4 trillion and the Chinese economy was US$12 trillion, this adds up to a loss of between US$30 billion and US$60 billion, respectively.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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Coelacanth Energy

Investor Insight

Coelacanth Energy is a pure-play Montney oil and natural gas company advancing one of the largest contiguous land positions in the Montney light oil window of northeastern British Columbia. Supported by a substantial discovered and undiscovered hydrocarbon resource base, growing production, established infrastructure and a management team that has built and sold six successful energy companies, Coelacanth is executing a strategy focused on increasing both near-term cash flow and long-term resource value.

Coelacanth currently producing approximately 8,000 boe/d in Canada

Overview

Coelacanth Energy (TSXV:CEI) is a Canadian oil and natural gas exploration and development company focused on the Montney Formation in northeastern British Columbia. The company controls over 150 contiguous sections in the Two Rivers region, a strategically positioned acreage block within the Montney light oil window. As one of the largest landholders in this highly prospective area, Coelacanth has assembled a large-scale resource platform with significant development potential.

Map of NEBC with two graphs and text detailing Coelacanth Energy's oil production projections and infrastructure.

The company’s asset base is supported by substantial petroleum initially-in-place estimates prepared by GLJ. These include 6.9 billion barrels of discovered oil PIIP and 8.3 billion barrels of undiscovered oil PIIP, alongside 5.9 Tcf of discovered gas PIIP and 7.1 Tcf of undiscovered gas PIIP. The resource spans multiple Montney intervals, including the Upper, Lower, Basal and Middle Montney, providing extensive opportunities for future development and delineation.

Coelacanth’s strategy combines near-term production growth with long-term resource value creation. The company has secured critical infrastructure, contracted gas takeaway and processing capacity, and advanced development activities across its Two Rivers assets. Average production reached 7,632 boe/d in Q2 2026, reflecting continued progress in transitioning from delineation and infrastructure buildout toward scalable production growth.

Colorful regional map of British Columbia with Coelacanth Energy's projects

A key differentiator for Coelacanth is its leadership team. Management has successfully built and sold six previous public energy companies and has demonstrated an ability to create value through multiple commodity cycles. Supported by deep operational, geological and financial expertise, the team is focused on disciplined execution of the company’s Montney growth strategy.

Company Highlights

Premier Montney land position: Controls over 150 contiguous sections in the Two Rivers region of northeastern British Columbia, making Coelacanth the largest landholder in the Montney light oil window.
Substantial hydrocarbons in place: GLJ estimates 6.9 billion barrels of discovered oil PIIP, 8.3 billion barrels of undiscovered oil PIIP, 5.9 Tcf of discovered gas PIIP, and 7.1 Tcf of undiscovered gas PIIP across the company’s Montney acreage.
Infrastructure-led growth strategy: Key infrastructure, including facilities, pipelines, processing agreements and gas takeaway capacity, has been secured to support scalable production growth.
Growing production base: Average production reached 7,632 boe/d in Q2 2026, supported by ongoing development at the Two Rivers project.
Multiple productive Montney horizons: The asset base includes the Upper, Lower, Basal and Middle Montney intervals, providing extensive development opportunities across multiple zones.
Strong market access: Secured 100 mmcf/d of gas takeaway capacity and up to 60 mmcf/d of processing capacity, with access to major pipeline networks and potential LNG Canada connectivity through Coastal GasLink.
Proven value-creation team: Management has built and sold six successful energy companies and brings extensive operational, technical and financial expertise to Coelacanth’s development strategy.

Key Project

Two Rivers Montney Development

Aerial view of North America's landscape highlighting Coelacanth Energy's Two Rivers Montney development

The Two Rivers project forms the cornerstone of Coelacanth’s growth strategy and encompasses the company’s extensive Montney land position in northeastern British Columbia. The project hosts multiple productive horizons, including the Upper, Lower, Basal and Middle Montney intervals, supporting a multi-zone development approach across the acreage. Geological delineation has been completed, providing a strong technical foundation for future drilling and development.

The project has demonstrated commercial productivity through successful drilling and testing programs. Coelacanth established proof of commerciality at both Two Rivers East and Two Rivers West, while development at the 5-19 and 10-08 pads confirmed productivity across multiple Montney benches. All 12 wells on the 5-19 pad were onstream by April 1, 2026, marking a significant milestone in the project’s progression.

Map with labeled facilities showing Coelacanth Energy Two Rivers asset advantage

Infrastructure development has been a major focus of the company’s execution strategy. Coelacanth has secured infrastructure financing, completed key facility and pipeline construction, contracted up to 100 mmcf/d of gas takeaway capacity and secured processing capacity of up to 60 mmcf/d. These initiatives establish the infrastructure foundation required to support future production growth.

The Two Rivers asset also benefits from strong market access. The company’s production can access major regional pipeline systems, including NGTL, Westcoast and Alliance, while its acreage is directly connected to LNG Canada through the Coastal GasLink system for potential future delivery. Coelacanth Energy said the long-term view for LNG expansion in British Columbia is very positive for its land, believing that lands with scale and direct access as such will trade at a premium once they are delineated and the resource is proven for development.

Combined with a commodity mix of approximately 31 percent oil and liquids and 72 percent natural gas, the project offers exposure to multiple energy markets.

Management Team

Rob Zakresky – President, CEO and Director

Rob Zakresky is a veteran energy executive who previously served as president and CEO of Leucrotta Exploration, Crocotta Energy, Chamaelo Exploration, Chamaelo Energy, Viracocha Energy and Bellator Exploration. He has a proven track record of building and monetizing public energy companies and leads Coelacanth’s strategic growth and value creation initiatives.

Nolan Chicoine – Vice President of Finance and CFO

Nolan Chicoine previously served as CFO and vice-president finance at Leucrotta Exploration, Crocotta Energy and Chamaelo Exploration, and was controller at Chamaelo Energy and Viracocha Energy. He is responsible for financial strategy, reporting and capital management.

Jody Denis – Vice President of Operations

Jody Denis is a former drilling, engineering and operations engineer at Leucrotta Exploration. His previous experience also includes senior operational and drilling leadership roles with Black Swan Energy, ARC Resources and Birchcliff Energy. He formerly led Coelacanth Energy’s drilling and completions activities.

John Fur – Vice President of Geosciences

John Fur previously served as manager of exploration at Leucrotta Exploration and held senior geophysical positions with Crocotta Energy, Chamaelo Energy, Viracocha Energy, Canadian Natural Resources, Post Energy, Amber Energy and Husky Oil. He oversees geological evaluation and resource delineation across the company’s Montney assets.

Jonathon Hanson — Vice President of Engineering

Jonathon Hanson has 20 years of industry experience. He previously served as manager for exploitation at Spartan Dela Corp, and was a senior exploitation engineer for companies Vermilion Energy, Lynx Energy and Saguaro Resources. He will focus on exploitation and reservoir management for Coelacanth Energy.