Sold Canadian Natural Resources (CNQ)

I've held Canadian Natural Resources (CNQ) since late 2022 based on excellent fundamentals.  Its an efficient low-cost producer in a safe jurisdiction, with effectively infinite reserves, that pays dividends and buys back shares.

But there's now political risk.  The upcoming July USMCA negotiations were already looking shaky:

• USMCA expires on July 1st.  In preparation, the USTR January report has listed areas of contention: lumber subsidies, diary protection, the digital services tax, imports rerouted from China, and fentanyl.
• 70-75% of Canada's exports go to the US.  Canada has no choice but to bend.  The issues can probably be worked through.  For example, the Digital Services tax has not been collected, and there are efforts underway to remove it from the books.  It depends on the support Carney can get.
• If the USMCA is not renewed by 1st July, it enters a 10-year "zombie state", whereby the three countries have to meet once a year for a "rolling renewal".  CNQ will be effectively licensed to sell 3/4th of their output to the US on a year-by-year basis.

Quick numbers on Canada's oil exports.  Most of their exports go straight to the US through the Mainline and Keystone pipelines.  Canada's total production is 4+m bbl/day.   The only way for them to bypass the US is through the TMX pipeline (890k bbl/day), and that is constrained as the port can only take up to Aframax sized tankers. So for long distances, they usually shuttle the oil to California to load onto VLCCs to China.   They may be able to dredge the port by 2027 to allow slightly larger Aframaxes in.  New pipelines are at least 8-10 years out.

Now Carney has gone to China and lowered tariffs on China EVs.  This is a slap in the face for Trump.  The US cannot tolerate Chinese influence on their neighbour.

I still think the USMCA is going to work out, but there'll be fireworks beforehand.  In between today and July, Trump will unleash tweets about destroying Canada's economy.  Canada is going to get bitch-slapped, then ass-fucked.  I may look to buy CNQ again when Canada rolls over or Alberta becomes the 51st state.