President Donald Trump signed an executive order last Thursday authorizing tariffs against any country that supplies Cuba with oil. The move aims to isolate the island from alternative suppliers like Mexico and Russia.
Following the capture of Venezuelan leader Nicolás Maduro in January, Havana has lost its primary source of subsidized oil, leaving the island’s economy in a state of near-collapse, and oil supplies dwindling.
The Trump administration is also reportedly working to identify Cuban exiles, government insiders, and civic groups to negotiate a deal to replace the current Communist leadership by the end of the year.
Markets Bet On Political Transition
On Polymarket, traders are currently betting on a transition of power, though the consensus favors a political exit over a military one:
The odds that Miguel Díaz-Canel is out as leader by December 31 are currently at 55%.
The probability of a U.S. strike on Cuba in the same time frame, sits lower at 26%.
These odds suggest traders think Trump’s pressure could force a regime change without military action. If a negotiated transition emerges, the U.S. will want concessions, and Cuba will want economic oxygen. A reopening of U.S.-linked tourism, starting with cruise itineraries, would be a natural starting place.
Cruise Lines Eye Cuba Reopening Boost
For investors in Norwegian Cruise Line Holdings (NYSE:NCLH), Royal Caribbean (NYSE:RCL), and Carnival (NYSE:CCL), a Cuba reopened for business could represent a significant market catalyst.
U.S. cruise ships were last permitted to sail to Cuba during a brief window of normalization between May 2016 and June 2019, a period that saw a massive surge in interest before the Trump administration implemented the current ban.
Currently, the industry is struggling with a “Caribbean Capacity Overhang.” Regional capacity has surged 9% year-over-year, leading to a supply glut that analysts fear will trigger a reduction in yield growth. Over 200 ships now operate in the region, making it difficult for lines to maintain premium pricing in over-saturated ports like Nassau.
A reopening of Cuba would fundamentally change the Caribbean map. Between 2016 and 2019, Cuba sailings commanded 20% higher premiums than cruises to the Bahamas. A democratic transition could reopen one of the cruise ship’s most alluring and profitable routes.
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