Cover Up?
Did Turkey shoot down a Russian warplane to cover up its role in moving ISIS oil? Russian President Vladimir Putin is leveling some very serious charges at Turkey saying that is exactly the reason their jet was shot down. Putin claimed in a speech, "We have just received additional information proving that unfortunately, large volumes of oil, industrial volumes coming from oil fields controlled by ISIS and other terrorist organizations, enter Turkey's territory.” Turkish President Recep Tayyip Erdogan said to Putin, "If you allege something you should prove it”. In fact he went a step further saying that if Putin did prove it he would step down.
In the meantime the U.S. is trying to ratchet down the tensions. President Barack Obama urged Turkey and Russia on Tuesday to set aside tensions over the downing of a Russian warplane and focus on the common priority of defeating the Islamic State group, according to the AP. Yet if it is proven that Turkey actually shot down a Russian jet to protect its lucrative black market oil trade, the Turkish President should step down. On the other hand if Putin is making up the story to cover for his pilots violating Turkish airspace and attacking groups loyal to Syrian President Bashar al-Assad, then Mr. Putin should step down.
In the meantime, oil awaits OPEC and Inventory levels but not necessarily in that order. Oil popped yesterday with stocks and then dropped with stocks. With all the debate about whether the Fed will cut rates and whether OPEC will cut production, oil is moving in lock step with stocks. OPEC is not expected to cut production but will perhaps work out a deal to allow for the orderly return of Iranian oil. Still any signs that there may be some cooperation with Russia and we could see a significant rally.
Bloomberg News reported that OPEC crude production dropped this month, led by declines in Nigeria and Libya. Output by the Organization of Petroleum Exporting Countries slipped by 33,000 barrels to 32.121 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month’s total was revised 57,000 barrels lower to 32.154 million a day because of changes to the Saudi, Iranian, Iraqi and Ecuadorean estimates.
Of course with all the focus on supply we are still forgetting about demand. Low prices have caused global demand to surge defying expectations or evidence of a global economic slowdown. Oil demand continues to blow away expectations. We will see just how much in tonight’s API report.