President Joe Biden is being called out by our allies for his failure to help the American people, and our allies, because of what former UK Prime Minister Tony Blair calls an “imbecilic” decision to withdraw troops from Afghanistan. This is a botched withdrawal and shows total lack of empathy or morality from Biden.
His unwillingness to take responsibility for his historically monumental failures is hurting U.S. prestige in the world and is making our country less respected, less safe and crushing any moral authority that we once had. German Chancellor Angela Merkel, in a meeting with her party’s top brass said that once the U.S. decided to withdraw, it was clear that other allies had to follow suit. The decision was “ultimately made by the Americans,” and for “domestic political reasons.” Even Russian President Vladimir Putin is worried that the fall of Afghanistan is going to allow the spread of radical Islam around the region and increase the risk of terrorist attacks.
Biden’s failures in Afghanistan are only part of what is happening from his bad decisions. The border is filled with people that were used as a political bargaining chip leading to massive issues at the U.S. border. The failure at the border is opening up the door to a rabid spread of COVID-19 and increases the risk that terrorists can make iy to U.S. soil. The failure from Biden is also emboldening Iran. Iran not only is upping its uranium enrichment, they are openly flaunting U.S. oil sanctions and are now calling on Japan to unfreeze their assets that are being sanctioned by the U.S. This all will add to the risk premium for oil and we will all be paying the price for this President, his poor judgement and his poor choices.
Reuters reports that,
“The leader of the Iranian-backed Hezbollah group, Hassan Nasrallah, said on Sunday that vessels carrying Iranian fuel will be setting sail soon followed by others to ease fuel shortages in Lebanon. Nasrallah insisted that the group was not trying to step in and replace the state by purchasing the fuel. The first vessel which last Thursday the group announced was about to leave Iran, had already sailed," he said.
“We are not taking the place of the state, nor are we an alternative to companies that import fuel,” he said in a speech to supporters without elaborating on how the shipments would enter the country. Hezbollah’s foes in Lebanon have warned of dire consequences from the move, saying it risked sanctions being imposed on a country whose economy has been in meltdown for nearly two years.”
Reuters also reports that,
“Iran’s President Ebrahim Raisi called on Japan to release Iranian funds frozen in the country because of U.S. sanctions, Iranian state TV reported after the president met on Sunday with the visiting Japanese foreign minister. Iran has been unable to obtain tens of billions of dollars of its assets mainly from exports of oil and gas in foreign banks, including $3 billion of its funds in Japan, due to U.S. sanctions on its banking and energy sectors.
"The sanctions were reimposed in 2018 after Washington abandoned Tehran’s 2015 nuclear deal with six world powers. The improvement of ties with Japan is of great importance for Iran…Any delay in unblocking Iranian assets in Japanese banks is not justified,” Raisi said in his meeting with Toshimitsu Motegi, who arrived in Tehran late on Sunday for a two-day visit."
It appears that Iran is looking to increase its military strength by working with Russia and China to create a military alliance. News reports say China and India will hold military drills in the Persian Gulf in late 2021 and early 2022. I’m sure if Joe Biden is asked about it, we’ll get a big laugh.
A fire at a Pemex well platform in the Gulf of Mexico is maybe another reason why the market is a little bit supported this morning. Obviously any problems in the Gulf of Mexico raises concerns that we could see more regulation from the Biden administration to restrict production. Of course that’s awfully early but we will monitor the situation.
Zero Hedge reports that,
“the latest chapter in what can only be described as a metastasizing sh*t show between China and Taiwan, Taiwan has now claimed that China wants to “emulate” the Taliban and take over Taiwan the same way Islamic radicals took over Afghanistan. Taiwan said the island is “ready to defend itself” against Beijing in the event China tries to seize power, according to RT.
"Taiwan has been watching, along with the world, as the collapse of the Afghanistan has taken place in short order over the last few weeks. Chinese state media has called the events in Afghanistan 'a lesson' for Taiwan that Americans can’t be trusted and that they will 'abandon' Taipei like they did with Kabul."
Oil Market Breathes New Life
After all of the drama of the weekend and after people were able to put things in perspective, it looks like the oil market has new life. Last week we seemed to be doom and gloom about the rise of COVID cases and now we seem to be flipping back towards optimism about economic growth and continued stimulus. The risk premium for oil is bound to go up and that should lend some further support.
We should also see U.S. oil inventories continue to fall as demand for gasoline stays relatively high. If we don’t get the amount of shutdowns due to COVID, the market is still going to be under supplied and we’re still going to see a trend of falling inventories around the globe that should give the market some longer term support.
Another heat wave is giving natural gas some support. It’s going to continue to add cooling degree days to the market next week at a time when things normally calm down. The long term picture for natural gas is still very bullish and it’s unlikely that we’re going to get a big sell off but if we do, look to buy calls.