Crude oil prices tried to retreat but rebounded after Peter Doocy at Fox News called out the Biden administration for reversing its “unwavering support for Israel” and asking about reports of a possible warning to Israel of a planned Iranian attack on Israeli soil.
This was in response to a statement by US Secretary of State Anthony Blinken that said that U.S. policy will change if Israel doesn’t change course and its war against Hamas. Mr. Doocy asked, “Did the CIA warn Israel or did President Biden warn Netanyahu today about an Iranian plan to attack inside Israel within 48 hours?” John Kirby: said “I’m not going to talk about intelligence matters, Peter. I think you can understand. Um, but, um, they didn’t talk.
Reports swirling about a possible attack by Iran on Israeli soil would be a definite escalation of the proxy war between Iran and Israel. That put the market in risk aversion mode causing stocks to sell off, oil to rally as people prepared for what could be a major price spike if this confrontation happens.
The risk to oil flows, especially coming out of Iran, would be put at risk. Also reports that the UAE would announce a suspension of all diplomatic ties with Israel. It’s another blow to the Mideast peace process that showed so much hope under Donald Trump when they signed the Abraham Accords.
The US Congress is continuing to call out the International Energy Agency (IEA) and sent them another letter demanding more information as to why the IEA has abandoned its historical commitment to nonpartisan and objective analysis for climate policy advocacy.
And while they were at it, they may want to call out our own Department of Energy for being blasted about the misleading way that they try to justify Biden’s electric car push when data is, at the very least, downright misleading, if not intentionally written in a way to hide the truth.
The Hill reports that Biden’s EPA can justify his new EV rules only by cooking the books. They write that,
“Before federal regulations are implemented, they must be justified with an extensive analysis of costs and effects. The new Environmental Protection Agency rule forcing a massive shift toward electric vehicles is no exception. Weighing in at 1,181 pages, it is accompanied by an additional 884 pages of “regulatory impact analysis.”
The EPA analysis justifying this rule is not unique in its length, but it is unique in its dishonesty. In a must read they wrote,
“EPA claims that the rule will reduce total greenhouse gas emissions over 2027-2055 by 7.2 billion metric tons. But despite a long and disingenuous discussion of the purported adverse effects of greenhouse gas emissions, EPA admits that it “did not specifically quantify changes in climate impacts resulting from this rule in terms of avoided temperature change or sea-level rise.”
The reason for that failure is obvious: The answer would be embarrassing. If we apply EPA’s own climate model, with assumptions that exaggerate the climate effects of reductions in GHG emissions, the rule would reduce global temperatures in 2100 by 0.0068 degrees Celsius — an effect far too small to be detectable.
Yet somehow, the EPA claims that the rule will yield “climate benefits” of $1.6 trillion. How is that possible for a near-zero effect on temperatures? As with the entire Biden climate regulatory regime across all agencies, EPA multiplies asserted reductions in greenhouse gas emissions by the “social cost of carbon,” a fictitious number that supposedly measures damage caused by the emissions.
The Daily Caller reported that, “A government watchdog group has filed a complaint with the Biden administration over its use of a dataset frequently used to push its climate agenda. They wrote, “Protect the Public’s Trust (PPT) filed the complaint with the Commerce Department over the National Oceanic and Atmospheric Administration’s (NOAA) “Billions Project” dataset, which purports to keep track of natural [and climate] disasters that have caused at least $1 billion in damages going back to 1980.
The billion-dollar disasters (BDD) data — cited frequently by the Biden administration to insinuate that climate change is intensifying and justify sweeping green policies — is based on opaque data derived from questionable accounting practices, PPT alleges in the complaint.
This is just some misinformation and geopolitical risk factors creating the potential for a major oil price spike that the Biden administration may be hard-pressed to stop. So far it looks like their plans are to try to cool prices or to try to look like they’re going to be tough on Russia, Venezuela and Iran while at the same time allowing those countries to export their oil or at the very least, their oil products.
The cancellation of the buyback for the Strategic Petroleum Reserve this week shows that the Biden administration must be very concerned about the global oil supply deficit. Supply deficit that was in part created by the government manipulating the market with releases from the strategic petroleum reserve before they were needed. Biden’s misuse of the strategic petroleum reserve angered OPEC and other oil producers and that is a reason that OPEC and Russia have continued to be very cohesive in reducing global oil output.
By artificially lowering prices, it did not help with a demand response or a production response to the real market conditions. And while the Biden administration may have benefited from the short-term price drop, it’s becoming more apparent with the looming global supply deficit that the misinformation provided by the reporting agencies and the SPR left the market short of supply.
Javia Blass says that all this turmoil will lead the Biden administration into a predictable pattern of damage control. First, they stopped further purchases for the SPR, then they announced there would be no reimposition of Venezuelan oil sanctions. Blass expects what will follow is to put pressure on OPEC to raise production.
When that fails and it most likely will, they will start putting pressure on U.S. oil companies again probably calling them price gougers or war profiteers.” Lastly, they’ll go back to the bullpen and start releasing oil from the SPR even though it’s been depleted to the lowest level in over 40 years. Now there are also reports that the Biden administration is talking about lifting its terror designation on the rebels if they just promise to stop attacking ships in the Red Sea. I am assuming that the Biden administration is saying please on that one.
Russia is also talking about limiting gasoline exports. This could be in response to the attacks on the refineries by Ukrainian drones. Russian refineries will not be back to full operation until June according to Russia and it’s possible that the attacks on Russian refineries have not stopped.
In other words, it seems like the oil markets are getting shot out of their complacency. The reason why I continued to keep a bullish outlook, even when the prices looked overbought, was because I could see that beneath all the noise and the rhetoric, the supply versus demand fundamentals were much tighter than the market was giving it credit for.
The reason why we suggested to keep hedged was exactly the situation that has been developing over the past few months. Despite all the doom and gloom about the economy and the potential for peak oil demand, we could see pretty clearly based on global daily demand versus daily global production as well as global inventories, that supplies are tighter than they’ve ever been or at least in a generation. And while the market seems to think this happened overnight, it’s been a long time since it’s been developing. The sad part about this is that a lot of this could have been avoided.
Natural gas got a bearish report. But the market is holding on to hopes of more production cuts. Working gas in storage was 2,259 Bcf as of Friday, March 29, 2024, according to EIA estimates. This represents a net decrease of 37 Bcf from the previous week. Stocks were 422 Bcf higher than last year at this time and 633 Bcf above the five-year average of 1,626 Bcf. At 2,259 Bcf, total working gas is above the five-year historical range.