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The Energy Report: Houthi Rebels Won’t Go Away

Published 06/10/2024, 09:47 AM
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Iranian-backed Houthi rebels are kind of like cockroaches that you can’t get rid of. They keep coming back and attacking. Despite the Biden administration’s plan to stop them, so far it has not. Back in December of 2024, the Biden administration launched the so-called, “Operation Prosperity Guardian” which was a coalition of more than 20 nations committed to defending international shipping and deterring Houthi attacks in the Red Sea yet the attacks continue. Over the weekend Houthi rebels attacked two commercial ships in the Gulf of Aden, increasing the number of launched attacks since Nov. 19, 2023, to 175 according to Reuters. This must be frustrating for the Biden Administration as it is another clear failure that they will have to find a way to blame on Donald Trump.

You would think the Houthis would be nicer to Biden because back in February of 2024 his administration tried to appease the rebels and Iran and removed the Houthis from the Foreign Terrorist Organization and Specially Designated Global Terrorist lists. Biden must have thought if you can’t trust a Houthi, then whom can you trust? But the real reason he did it was because his hated rival, President Donald Trump or that gentleman, as Biden calls him, originally put the Houthi’s on the terror list in the first place. It was just another thing Biden unwound from President Trump like border policies, Federal drilling policies and the politically vindictive killing of the Keystone XL pipeline.

Yet despite this appeasement, it appears it has just made the Houthi rebels more aggressive. I guess when you’re not designated as a terror group you want to try harder to get the recognition you think you deserve.

So back in January Biden once again designated the Houthi rebel group as a terrorist organization. The Biden administration was forced to do an about-face because after his move the Houthi rebels launched drone and missile attacks on U.S. military ships and commercial vessels operating in the Red Sea. The Biden Administration, empowering the rebels and their major funder Iran, became an international embarrassment, so they had to put them back, grudgingly, on the list.

Now it appears that before the weekend attack, the rebels may have been in the hostage-taking business. The AP reported that at least, “nine Yemeni employees of United Nations agencies have been detained by Yemen’s Houthi rebels under unclear circumstances, authorities said Friday, as the rebels face increasing financial pressure and airstrikes from a U.S.-led coalition. Others working for aid groups also likely have been taken.

For the oil market, this is a simmering geopolitical risk. It’s almost unthinkable that a small rebel group can disrupt global shipping lanes and the Biden administration continues to let it happen. Or at the very least has been very ineffective at stopping it.

On the supply side, there are reports that Iraq’s oil minister sees a deal to allow more oil flow. Reuters is reporting that Iraq’s Oil Minister Hayan Abdel-Ghani said there has been progress in talks with Kurdistan region officials and representatives of international companies operating there for a deal to resume northern oil exports. Stay tuned.

Retail gasoline prices are sliding. US air travel continues to rise. According to the TSA US air travel is up 7.7% at 2019 numbers that’s incredible. On the ground there are still big questions about gasoline demand and weekly demand numbers that have been all over the map and while we’re seeing signs that demand is still relatively strong, there still seems to be some resistance from drivers because of being squeezed by inflationary pressures.

US oil production is at the very least straining on growth if not hitting a peak. Reuters reports that, “U.S. energy firms this week cut the number of oil and natural gas rigs operating to the lowest since January 2022, energy services firm Baker Hughes (BKR.O), opens new tab said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, fell by six to 594 in the week to June 7, decreasing for the second time in three weeks. Baker Hughes said that puts the total rig count down 101, or 15% below this time last year.

Oil and petroleum held up rather well even in the face of a jobs report that seemed to blow away expectations and raise concerns that the Federal Reserve would not be able to cut interest rates. The market is starting to realize in the aftermath of the OPEC plus cartel session to extend their production cuts, that we are going to see a very tight market later this year.

Oil inventory declines are going to continue and if the jobs market numbers are correct the demand for gasoline should improve. In fact I would argue that gasoline demand has been underreported here in the last few months and we will expect to see it continue to recover.

The Biden administration has taken advantage of the weakness in oil to buyback oil for the reserve. Reuters reports that, “The administration of President Joe Biden said on Friday it has sped up offers to replenish crude oil for the Strategic Petroleum Reserve following its historic sale from the stockpile in 2022. Energy Secretary Jennifer Granholm said in an exclusive interview on Tuesday that the department could speed replenishment of the SPR this year, beyond a roughly 3-million-barrel month pace.” They still have a long way to go and I doubt the Biden administration is going to live up to Jennifer Granholm Holmes hopes that they could refill the SPR by the end of the year. At this point they better hope for the end of the decade.

European politicians are getting the green energy slap back as people in Europe realize these policies are not meant to save the planet, they’re just meant to take away their freedoms. Bloomberg reports that, “European voters handed gains to right-wing parties in many countries, while support for the Greens plunged, leaving the bloc more fragmented and its ambitious environmental goals in doubt.  While Ursula von der Leyen’s center-right European People’s Party looks set to win the largest number of seats in the European Parliament, boosting her chances of a second term, dramatic losses for the governing parties of France and Germany upended the core of the European project.

In France, President Emmanuel Macron’s party was trounced so badly by Marine Le Pen’s far-right National Rally that he called snap legislative elections for June 30. In Germany, the anti-immigration won a bigger share of the vote than Chancellor Olaf Scholz’s Social Democrats, which recorded their worst-ever showing. Overall, the results present a setback for European unity and the chance of major reforms.”

The reality is that people in these countries realize that these policies from the global elitist are meant to take wealth away from them and put it into the hands of the powerful. They are trying to take away people’s rights in the name of so-called climate change and take away national identity. It’s only a precursor for more government control on individual’s rights. Their policies are failing and people are waking up to the fact that this sham about the energy transition is really about amassing more power for themselves.

As I have written many times before, the green energy policies of the leftist has made the world less secure and energy more expensive. This is especially true in Europe and people have had enough. Analyst Anas Alhajji also point out that the decline in the Euro relative to US dollar means higher energy bills for the EU, even if oil and gas prices remain flat! Funny that the largest energy subsidies to consumers in the world are in the EU and that includes “fossil fuel” subsidies! No wonder they want to send those who championed these crazy policies packing.

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