While German Economic Minister Robert Habeck says:
“I am disappointed that it is taking so long to agree on an oil embargo vs. Russia,”
even if they do, Saudi and OPEC have Russia’s back.
The FT reported that Saudi Arabia has signaled it will stand by Russia as a member of the Opec+ group of oil producers despite tightening western sanctions on Moscow and a potential EU ban on Russian oil imports. Prince Abdulaziz bin Salman, the energy minister, told the Financial Times that Riyadh was:
“[Hoping] to work out an agreement with Opec+, which includes Russia[...] The world should appreciate the value of the alliance of producers.”
Biden has also said once again that he wants OPEC to raise production and is considering lifting sanctions on China while once again blaming the “previous administration” for all his woes and unpopularity as president. After he committed the US to defend Taiwan either by mistake or purpose, he seems unclear as to his powers as president to remove sanctions on China. Of course, he had no such confusion when it came to canceling pipelines, drilling moratoriums, and reducing trump era common-sense regulatory streamlining that would have helped keep gasoline prices down. This comes as China is starting to reopen Shanghai, which will only increase demand and tighten supply even more.
Reuters reported that Joe Biden said he was weighing cutting tariffs on Chinese goods while increasing calls on OPEC to raise oil production as he grappled with a politically damaging wave of inflation. Biden said on reducing tariffs on China:
“I am considering it. We did not impose any of those tariffs. They were imposed by the last administration, and they’re under consideration.”
He made the comments during a news conference with Japanese Prime Minister Fumio Kishida.
Of course, so far, OPEC has not listened to Biden. Maybe he should tweet it out like his predecessor because President Donald Trump did get OPEC to raise and lower output. Yet the Biden bull in a china cabinet foreign policy and his declaration that that “America is Back” arrogance failed to endear him to our Saudi allies or the UAE for that matter either. Things got so bad that the UAE and Saudi Arabia refused to take their calls.
While there is a lot of negation to undo the political damage the Biden administration did, it is not enough to get OPEC to raise output to help this failing and flailing presidency. He also blames math issues. Zerohedge reported that the Biden administration quietly acknowledged in an April letter to oil & gas industry execs that a “miscalculation” is responsible for a massive backlog in offshore drilling permits.
The Biden administration, which allowed the Russian Ukraine war on their watch, is now potentially committing us to a potential war in the future. Biden seems to be committing our troops to the defense of Taiwan. The Wall Street Journal reported that Biden said the U.S. would get involved militarily to defend Taiwan if China tries to take it by force, issuing a stark warning to Beijing and appearing to break with the longstanding American policy of strategic ambiguity. “Yes. That’s the commitment we made,” Mr. Biden said Monday at a news conference in Tokyo during his first trip to Asia as commander-in-chief. He was responding to a question about whether the U.S. would get involved militarily in response to a Chinese invasion of Taiwan after declining to send American troops to Ukraine to fight Russia’s invasion.
Mr. Biden stressed that the U.S. remains committed to the bedrock “One China policy,” which recognizes the People’s Republic of China as the only legitimate government of China and acknowledges—but doesn’t endorse—Beijing’s claim that Taiwan is a part of China. But the president said that policy doesn’t give China the right to take over the democratically self-ruled island forcefully.
Mr. Biden said:
“We agree with the One China policy and all the attendant agreements we made. But the idea that it can be taken by force, just taken by force, would just not be appropriate. It would dislocate the entire region and be another action similar to what happened in Ukraine. So, it’s a burden that is even stronger.”
The American president played down the possibility that China would try to take Taiwan. “I expect that it will not happen; it will not be attempted,” Mr. Biden said.
Yet when has President Biden been right about any foreign policy predictions. He was wrong about Afghanistan, claiming that the Taliban would not take the country over, even going as far as overruling his Generals about the pull-out plan leading to the deaths of 13 American soldiers. Now he is saying, “The US will protect Taiwan if it is attacked but not to worry because he doesn’t think it will happen. Note to readers…Start to worry.
Start to worry about filling your tank as gasoline prices continue their record-breaking run. Gas prices, according to AAA, went up, hitting a record for the 14th day in a row. AAA puts Regular Unleaded at $4.596. Diesel is below its record high of $5.577 set on 5/18/22 and is now at 5.5544 a gallon if that makes you feel any better.
For oil and products, we are in the buy the breaks mode yet again. Global oil inventory tightness will keep us well supported. Look for signs of demand destruction in this week’s reports, and unless it is big, then we will see new highs this week. Breaking news…the Biden administration says they are monitoring diesel supply on the East Coast and preparing policy actions to mitigate supply challenges. They are prepared to authorize release from the Northeast home heating oil reserve if conditions deteriorate.
Natural gas also is very solid. EBW Analytics says that natural gas rose early last week as constructive fundamentals turned even more bullish amid building early-summer cooling demand, sliding dry gas production to two-month lows, and recovering LNG feedgas demand to seven-week highs north of 13.0 Bcf/d.
There is strong technical resistance near $8.50/MMBtu and rebounding supply over the weekend suggests possible near-term weakness. By mid-week, however, a bullish bent to trader positioning ahead of June contract options expiration and the final settlement may dominate trading.