The Biden administration is starting to realize that their policies of engaging and appeasing Iran have failed. The administration’s desperation to get back into the flawed 2015 Joint Comprehensive Plan of Action, which was meant to rein in Iran’s nuclear program in return for loosened economic sanctions, only has allowed Iran to become more of a disruptive force in the region. The deal failed to rein in Iran’s missile capability while helping fund their activities in Yemen, Syria and other places.
The Biden administration retreated from Trump-era policies of getting tough on Iran and isolating the country in favor of begging the rogue regime to come back and deal while they looked away as Iran openly ignored US sanctions and supported attacks on Saudi Arabia by Houthi rebels. All of that appeasement seems to have failed as hardline Iranian President Ebrahim Raisi has laughed off the overtures and the US says that Iran is not serious about getting a deal.
So now another shift back towards Trump-era policies warning that they will crack down on those that facilitate Iran’s cheating. In A Wall Street journal exclusive, it seems that the Biden administration is to tighten sanctions enforcement.
The Journal writes that this is the first sign of Washington increasing economic pressure on Tehran as diplomatic efforts to restore the 2015 nuclear deal falter. According to senior State and Treasury Department officials, the U.S. will send a top-level delegation, including the head of Treasury’s Office of Foreign Assets Control, Andrea Gacki, next week to the United Arab Emirates.
The U.A.E. is a top U.S. ally, but also Iran’s second-largest trade partner and a conduit for Iran’s trade and financial transactions with other countries. The U.S. officials will meet with petrochemicals companies and other private firms and banks in the U.A.E. doing billions of dollars of trade with Iran.
They will warn that the U.S. has “visibility on transactions that are not compliant with sanctions,“ one of the senior officials said. ”Those banks and firms face extreme risk if this continues.” The visit could be followed by sanctions against Emirati and other firms, the officials said.
That could drive companies to stop dealing with Iran and then China would have to buy their oil at a deep discount. It will also be another bullish factor for oil as Iran’s illicit barrels will be reduced.
Biden’s approach to energy and international relations has made the world more dangerous. Putin’s threat to Ukraine along with his stranglehold on European gas supplies puts him in a very strong diplomatic position. Biden is trying to use Nord Stream 2 as leverage which shows that US options are limited.
If it were not for Biden’s disdain for the US energy industry and its radical anti-fossil fuel obsession, the US energy producer is our best leverage against Russia’s domination over the region.
Javier Blass reminds us that,
“As the US talks about economic sanctions if Russia invades Ukraine, let’s not forget (as this is not widely known) that Russia is currently the 3rd largest oil supplier to the US, only behind Canada and Mexico, and ahead of Saudi Arabia.”
UK Prime Minister Boris Johnson’s work at home order slowed the oil price recovery. The FT reported that UK health secretary Sajid Javid has warned that the rapidly-spreading Omicron variant of coronavirus could infect 1m people. According to Javid in an interview with Sky News on Thursday:
“We’ve learned it spreads very, very quickly, faster than any other COVID variant we’ve seen so far.”
Given what we know about the time it takes for infections to double, so far,
“we could hit about a million infections in the community throughout the UK.”
Oil prices are pulling back just a little bit on uncertainty, but technically, the market is trying to break out to the upside. If the market can close above 7300, that would probably be the area that would start sending prices to retest the Thanksgiving Day break. So in other words, if we close above 7300, technically there’s a lot of error up above and it could send prices soaring. We believe at some point that’s going to happen so use any weakness to put on some bullish strategies.
Reuters reported that U.S. natural gas futures rose about 3% on Wednesday on forecasts for more heating demand this week than previously expected and as the U.S. market followed an 8% jump in European gas prices, that should keep U.S. liquefied natural gas (LNG) exports near record highs.
Traders said that increase in U.S. prices occurred despite forecasts for milder U.S. weather and lower heating demand next week than previously expected. Many analysts expect the mild weather will allow U.S. utilities to leave enough gas in storage to allow stockpiles to reach above normal levels by mid-December.