Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
Could an Earthquake along the Iraq and Iranian coast be a reason why Saudi Arabia and Iran did not get into it over the weekend. A devastating 7.3 earthquake hit a mountainous border region between the two countries killing at least 300 people and maybe more. This comes as tensions between Saudi Arabia and Iran are close to boiling over. It may be the only reason why the Crown Prince Mohammed bin Salman of Saudi Arabia held back an attack.
Over the weekend it was reported that the Saudi’s had mobilized its F-15 fighter jet fleet into launch a military operation against the Iranian-backed terrorist militia of Hezbollah in Lebanon according to reports. Last week Saudi Arabia ordered its citizens to leave Lebanon raising fears of an attack. The Royal Saudi Air Force has been placed on alert all weekend and are ready to launch strikes as soon as they are given the order. The mystery is right now being why the order has not been given?
At least one mystery was solved, Lebanon’s Prime Minister Saad Hariri says he is not being held against his will and says he will return home in days to formally submit his resignation. Mr Hariri continues to blame Hezbollah involvement in the countries politics and says he is stepping down on concerns for his s family’s safety.
Reuters reported that Saudi Arabia has called for an urgent meeting of Arab League foreign ministers in Cairo next week to discuss Iran’s intervention in the region, an official league source told Egypt’s MENA state news agency on Sunday. The call came after the resignation of Lebanon’s prime minister pushed Beirut back into the center of a rivalry between Sunni kingdom Saudi Arabia and Shite Iran and heightened regional tensions.
Press Tv reports that Yemen’s Houthi Ansarullah movement has threatened that it could strike warships and oil tankers of the Saudi-led coalition in retaliation for the blockade the military alliance has imposed on the Yemeni ports, particularly the southwestern port of Hudaydah.
“The battleships and oil tankers of the aggression and their movements will not be safe from the fire of Yemeni naval forces if they are directed by the senior leadership (to attack),” Yemen’s Arabic-language al-Masirah television network quoted a Houthi military commander as saying on Sunday.
From a crude oil trading standpoint, the refusal of the market to break after an extended run and a weekend where there were no escalation in the conflict in the proxy war by Iran and Saudi Arabia is bullish. It shows that there are reasons to be very bullish oil other than geo-political events, talk that oil from floating storage has drained and tight supply of oil for Asian and European refiners is showing that the global oil glut has all but gone away.
U.S. gasoline demand remains near a record as well as distillate demand. U.S. oil rig did rise by nine rigs last week.
Winter is officially here as far as the natural gas market is concerned! We will get our first withdrawal from storage of about 6 bcf. The Wall Street Journal writes that natural gas deals announced in China during President Trump’s state visit last week may not be as a big a deal as you might think. The Journal says that the headline figures are impressive: a $43 billion pipeline and liquefaction project in Alaska, $84 billion for shale gas and chemicals in West Virginia, and a memorandum on gas exports for Texas-based Cheniere Energy. The Journal says that sounds like a lot of money and a lot of gas—and it would be, if all these nonbinding agreements metamorphose into real brick and mortar projects. That, however, is unlikely according to the Journal.
Building liquefied natural gas (LNG) plants is a notoriously expensive and lengthy proposition: one reason a 2012 study found the cost of the Alaskan project might be as high as $65 billion.
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