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
The Iranian backed Houthi rebels continue to make drone attacks on our allies including Saudi Arabia. Iran is involved in a shadow war with Israel and last week struck an Israeli civilian vessel at sea. The Israeli Times reports that, “Thursday’s attack wasn’t the first time Iran allegedly struck an Israeli-owned cargo ship. On February 26, a blast struck the Israeli-owned MV Helios Ray, a Bahamian-flagged cargo ship, in the Gulf of Oman. Netanyahu accused Iran of attacking the ship. Iran swiftly denied the charge, but experts say the attack bears hallmarks of previous attacks ascribed to Tehran. The operation seems to have been carefully planned and mirrored a series of attacks on tankers in 2019 and an Iranian campaign against shipping vessels four decades ago. According to The Wall Street Journal, Israel has been carrying out covert strikes on Iranian vessels, and other ships with Iranian cargo. If true, the latest attack may well be part of a more assertive Iranian response to such actions.
Yet despite this violation of temporal and International law, the Biden administration is fawning all over the Iranian regime begging them to return to the deals even though Iran was more isolated from the world and progress for peace was being made as more countries recognized Israel. The United Arab Emirates, Bahrain, Sudan, and Morocco joined Egypt and Jordan on the list of countries willing to break ranks with the rest of the Arab world, establishing full diplomatic relations with Israel although the Palestinian problem remains unsolved.
The Jerusalem Post reported that, “after the Biden administration considers the West Bank to be occupied territory, but ducked a question as to whether it held that settlements were illegal. “It is a historical fact that Israel occupied the West Bank, Gaza, and the Golan Heights after the 1967 War,” US State Department spokesman Ned Price told reporters in Washington on Wednesday. The 2020 Country Reports on Human Rights Practices release its report on Tuesday. It is the first of the annual reports released since Joe Biden took office in January.
The report affirmed steps taken by the previous administration of President Donald Trump, which had both recognized Jerusalem as Israel’s capital and Israeli sovereignty over the Golan Heights. It also kept in place a description change made to the report by former President Trump, in which he replaced the phrase “Israel and the occupied Palestinian Territories” with “Israel, West Bank, and Gaza.” But within the report, the Biden administration reintroduced the word “occupied” to describe Israel’s capture of territory during the 1967 Six-Day War. When quizzed by a reporter as to whether the US considered that Israel occupied the West Bank, Price affirmed that it did.
Syria is consumed by a decade-long civil war, Iran has been trying to open a new front on Israel’s border. It has sent allied forces to the Syrian Golan Heights to set up infrastructure for carrying out attacks on Israeli targets. It has also been working to arm its Hezbollah proxy terrorist group with precision rocket capabilities, shipping weapons through Syria to Lebanon.
Yet the Biden administration wants to reward Iran by opening up a path where they can get a nuclear weapon in the future. The regime, that is a source of unrest across the Middle East, does not deserve the credibility that the Biden administration wants to give it. By trying to resurrect the Iran nuclear deal just because they despise former President Donald Trump is not a good reason. At the same time, a deal that will allow Iran to sell oil unimpeded while the US puts restrictions on US producers is a slap in the face of the US energy industry that produces oil and gas cleaner than anyone else in the world. Iran has not earned the right to be given an advantage over US energy producers.
Still, while oil is selling off on the prospect of more Iranian oil coming on the market, the downside risk for oil is much less than it was in 2015. OPEC Plus has done a great job showing restraint and Iran has already been sending oil and cementing ties with China. Iran does not have as much oil in storage as it had in 2015. The policy of re-engaging Iran has no upside for the US. This is all bout undoing Trump.
Oil supply this week should fall significantly by at least 4 million barrels. This should be a new string of oil draws. We also expect the gasoline supply to fall by 2 million barrels and distillates to rise by 1.0. Runs should increase by 2.0. Reigzone reports that the U.S. rotary rig count increased by 13 to 430 drilling units this week, Baker Hughes Co. reported Thursday. Its weekly count of operating rigs Baker Hughes noted the U.S. oil rig count rose by 13 and now totals 337. The U.S. gas rig count slipped by one to 91 and the number of miscellaneous rigs grew by one to two, the service company added. Since this time last year, when 664 rigs were operating, the U.S. has shed 234 rigs, Baker Hughes noted. The firm stated the year-on-year figures reflect a 225-unit decrease in oil rigs, a nine-unit decline in gas rigs, and no change in the number of miscellaneous rigs (two). It added the U.S. offshore rig count increased by two this week to 14 – compared to 18 a year ago.
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