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
Zerohedge reported that Israeli and Iranian ships in the Red Sea have been subject to regular attacks in recent weeks and months. Tel Aviv and Tehran blame each other but with little evidence to support either side’s claims. Yet the real impact of the tensions may be a further dragging out of lifting of sanctions on Iran that the Biden administration is just dying to do. The talks for the accord begin again on Wednesday. Russian IAEA Envoy: Nuclear talks with Iran are showing good progress. The oil markets are pricing in the lifting of sanctions already.
Under Barrack Obama’s watch, Vladimir Putin was not viewed as a threat. “The 1980’s called; they want their foreign policy back.” Yet Vladimir Putin sensed that Obama was a weak leader and took advantage of that by annexing Crimea as they invaded eastern Ukraine. Obama led the administration that drew red lines and dared foes to cross them in Syria, never followed through, so Putin made his moves not only in Ukraine but in Syria as well.
Now Putin, sensing the disarray in Washington is testing the metal of the Biden administration as it appears to be getting ready to finish the job and go to war to take over the rest of Ukraine as a show of power and seize Ukraine’s lucrative energy assets. The Kremlin released a statement that read, “The new situation in east Ukraine raises the possibility of full-scale military intervention. The Biden administration seems to be drawn into the situation and wants to do more than Obama who covered a late-night phone call to Vladimir Putin warning him to stay out of Ukraine. Putin invaded the next day.
Zerohedge reported that, “A US defense official has told CNN on Thursday that the Biden administration is seriously considering sending warships into the Black Sea amid reports that Russia is mustering forces near the border with Ukraine in response to a renewed uptick in fighting in nearby Donbas. The warships could be deployed “in the next few weeks in a show of support for Ukraine,” the unnamed defense official described. And further, “The US Navy routinely operates in the Black Sea, but a deployment of warships now would send a specific message to Moscow that the US is closely watching, the official said,” according to the CNN report. I wonder if that will influence Vladimir Putin more than Obama’s phone call. Maybe it might. Germany’s Chancellor Merkel just made a phone warning Moscow to pull back troops from the near border with Ukraine. That will stop them for sure.
Yet Russia responded that they are free to transfer its forces around as they wish. Now the ball is in Putin’s court and his aggressive nature with Ukraine undoubtedly has picked up now that President Donald Trump is out of office.
While oil markets are still trapped in a sideways range, we expect a big upside breakout after it finishes its consolidations. Suppliers globally will tighten, and we feel the lockdown fears from covid will have less of an impact on demand than feared. In the meantime, if you were doubting the unity of OPEC Plus you better not. A report by Energy Intelligence shows that compliance reached 113%, the highest level since the deal went into effect last May.
How the Biden administration responds to Ukraine will be watched closely by our adversaries. Risk factors point to the upside. While the world writes the obituary on fossils fuels, perhaps they should wait until it’s clear that they are dead before they underestimate this market.
Why don’t you take the time to invest in yourself? Tune to the Fox Business Network! They are invested in you!
You should call to get my Daily Trade Levels and get information on my upcoming MoneyShow event. Call 888-264-5665 or email me at firstname.lastname@example.org.Questions? Ask Phil Flynn today at 312-264-4364