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
Oil prices surged on increasing risk perception after the Iranian-backed militia killed 3 U.S. troops and wounded dozens more as the Biden administration’s Foreign Policy is making the world a more dangerous place and sadly much more dangerous for our men and women in the military. Pressure is building on Biden to respond against Iran as opposed to turning a blind eye to Iranian oil sanctions and giving this terror-sponsoring regime billions of dollars. Biden’s naivete about the danger of this regime has cost us all dearly.
The Wall Street Journal Opinion said, “It was bound to happen eventually, as President Biden was warned repeatedly. A drone or missile launched by Iran’s militia proxies would elude U.S. defenses and kill American soldiers. That’s what happened Sunday as three Americans were killed and 25 wounded at a U.S. base in Jordan near the Syrian border. The question now is what will the Commander in Chief do about it? Biden issued a statement Sunday that, “America’s heart is heavy” at the death of patriots who are the “best of our nation.” That sentiment is nice, and no doubt sincere, but at this point, it is inadequate and infuriating.
The sorry truth is that these casualties are the result of the Biden’s policy choices. Mr. Biden has tolerated more than 150 Iranian proxy attacks on U.S. forces in the Middle East since October. Only occasionally has he or the administration registered more than rhetorical displeasure by retaliating militarily, and only then with limited airstrikes. Biden refused to change course even after U.S. troops suffered traumatic brain injuries. A Christmas Day proxy attack in Iraq left a U.S. Army pilot in a coma. Last week, more than a month later, Chief Warrant Officer 4 Garrett Illerbrunn was finally “sitting up in the chair for the first time for most of the day,” and “alert with both eyes opened and following,” his family’s medical blog says.
Mr. Biden vowed Sunday to, “hold all those responsible to account at a time and in a manner our choosing,” though that stock line rings increasingly hollow. He has no choice now other than to approve strikes in retaliation, but targeting the responsible militia is insufficient. The Journal says one thing to watch is whether the Administration will react to this attack by putting more pressure on Israel to stop its campaign against Hamas. This would validate the claim of the militias that they are merely targeting the U.S. because it supports Israel. And it would tell Iran that its militia drone and missile campaign has succeeded in easing pressure on Hamas. But this is how this administration thinks.
Oil prices popped on the opening Sunday night and have pulled back and filled the gap but are still going to be trading nervous with substantial upside risk. Any ministration is going to have increasing pressure on it to do something. In the meantime the Red Sea is still a danger zone. On Friday an oil tanker was actually hit. The risk to oil supplies is still high.
And while the Biden administration plays politics with liquefied natural gas exports, there are reports that the demand for US natural gas is going through the roof. Breitbart reported that, “Texas Land Commissioner Dawn Buckingham says President Joe Biden’s recent decision to stop approval of Liquified Natural Gas (LNG) exports looks “more like retaliation than a sound policy decision.” Biden’s announcement came one day after, “Texas took a bold stand in defending our border against foreign invaders,” the commissioner added.
Biden announced on January 26 that he was placing a “temporary pause on pending decisions of Liquified Natural Gas exports,” Breitbart News reported. January 26 was also the DHS deadline to send in a letter to the State of Texas demanding access to Shelby Park in Eagle Pass, Texas. The State has not budged on opening up the park seized earlier this month.
This comes as it is being reported that global gas demand growth is expected to surge in 2024 due to colder winter conditions and lower prices, the International Energy Agency’s (IEA) latest report on Friday showed, while warning of renewed price volatility amid geopolitical uncertainties. Significant demand for natural gas in mid-February led to the second-largest reported withdrawal of natural gas from storage in the United States, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). Weekly stocks fell by 338 billion cubic feet (Bcf) in the week ending February 19, 2021. “In 2023, global gas demand rose by just 0.5%, as growth in China, North America, and gas-rich countries in Africa and the Middle East was partially offset by declines in other regions,” said the Paris-based energy agency in its latest Gas Market Report.
According to the report, following the loosening of COVID-19 restrictions and the revival of economic activity, China regained its position as the world’s largest LNG importer, with an increase in its natural gas demand rate of 7%. The report predicts a growth of 2.5%, or 100 billion cubic meters (bcm), in the global demand for gas this year. Expected colder winter weather in 2024, compared with the unusually mild temperatures experienced in 2023, is likely to bring increasing demand for space heating in residential and commercial sectors,” it added.
Reuters reported that – Joe Biden on Friday paused approvals for pending and future applications to export liquefied natural gas (LNG)from new projects, a move cheered by climate activists that could delay decisions on new plants until after the Nov. 5 election. The Department of Energy (DOE) will conduct a review during the pause that will look at the economic and environmental impacts of projects seeking approval to export LNG to Europe and Asia where the fuel is in hot demand.
Natural Gas Intelligence reported that, “in the US The whopping 326 Bcf of natural gas that utilities pulled from storage in the third week of January amplified concerns that capacity may prove inadequate in coming years as U.S. production further escalates to meet global LNG demand.
We continue to warn that there is upside risk of price spikes. Be on guard and be hedged.
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