About The Author

Phil Flynn

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 hit a new October high price for West Texas Intermediate as record breaking global oil demand is getting harder to ignore. The Biden/Harris foreign policy is leading to more instability and now promises of new sanctions on Iran and Russia is causing more concerns about a global shortfall. 

Treasury Secretary Janet Yellen in talks about the sanctions on Iran, the question is why have they not enforced the ones they already have in place. Bloomberg, using data from Tanker Trackers, reported that Iran’s oil exports averaged 1.7 million barrels a day in the third quarter of this year, almost two-and-a-half times as high as they were in second half of 2019. TankerTrackers.com has been monitoring the nation’s shipments using satellite data for years.

Reports that the Biden/Harris administration is asking the G-7 to put sanctions on Russian palladium and titanium is causing those prices to climb higher. That will increase the cost of the internal combustion engine cars that need catalytic converters and fancy golf clubs that use titanium. Now it’s getting serious.

What is really getting serious is the support that the Iranian regime has mustered. Russia said that Iran is a member in good standing with BIICS, (I added another I ) and China’s president Zi so that they support Iran in safeguarding their national sovereignty security and national dignity. Yet I think it is too late for the Iranian Regime to save its dignity. How can you save something you never had in the first place?

Now if you need more evidence that the Biden/Harris foreign policy is causing a shifting of alliances, Saudi Arabia, the allies that Biden vowed to make a ‘pariah state’ has joined Iran in war games. That is like getting cats and dogs to work together. Barrons reported that, “Saudi Arabia held military exercises with Iran and other countries recently in the Sea of Oman, the Saudi defense ministry spokesman said in a statement to AFP Wednesday.

The two Middle East rivals, which have long backed opposing sides in conflict zones across the region, severed diplomatic ties in 2016. However Shiite Muslim-dominated Iran and Sunni-majority Saudi Arabia resumed relations last year under a surprise China-brokered deal. “The Royal Saudi Naval Forces had recently concluded a joint naval exercise with the Iranian Naval Forces alongside other countries in the Sea of Oman,” said Brigadier General Turki al-Malki. It comes after the official Iranian news agency ISNA on Monday said the two former foes were planning joint military drills in the Red Sea. “Saudi Arabia has asked that we organize joint exercises in the Red Sea,” the commander of Iran’s navy, Admiral Shahram Irani, was quoted as saying by ISNA. 

This also shows that the longer that Israeli waits to attack Iran, the bigger risk we have for a wider war. That is why the fact that what the Hill called, “An apparent U.S. intelligence breach related to Israel’s plans to strike Iran has unsettled the intelligence community and sent the Biden administration” a bigger threat to geopolitical peace. Instead of marginalizing Iran, the pause has empowered the largest state sponsor of terror. The Times reported that, “Israel has delayed its retaliatory strike against Iran because of a leak last week of potentially sensitive military information from the US. The leak revealed Israel’s well-advanced plans to respond to a salvo of nearly 200 Iranian ballistic missiles fired against it earlier this month, which was a retaliation by Tehran for Israel’s attacks on its Middle Eastern proxy groups. The top-secret document was published on a pro-Iranian Telegram channel last Friday and appeared to be a US assessment of Israel’s likely response, based on satellite imagery and other intelligence. It made reference to Golden Horizon and Rocks, two Israeli air-launched ballistic missiles.

In the US we saw a increase in crude supply as US oil imports bounced back. The EIA reported that, “US oil imports snapped back after a couple of storms related off weeks while US oil and product exports that exports tend near record highs. US oil imports exceed the two year high this week by importing an average of 6.431 million barrels a day. That was up from 5.529 million barrels the week before.

On the export side crude oil came in at an impressive 4,112 million barrels a day but an even more impressive 6,429 million barrels a day.

Still, after reported increase of by 5.5 million barrels from the previous week at 426.0 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year. Gasoline inventories increased by 0.9 million barrels from last week and are about 3% below the five years. Distillate fuel inventories decreased by 1.1 million barrels last week and are about 9% below the five-year average for this time of year.

Total petrol demands an average of 20.5 million barrels a day on the for week moving average up 1,4 % on the year. Gasoline demand averaged 8.9 million barrels a day, up by 3.6% from the same period last year.

 Distillate demand was 4.0 million barrels a day over the past four weeks, up by 0.3% from the same period last year.  Jet demand is 7.2% compared with the same four-week period last year.

At some point the upside-price risks and the supply and demand fundamentals will be priced in making it more dangerous for hedge funds to play the short side.

Natural gas demand expectations are soaring. Supply demand growth expectations for China and India are soaring. Rystad Energy reports that, “Fueled by population growth, economic development and a shift towards cleaner energy, India’s gas consumption is expected to nearly double to 113.7 billion cubic meters (Bcm) by 2040 from 65 billion cubic meters (Bcm) in 2023, according to Rystad Energy’s research

Near-term demand is supported by a 51% jump in domestic gas production since 2020 to 36.7 Bcm by 2025, but this will not be enough to meet the country’s growing demand for natural gas. The result is that India will continue to rely heavily on imports to satisfy its future energy needs.

This is causing big banks to notice. Bloomberg reported that (Bloomberg) — JPMorgan Chase & Co. is in talks to start trading physical liquefied natural gas again after more than a decade on the sidelines, a move that lines up with Chief  Executive Officer Jamie Dimon’s calls for an increase in  domestic production and energy exports. JPMorgan has expanded its physical natural gas trading operation in the US since 2022 and is eying US power, as well as gas and power in Europe, where it recently applied for a natural gas shipper license, some of the people said. And if you haven’t noticed the price of natural gas in Europe is soaring. The biggest risk to Europe as far as natural gas prices is if if they get a cold winter.

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Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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