On Secondary Thought. The Energy Report 03/31/2025

President Trump threatened to put secondary sanctions on Russian oil for anybody who buys Russian oil. President Donald Trump said he was “very angry” and “pissed off”  at Vladimir Putin and threatened Iran that if they did not come to a deal, they would start bombing them. President Trump told NBC News that, “If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia’s fault — which it might not be — but if I think it was Russia’s fault, I am going to put secondary tariffs on oil, on all oil coming out of Russia. That would be that if you buy oil from Russia, you can’t do business in the United States, There will be a 25% tariff on all oil, a 25- to 50-point tariff on all oil.”

It did not have an enormous impact on futures prices right away but as the market started to contemplate the potential bullishness of this situation, the market started to rally. This comes as India’s oil demand hit a record high as their exports averaged five million barrels a day in March according to Kpler. India relies mightily on Russian oil and will feel the impact if President Trump does decide to put on secondary sanctions on Russia. India crude inventories have dropped below eighty million barrels, marking the lowest recorded level since Kpler began monitoring. The 53% utilization rate reflects aggressive crude drawdowns to sustain high refinery run levels. Kpler expects March refinery to approach 5.58 mbd, the highest seasonal rate registered in 2024, ahead of a scheduled April maintenance at the Jamnagar complex.

And if you look at the market supplies they are not that ample, in fact very tight. If you look at the time spreads on the Brent crude oil and the US crude, the market is a lot tighter than people think. India’s oil demand has reached unprecedented levels, with their significant dependence on Russian oil imports potentially being impacted by prospective sanctions. Market supplies are limited, with Brent and U.S. crude tighter than expected.

After Trump’s comments to NBC over the weekend, Iran’s supreme leader says the IRI doesn’t think they will, but if the US and Israel “engage in mischief” as they are threatening, they will, without a doubt, receive a strong reciprocal blow. Ayatollah Ali Khamenei warned of a “firm retaliatory strike” if attacked by the US or Israel, following Donald Trump’s threat to bomb Iran unless it renounces nuclear weapons. Still, in the televised remarks on Monday, Khamenei downplayed the likelihood of such an outcome, characterizing it as “highly unlikely.”

Despite up-to-date news, oil prices remain stable. The expectation is that the oil supply will continue unaffected by current threats. However, the market remains uneasy. Given tight margins between supply and demand, any disruption, such as reduced Iranian supply or secondary sanctions on Russian oil, could have significant impacts. Therefore, it is prudent to hedge against the worst-case scenario.

China is blocking the sale of its strategic ports owned by a Hong Kong-based company in the Panama Canal. They argue that the United States cannot be allowed to control it.

Refiners are going to start ramping up this week as we get closer to the summer driving season. Inventories are below normal and we get the Energy Information Administration report today. The monthly numbers could be supportive for prices.

Natural gas is popping once again as winter refuses to end either here in the United states or in Europe. On both sides of the Atlantic, winter winds are blowing and the late test of cold is giving natural gas a big surge this morning.

The FOX Forecast Center continues to track a destructive winter storm that brought crippling ice accretions to communities across the northern U.S. from the Great Lakes region to the interior Northeast and northern New England over the weekend. Fox Weather reported extensive power outages, including in Michigan, where over 100,000 power outages were recorded across the state, as stated by FindEnergy.com. Power outages have also been reported to the west in Wisconsin, as well as in northern New York state and Vermont. The FOX Forecast Center said ice totals so far have exceeded a half inch in communities in Michigan and northern New York.

Make sure you download the FOX weather app for the latest developments as it will be critical for the natural gas market in the next few days.

Also stay tuned to the Fox Business Network because they are invested in you.

It’s also very important to sign up for the Phil Flynn Daily Trade Levels that covers all the major commodities. It’s very popular and very helpful for your trading. You can also sign up to the Phil Flynn Manic Metals report and open your futures trading account by calling 888-264-5665 or you can e-mail pflynn@pricegroup.com.

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