Rare Earth Shattering. The Energy Report 07/11/2025

The Trump Administration understands that securing rare earth minerals and leading the way in AI is critical to ensure our national security. The Administration made a bold and historic move to start reducing our dependence on other countries for are rare earth minerals needs, especially from China and other nations that do not like us or use slave labor to produce the vital minerals.

The Pentagon announced that they are becoming the largest shareholder in MP Materials, an American rare earth mining company by buying $400 million dollars in preferred stock. Yes, they know that rare earth minerals are essential for advanced military equipment. Rare earth minerals are used in everything from fighter jets, lasers radars drones and missiles and sadly our country under the last administration took those needs for granted and allowed us to become even more dependent on other countries.

Trump’s move will also inspire more domestic production of rare earth minerals and avoid China’s tit for tat tariffs that could raise the cost for US producers to manufacture goods. This comes as the Trump Administration is pursuing a broader strategy to secure rare earth minerals with deals with the Ukraine and Greenland and other countries.

OPEC has projected that total investment requirements in the oil sector will rise to $18.2 trillion by 2050, compared to $17.4 trillion in 2024. President Donald Trump has announced the possibility of imposing a 35% tariff on certain Canadian goods effective August 1 and indicated that he may consider raising tariffs on most other countries.

In a letter to Canadian Prime Minister Mark Carney, Trump cited various tariff and non-tariff policies as well as trade barriers imposed by Canada, which he claims contribute to unsustainable trade deficits with the United States.

Additionally, Trump stated in an interview with NBC News that he is considering general tariffs of 15% to 20% on most U.S. trading partners, while the current global baseline minimum tariff rate for nearly all U.S. trading partners remains at 10%.

The International Energy Agency (IEA) would depress Hyena with another downbeat outlook on global oil demand that forecast that will no doubt be adjusted upward in the future. The IEA is consistently the most bearish of the three big ones like OPEC and the Energy Information Administration famously incorrectly predicted peak oil demand and ridiculously called for the global to stop investing in fossil fuels.

So, when they release a report like today that says that, “World oil demand growth is forecast to increase by 700 kb/d in 2025, its lowest rate since 2009, except for the 2020 Covid year, You have to really question what the heck their agenda really is.

They state that, “Annual demand growth eased from 1.1 mb/d in 1Q25 to just 550 kb/d in 2Q25, with emerging market consumption particularly lackluster. Global oil demand is projected to expand by 720 kb/d to reach 104.4 mb/d in 2026.”

They say that “Global oil supply increased by a steep 950 kb/d m-o-m to 105.6 mb/d in June, led by Saudi Arabia. Really, steep?

Output increased by 2.9 mb/d year-on-year, with OPEC+ contributing 1.9 mb/d. With higher OPEC+ targets in August, global oil supply is expected to rise by 2.1 mb/d to 105.1 mb/d this year and by another 1.3 mb/d in 2026, driven by non-OPEC+ additions of 1.4 mb/d and 940 kb/d, respectively.

After a 1.7 mb/d monthly increase in June, global refinery runs are projected to rise by an additional 2 mb/d in July and August, reaching a seasonal high of 85.4 mb/d. For 2025 and 2026, runs are expected to increase by 500 kb/d and 460 kb/d, averaging 83.3 mb/d and 83.8 mb/d, respectively. Refining margins declined in June due to higher crude prices but subsequently returned to multi-month highs in early July, primarily driven by stronger diesel cracks.

Observed oil inventories increased by 73.9 mb to 7,818 mb in May, largely attributed to OECD commercial product inventories and crude in non-OECD countries. Crude, NGLs, and feedstocks rose for the fourth consecutive month by 49.7 mb, mainly because of growth in China, while oil products recorded their first increase this year at 24.2 mb. Preliminary data for June indicate that global oil stocks continued to grow, predominantly in oil on water and in non-OECD regions.

According to the IEA, North Sea dated crude rose by $7 per barrel month-on-month to an average of $71.35 per barrel in June, following trading within a wide range of $65 to $80 per barrel. Mid-month air strikes by Israel on Iranian military and nuclear facilities caused prices to briefly exceed $80 per barrel; however, levels moderated after a ceasefire was reached. The OPEC+ decision to further accelerate the unwinding production cuts had a limited effect on the market due to prevailing tight supply fundamentals.

Stocks pulled back from records and petroleum also dipped after President Trump announced a proposed 35% tariff on certain Canadian goods, effective August 1, and indicated the possibility of increasing tariffs on goods from most other countries. In correspondence with Canadian Prime Minister Mark Carney, Trump cited concerns about various Canadian trade policies, including tariffs, non-tariff measures, and trade barriers, which he said contribute to trade deficits with the United States. Trump also stated to NBC News that he is considering general tariffs of 15% to 20% on most trading partners, while the current baseline minimum tariff rate for nearly all US trading partners is 10%.

Keep in mind every time that market has sold off on tariff uncertainty it has presented a buying opportunity because the market generally misunderstands what the tariffs are going to actually be and how it will actually impact supply and demand. So far the negativity about tariffs has been overstated time and time again and if you are looking for evidence that tariffs cause inflation there just isn’t any.

The Diesel crack is trying to come back as global tightness persists. John Kemp Energy pointed out that EUROPE’s gasoil futures contract for July ceased trading and went to delivery at a premium of more than $11 per barrel over the contract for August, underscoring the shortage of physically deliverable barrels around the Amsterdam-Rotterdam-Antwerp trading hub.

It’s not surprising that the IEA downplays its forecast errors. By underestimating demand, the International Energy Agency has sent misleading signals to Europe’s market, contributing to diesel shortages. Their green energy policies have exacerbated the problem, and instead of addressing it, they issue weak demand forecasts to ease concerns, yet prices continue to spike in reality.

Natural gas is coming back after the first bullish storage report for what seems like forever. The Energy Information Administration reported that working gas in storage was 3,006 Bcf as of Friday, July 4, 2025, based on EIA estimates. This is an increase of 53 Bcf from the prior week. Stocks were 184 Bcf lower than at the same time last year and 173 Bcf higher than the five-year average of 2,833 Bcf.

At 3,006 Bcf, total working gas remains within the five-year historical range. The injection was smaller than expected. The LNG projects getting ready to be approved or expected demand to pick up in the coming months. On March 5th, Energy Secretary Chris Wright extended the export permit for Golden Pass LNG, indicating streamlined approvals under President Trump. Approvals are also expected soon for Commonwealth LNG, Venture Global CP2, Sempra’s Port Arthur LNG Phase 2, Lake Sabine Pass expansion, and Energy Transfer’s Lake Charles terminal in Louisiana.

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