Oil On the Brink of Peace. The Energy Report 08/07/2025

That beat some of the risk premium out of the price of oil and even though we’re still in the same tight trading range the market realizes that something’s got to give. And even though Russian oil has been toxic, it is being bought in large measures by Russia and India and to be honest Russian oil has kept us from a global diesel shortage whether we want to admit it or not.

Javier Blas of Bloomberg Tweeted, “I love the fact the 25% extra US tariff on India doesn’t apply if India buys Russian oil, refines it and sells the, say, gasoline or diesel, in the US market (US imports of energy are exempted from the tariffs that Trump has so far imposed, and that’s the case in this instance). And Bloomberg also points out this morning, “the oil market is pulling all the levers it can to ease a global diesel crunch, but the window is narrowing to replenish stockpiles of the world’s workhorse fuel before hurricanes and refinery maintenance curtail output.

They say that across major hubs like the US Gulf Coast, Rotterdam, and Singapore, storage tanks are only just starting to recover from extremely low levels, and traders agree it’s going to be a close call to top them off in time. With the market still remembering the price spikes from the recent Israel-Iran conflict, there’s a lot of caution—big names like Goldman Sachs and TotalEnergies have both echoed these warnings.  Rami Ramadan, who leads global middle distillates at BB Energy shared, “We’re pretty optimistic about the end of the year. Still, we should brace ourselves for some surprises, especially since Europe is no longer getting supplies from its nearest neighbors.” In fact, US diesel stockpiles—which keep everything from trains and trucks to power plants and home heating running—have dropped to their lowest summer levels in decades. Normally, inventories would build up over the summer, but several long-term trends have made the situation a lot more challenging in recent years.”

We saw that nervousness in the crack spread a little bit as it rallied sharply so for the last couple of days we had a big pop, a drop and then a big rallying on the diesel crack that looks like a market that is simmering for an upside break out and that may happen if these sanctions on Russian oil go into place on Friday.

Fox News reports that President Donald Trump and Russian President Vladimir Putin appear to be on track to soon have their first meeting since Trump took office for his second term earlier this year. “As for Ukrainian affairs directly, at the suggestion of the American side, an agreement was agreed upon in principle to hold a bilateral meeting at the highest level in the coming days, that is, a meeting of Presidents Vladimir Putin and Donald Trump,” aide to the Russian president Yuri Ushakov noted, according to a Russian to English translation by Google Translate of Ushakov’s comments.’

Considering the tightness in the diesel market and the strength of the stock market, we anticipate oil prices to rise. Contrary to the belief that OPEC is increasing production to regain market share, it seems they are responding to robust demand. Saudi Aramco, in particular, sees a surge in demand beyond expectations. Meanwhile, US producers are scaling back due to the disruption caused by the misuse of the Strategic Petroleum Reserve under the Biden administration, which led to an oversupply in the market. This scenario fosters an underinvestment environment at a time when more investment in oil and gas is crucial.

One of the hopes is that the Trump Administration will facilitate increased oil and gas production. It would be beneficial if the administration also worked on easing reporting requirements imposed by the Biden administration, which have made it challenging for smaller producers to operate.

CountryMark  a company that refines American oil, transforming it into quality fuels and lubricants in the Midwest says that, “The oil and gas industry has been dealing with new environmental rules set by the Biden administration, called NSPS OOOOb and EG OOOOc.These rules aim to control emissions (like methane and other pollutants) from oil and gas wells and related facilities. They were finalized in 2024 and require companies to start reporting their emissions data in August 2025.

Throughout 2025, trade groups (organizations representing multiple oil and gas companies) have been talking to the EPA (Environmental Protection Agency) to work out problems with these rules. The trade groups asked the EPA to delay the reporting requirements for everyone in the industry, but the EPA said no—a blanket delay for the whole industry isn’t allowed. Instead, each company has to submit its own individual request if it wants a delay in reporting.

On July 29, 2025, the EPA announced an Interim Final Rule that delays some parts of these regulations, like certain compliance deadlines for things like fixing leaks or upgrading equipment. However, the requirement to start reporting emissions in August 2025 was not delayed. So, if a company wants more time to start reporting, it must send its own request to the EPA and ask the EPA directly. Let’s hope the Trump Administration can look at this as theses small producers represent almost 10% of us output and many may have to go out of business with these crazy Biden Era, EPA overreach.

Natural gas is finally showing some signs of life and trying to bottom but it still has an uphill road to climb. Prolific production and supplies that look adequate heading into winter are taking away some of the fears of tight supplies even though we will see record liquefied natural gas exports this year and that will rise as the year goes on. Yet weather can change things as we’re reminded bye Fox Weather. They say that, “A budding tropical disturbance in the central Atlantic Ocean was designated Invest 96L by the National Hurricane Center (NHC) on Wednesday, as it enters favorable conditions for gradual development in the next week.

The term “invest” is a naming convention used by the NHC to identify a system that forecasters are investigating for possible development into a tropical depression or tropical storm within the next seven days. The designation allows the agency to run specialized computer forecast models to track the area’s potential storm development.

To keep up on that storm download the FOX Weather app at the same time you should stay tuned to the Fox Business Network because they are invested in you!

You should also sign up for the Phil Flynn Daily Trade Levels and get the periodic manic metals report. It’s a great time to open your trading account with me by calling Phil Flynn at 888-264-5665 or e-mail me atpflynn@pricegroup.comand I will get back to you.