Shaken But Not Stirred

Oil bulls were shaken but not too stirred up after the first significant price decline in almost a month. Some said it was a delayed reaction to the big crude oil build in US inventory and others said it was a delayed reaction to secret Russia, US and Saudi Arabian deal to raise oil production. Platts reported OPEC and its allies have surpassed their 1 million b/d output rise target, Saudi Arabia up to 10.60 mil b/d, Iran drops 100,000 b/d to 3.50 mil b/d, Libya pumps most since June 2013. There was also a reported crude oil build by private forecaster Genscape that showed a 1,707,764-barrel increase in crude supply in the Cushing Oklahoma Delivery point. 

While all of that may be partly true, the main reason that we saw that pullback was that the oil market was shaken by the sharp pop in Treasury yields and a falling stock market. Besides, after trending straight up for almost four weeks in a row, the market was overbought and had overachieved its short-term $75 a barrel target which could lead to some range-bound trading for a while until we start to get even closer to the U.S. State Department November 4th deadline for Iranian oil buyers to completely cut their purchases to avoid American sanctions.

Which by the way is the same date back in 1979 that Fifty-two American diplomats and citizens were taken hostage and held for 444 days in captivity. This is not a coincidence. President Donald Trump is sending a message to the world that when a rogue regime uses terrorists’ tactics against the United States, the US will not forget, and they will be held accountable. Take note all US enemies. Iran should be shaken and stirred.

The compliance to President Trump’s Iran oil sanctions, in my opinion, will exceed 95% because the warnings to those that don’t comply are being taken seriously by the world at large. They are on notice that the US is serious when it comes to defending our people and Nation.

Those that thought the US would be granting a lot of waivers, countries like India and Iraq, are instead working to find a substitute for Iranian oil. The White House said on Thursday as it reiterated its warning to all purchasers of Iranian oil to bring it down to zero by November 4 or face imminent sanctions from the United States. And as we are finding out, the US has a long memory or at least Donald Trump does.