Things are looking up for Iran and the Iranian regime as reports suggest that all sanctions will be lifted on them so they can go back to doing what they do best, create instability in the world and the Middle East. The world powers that were so worried that the Iranian regime might get a nuclear weapon because the regime is just crazy enough to use them, decided to bend to Iran's nuclear blackmail. Iran's actions suggest that their negotiating point was to give us what we want or we will get a nuclear weapon.

Photo by American Public Power Association on Unsplash 

World leaders feared the regime that was created by taking Americans hostage, an extended war in Iraq, and fight proxy wars in Yemen, Iraq, Lebanon, and Syria, just night make good on their threats of death to America or wiping Isreal off of the face of the earth. So lesson learned to all despot regimes, perhaps you should use the Iranian model of international blackmail to get your want. Weak world leaders will give you your way. Then you can go on to spread your terrors through the world.

The presumption of an Iran deal caused oil to have its worst week since March. Iran is preparing to hike its oil exports to "maximum capacity" in the coming months. Yet in the big picture, the truth is that the world will need that oil regardless. There is an assumption that OPEC plus will refrain from raising production so the Iranian barrels will not disrupt the marketplace. Yet with the global economic reopening, they may be able to raise output even with the return of Iranian barrels. Iran may be able to export 1.0 to 1.5 million barrels a day as soon as August and perhaps over 2 million barrels a day by the end of the year. That may be not enough to fill the coming global supply deficit.

Reuters reports correctly that the global oil market is rebalancing, and oil demand has risen to 95 million barrels per day, Sultan Ahmed Al Jaber, chief executive of the Abu Dhabi National Oil Company, said on Thursday. The longer-term forecast has demand rising to 106 million bpd by 2030, Al Jaber said during the Columbia Global Energy Summit. The oil and gas industry has reduced investments over the past five years, as companies prioritized capital discipline and as investors grew more motivated by environmental concerns, he said.

Short term the Iran deal gives oil some weakness and we could try to work towards $60.00 a barrel. Yet this should be looked at as a hedging opportunity for those that failed to do so $10 or $20 a barrel ago. The trend is still up and we are still headed towards a period of oil and product supply tightness. 

The International Energy Agency tells us that the only way to meet our carbon goals is to stop investing in fossil right now! Already many of the world's oil producers are saying that that is not going to happen so what is the plan.

While the U.S. retreats from the global oil market dominance, according to Bloomberg, “China is set to extend its dominance in the global oil market as planned tax adjustments spark a chain reaction, prompting processors to boost crude imports and raise refinery run rates. From mid-June, the top crude importer will introduce a levy on inbound flows of three oil-related items -- bitumen mix, light-cycle oil, and mixed aromatics -- that are often used to make low-quality fuels or processed in refineries. Faced with the prospect of costlier products, Chinese buyers are on the hunt for barrels of suitable crudes as replacements.” Most of those could have come from the U.S. but as the Biden administration continues its crackdown on fossil fuels, that is not going to happen.

John Kemp at Reuters says that "U.S. ETHANOL PRICES have risen to the highest level since 2013/14, contributing to upward pressure on gasoline prices via the renewable fuels blending mandate. But ethanol prices are only one of the multiple drivers of gasoline margins. Since the end of October, gasoline margins have tripled while ethanol prices have risen by around +60%. Both are responding to the strong rebound in motor fuel consumption as the economy re-opens and travel resumes after the epidemic. Gas prices are stable today at Today’s AAA National Average $3.042Price as of /21/21.