India’s COVID Nightmare

India’s COVID 19 nightmare is impacting oil prices and may cause OPEC plus to cut back production of oil instead of standing pat. The tales of human suffering from India are heartbreaking as hospitals are turning patients away as new cases of COVID-19 are breaking records. The number of confirmed infections among its population of over 1.3 billion has continued to rise each day since India first recorded the highest ever number of cases—more than 314,000 infections according to the Wall Street Journal. It was the world’s biggest-ever single-day jump of new infections. Right now it seems that there are estimates that the situation in India could cause a 300,000 barrel a day reduction in oil demand and that is weighing on prices.

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This news comes as OPEC Plus starts their Joint Technical meeting today to assess compliance and perhaps make recommendations on the next move that the group should make. I am sure we will get some leaks from some unnamed sources and potential trial balloons but it will be hard for the cartel to ignore the tragedy unfolding in India.

OPEC plus also has to adjust for the growing possibility that the Biden administration will lift sanctions on Iran. Iran of course will want the OPEC Plus group to allow them to make up for lost production time and that they should ignore their bad behavior.

Speaking of bad behavior it was a busy weekend on the geopolitical risk front. Reports that a drone hit an Iranian oil tanker is raising tension as Iran blamed Israel. Reuters reports that, "Syria's oil ministry said firefighters on Saturday put out a fire on an oil tanker off the Baniyas refinery after a suspected attack by a drone coming from the direction of Lebanese waters. The identity of the vessel was unclear, with Iran's al-Alam TV saying it was one of three Iranian oil tankers that had recently arrived at the Syrian oil terminal, while the semi-official news agency Tasnim denied it was Iranian. TankerTrackers said in a tweet that "the tanker seen burning today off the coast of Baniyas is not an Iranian vessel", but Beirut-registered. Syria's coastal town of Baniyas houses a refinery, which along with another in Homs, covers a significant part of the country's demand for diesel, heating fuel, gasoline, and other petroleum products, according to industry experts.

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