Oil prices are coiling in a tight trading range waiting to see if rising geopolitical risks will start to boil over. Israel, responding to Hezbollah attacks in Lebanon and a disputed election in heavy oil producer Venezuela, are just a few of the risks to start this week. If you have any question as to whom the Biden-Harris administration is rooting for in these conflicts maybe these headlines will give you an idea.

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Vice President Harris apparently seemed to ignore the obvious. Not only did Venezuelan President Vince Maduro use the military to stop people from voting and had his thugs steel voting booths, but they also then have the nerve to declare victory. Yet Vice President Harris appears to have no problem with those results. The Vice President tweeted that, “”The United States stands with the people of Venezuela who expressed their voice in today’s historic presidential election. The will of the Venezuelan people must be respected. Despite the many challenges, we will continue to work toward a more democratic, prosperous, and secure future for the people of Venezuela.” No comment from the supposed President.

Yet at least in some countries there is some semblance of reason. It is being reported that governments all over South America are declaring that they will NOT accept the results of the stolen Venezuelan election by Nicolás Maduro and his socialist regime. The government of Peru has emphatically stated that it “will not accept the violation of the popular will of the Venezuelan people.” Costa Rica President Rodrigo Chaves Robles stated, “We will work with the democratic governments of the continent and international organizations to ensure that the sacred will of the Venezuelan people is respected.” Chilean President Gabriel Boric: “The Maduro regime must understand that the results it publishes are difficult to believe.”

Israel’s attack on Lebanon and the Hezbollah terror group is keeping the market on edge, raising concerns of a wider conflict. The Wall Street Journal reported that Israel’s government authorized a retaliatory strike against Hezbollah in Lebanon, amid an American-led diplomatic push to contain the fallout from a strike that killed 12 young people in the Israel-controlled Golan Heights. Israel and the U.S. have accused the Iran-backed militia Hezbollah of carrying out Saturday’s strike.

Yet the Biden Harris Administration seems to want to help Hezbollah. Israeli reports say Lebanese officials now confirm that US envoy and NSC official Amos Hochstein passed information of Israeli strikes in advance of those strikes to Lebanon which of course is the terror group Hezbollah.

Iran, who supports Hezbollah with the millions of dollars the US has given them under the Biden Harris Administration directly and indirectly by ignoring sanctions, is becoming bolder. Reports say that Iran seized on Friday the Togo-flagged Pearl G tanker carrying 700,000 liters of crude in the Gulf, Iran’s semi-official Tasnim news agency reported on Monday.

This sad foreign policy with no real clarity of any sort and the lack of leadership is only spinning the world closer to conflict. The leadership void in the United States is leading to more global instability.

This comes as we get a dire warning that the lack of investment in fossil fuels is leaving us with a big void in our economic future. Rystad Energy’s latest research shows global recoverable oil reserves held largely steady at around 1,500 billion barrels, down some 52 billion barrels from our 2023 analysis. Of this year-over-year decrease, 30 billion barrels are due to one year of production, and 22 billion barrels are mostly due to downward adjustments of contingent resources in discoveries.

The largest downward revisions are seen in Saudi Arabia, where development priorities have shifted from offshore capacity expansions to onshore infill drilling. The only country with any significant increase in 2024 is Argentina, with a gain of 4 billion barrels thanks to the de-risking of shale projects in the Vaca Muerta formation. They say that the total recoverable oil resource of 1,500 billion barrels gives an upper limit of how much oil can be produced over the next 100 years or more. Of course this upper limit is only realistic and economical if oil demand is not impacted by the energy transition, meaning oil prices would rise far above $100 per barrel. In this theoretical “high case,” total oil production would peak around 2035 at 120 million barrels per day (bpd), then decline steeply to 85 million bpd in 2050. They estimated that total recoverable oil resources have fallen by 700 billion barrels since 2019 due to reduced exploration activities.

Exploration has fallen as investors fear new discoveries will remain stranded due to the ongoing electrification of vehicles and the expected slump in both oil demand and crude prices. They warn that the world’s remaining oil reserves are insufficient to support oil demand if there is no transition to electric vehicles. Attempts to limit the supply of oil will have hardly any effect on limiting global warming. Instead, the only feasible way of keeping global temperatures rising less than 2.0 degrees Celsius is to ensure fast electrification of road transportation.”

The crude oil market is struggling to move higher even as there’s evidence that the supplies are tightening. Ongoing concerns about the Chinese economy still seems to be one of the things that is holding us back and the calendar as well these all cracks and gasoline cracks seem to be improving just a little bit and that also suggests that US demand is still robust. We’re expecting drawdowns across the board when it comes to inventories following last week’s very bullish report. Look to buy dips.

Traders also should download the Fox Weather app as a tropical storm could come into play for the markets later this week. Fox Weather is reporting that Atlantic disturbance could become tropical depression or storm and track toward Florida this week. There is a medium chance that the disturbance will develop, but the odds have been increasing over the weekend. If the system were to become a tropical storm, it would be named Debby – the fourth named storm of the 2024 Atlantic hurricane season.

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