Oil prices that were surging took a Goldman Sachs dip after the investment house signaled that they think the Federal Reserve of the United States will raise rates by 50 basis points at its meetings in May and June. The report that came out in the wee hours of the morning caused a spike in the dollar and a drop in the oil market, probably giving Goldman an excellent chance to buy in.
The war in Ukraine is continuing. The EU is looking to ban Russian oil potentially. There is still Russian oil going into Germany, and they are a little bit reluctant to cut off supplies completely, not so much for the oil but because of the concerns that Russia might then cut off their natural gas supply.
As we have stated many times before, a bad energy policy in Germany and Europe has emboldened Vladimir Putin to make war on Ukraine.
Putin believes that energy can be a weapon of last resort. His next ploy may be to cut off the natural gas supply for a guy who’s using hypersonic missiles to show just how tough he is because bombing schools and hospitals and shopping malls didn’t prove it. However, he might not be tough enough to do that because he needs the money.
Fox News reported that Saudi Arabia said Monday that it would not accept blame for any international oil shortages after multiple Saudi facilities were targeted by Yemen’s Iran-backed Houthi rebels. The Saudi press agency cited an official, unnamed source in the kingdom’s Ministry of Foreign Affairs in relaying a statement that the world’s largest oil exporter:
“will not incur any responsibility for any shortage in oil supplies to global markets in light of the attacks.”
Saudi Arabia is not taking responsibility for higher energy prices mainly because of the Iranian-backed Houthi rebels. They continue to bomb their energy infrastructure. While the damage is minimal, it is really a statement that signals the Biden administration to not follow through with an Iranian nuclear deal. How can you deal with Iran as they continue to attack their neighbor with drones and missiles and threaten the global economy by taking out Saudi Arabia’s energy infrastructure?
The Wall Street Journal, in a must-read report, wrote that the effort to revive the 2015 nuclear deal agreement now hinges on perhaps the most politically sensitive issue in the negotiations: whether to remove the U.S. terrorism designation for Iran’s elite Revolutionary Guards, the country’s powerful security force.
The issue is galvanizing opposition to the nuclear deal in Washington and among Middle East allies such as Israel, where the government issued stinging public criticism of any attempt to remove the terrorism designation of the Islamic Revolutionary Guard Corps. Stay Tuned, as this is a downside risk for oil.