The United States Central Command confirmed on Wednesday that its forces carried out a “unilateral strike” in Iraq which killed a Kataib Hezbollah commander as a response to the attack that took the lives of three American service members in Jordan last month. The commander is said to be “responsible for directly planning” and “participating” in attacks on American forces in the region. “The United States will continue to take necessary action to protect our people. We will not hesitate to hold responsible all those who threaten our forces’ safety,” the Central Command said in a statement. The Pentagon previously noted that indications were showing the involvement of the Kataib Hezbollah group in the attack on the US base in Jordan. The militant group later announced an end to all military operations against the US forces to prevent “embarrassment” to the Iraqi government. NN: I guess he is sorry now.
Blinken pushes for Palestinian state in meeting with Netanyahu
United States Secretary of State Antony Blinken met on Wednesday with Israeli Prime Minister Benjamin Netanyahu and again voiced Washington’s support for the establishment of a Palestinian state, according to a statement by State Department spokesperson Matthew Miller. During his visit to Israel, Blinken remarked that the two-state solution to the Israeli-Palestinian conflict is “the best way to ensure lasting peace and security for Israelis and Palestinians alike and greater integration for the region.” Additionally, Blinken reiterated that Israel has the right to self-defense, but stated that it is urgent to “de-escalate tensions” in the West Bank and to avoid the conflict spreading to other parts of the region. NN: Their will be peace when Hamas is neutralized.
Uncertainty in Oil Markets as Speculation Overshadows Fundamentals
Rumors and speculation appear to be driving oil markets this week, adding to volatility as the world awaits a potential ceasefire agreement between Israel and Hamas. Speculation has overshadowed market fundamentals this week, with unsubstantiated reports of an impending ceasefire between Israel and Palestine dragging Brent futures below $80 per barrel again. On the fundamental side, with OPEC+ rolling over its policy and refusing to change its pre-set course, unforeseen refinery outages in the United States might have an even more lasting impact on prices by weakening US demand even further. NN: SEE BlackMask Marker New and Commentary Titled:
Peace In The Valley.
US confirms strikes on 85 targets in Iraq, Syria
The United States Central Command (CENTCOM) confirmed on Friday that the country’s forces conducted a series of strikes targeting Iran’s Islamic Revolutionary Guards Corps (IRGC) Quds Force and “affiliated militia groups.” CENTCOM noted that American forces conducted the strikes with “numerous aircraft,” employing 125 precision munitions, and struck over 85 targets. “The facilities that were struck included command and control operations, centers, intelligence centers, rockets, and missiles, and unmanned aired vehicle storages, and logistics and munition supply chain facilities of militia groups and their IRGC sponsors who facilitated attacks against US and Coalition forces,” the US added. The military action comes in response to a recent drone attack that killed three and wounded at least 25 American troops at an outpost in northeastern Jordan. NN: This came a surprise to no one..
Hamas: Gaza deal must include permanent ceasefire…… Major U.S. Strike in Middle East Could Begin Within Hours
A senior Hamas official in Beirut Osama Hamdan told Lebanon’s LBC TV on Friday that the new Gaza deal “must include permanent ceasefire.” Commenting on the proposed agreement on hostage release and a “prolonged pause in fighting,” he said that Hamas is “still studying” it, adding that without a permanent ceasefire, “there is no way that this will be acceptable to the resistance.” “We have tried temporary truces and it turned out that the Israelis don’t respect these truces but always violate them,” Hamdan explained, emphasizing that the military group also demands the release of “Palestinian prisoners being held for acts related to the conflict with Israel, including those serving life sentences.” NN: A temporary piece is in the works.. In the middle east peace deals are made to be broken
Major U.S. Strike in Middle East Could Begin Within Hours
Sky News Arabia is reporting Friday morning that major US strikes against Iran-aligned targets may begin within hours, while NBC is once again reporting that Biden’s counterattack plan in response to the killing of three Americans last weekend is expected to unfold over days and possibly even weeks. The speculation over the scope of the expected attacks has grown with each passing day that there are no strikes. An overnight Israeli attack on parts of Damascus triggered initial speculation it could have been the start of the US operation, but it appeared another Israeli ‘one-off’ hit on Syria. NN: Like i said peace deals are made to be broken.
Non-OPEC Oil Supply Might Cap Oil Prices
- nergy Intelligence has predicted that global demand in 2024 will clock in at a modest 1.1 mb/d, a growth clip typical of the pre-Covid era.
- Energy Intel’s view on OPEC production contradicts StanChart’s, which has predicted an average 2024 call on OPEC crude oil of 29.3 mb/d, 1.4 mb/d higher than 2023 output.
- OPEC has predicted that global demand growth will clock in at 2.25 million b/d in 2024 and 1.8 million b/d in 2025 as the Chinese economy grows stronger, well above non-OPEC supply growth at 1.34 million b/d in 2024 and 1.27 million b/d in 2025.
Last year, global oil demand grew at a blistering pace with 2023 consumption exceeding the previous year’s by more than 2 million barrels per day. A number of energy agencies have provided demand growth forecasts for the current year, and the consensus is that global oil demand will see another uptick in 2024. The Paris-based International Energy Agency (IEA) typically leans to the bearish side when it comes to oil demand and oil price predictions; however, the agency has raised its 2024 oil demand growth estimate from 850 kb/d in May 2023 to 1.2 mb/d currently. The U.S. Energy Information Administration (EIA) tends to be more bullish on these matters. The EIA has trimmed its 2024 demand growth forecast from the 1.7 mb/d it had predicted back in January 2023 to 1.35 mb/d currently while Standard Chartered’s has remained mostly flat at 1.5 mb/d. And, yet another energy watchdog has weighed in: Energy Intelligence has predicted that global demand in 2024 will clock in at a modest 1.1 mb/d, a growth clip typical of the pre-Covid era. According to Energy Intel, non-Opec-plus supply growth of 1.5 million b/d (crude 1 million b/d) will be enough to offset demand growth even if it surprises to the upside in the 1.5 million-2 million b/d range. This, in effect, means that OPEC will have little room to unwind its production cuts if these numbers turn out to be in the ballpark. Further, Energy Intel says limited pent-up demand, a weaker economy, adequate spare production capacity and large Chinese inventories will all serve to keep a cap on prices. Energy Intel’s view on OPEC production contradicts StanChart’s, which has predicted an average 2024 call on OPEC crude oil of 29.3 mb/d, 1.4 mb/d higher than 2023 output, leaving scope for voluntary cuts to be phased out quickly. Call on OPEC is the difference between global oil demand and oil supply by non-OPEC members. If OPEC is unable to meet this call, a deficit ensues while exceeding it leads to oversupplied markets.
OPEC belongs to the bull camp, too. The global oil organization has predicted that global oil demand growth will far outpace non-OPEC supply growth over the next two years. OPEC has predicted that global demand growth will clock in at 2.25 million b/d in 2024 and 1.8 million b/d in 2025 as the Chinese economy grows stronger, well above non-OPEC supply growth at 1.34 million b/d in 2024 and 1.27 million b/d in 2025, on the back of surging production by the U.S., Canada, Brazil and Guyana.
Energy Intel has, however, acknowledged that any major supply disruption or further elevation of Mideast risk could still present upside potential.
It’s a view shared by Standard Chartered which has argued that the markets are heavily discounting ongoing geopolitical risks. The commodity analysts have noted that the markets only issued a muted response to the recent drone attack that killed three and wounded more than 40 U.S. servicemen at a military base in Jordan near the Syrian border. According to StanChart, the markets appear to be betting that the U.S. will only issue a light response to the attack that likely will be limited to Iraq and Syria. But StanChart says there’s a big probability that we will see a significant change in the policy dynamic between the U.S. and Iran, with Iran’s surging oil production likely to be in the crosshairs.
Lackluster Economic Data Out of China Puts Oil Prices Under Pressure
Crude oil prices went lower today after the U.S. Energy Information Administration reported an inventory build of 1.2 million barrels for the week to January 26 This compared with a substantial draw of 9.2 million barrels for the previous week. A day earlier, the American Petroleum Institute estimated another inventory draw, at 2.5 million barrels, for the week to January 26. This significantly exceeded analyst expectations for a much smaller draw, at 867,000 barrels. In fuels, the Energy Information Administration reported mixed inventory changes for the week to January 26. Gasoline stocks, per the EIA, added 1.2 million barrels in the reported week, with production averaging 9.3 million barrels daily. This compared with an inventory build of 4.9 million barrels for the prior week and average daily production of 8.3 million barrels per day. In middle distillates, the EIA estimated an inventory decline of 2.5 million barrels for the week to January 26, with average production standing at 4.4 million barrels per day. This compared with an inventory draw of 1.4 million barrels for the previous week and production averaging 4.5 million barrels per day. Refineries in the United States processed some 14.8 million barrels of crude daily last week, operating at 82.9% of capacity. This compared with 15.3 million bpd for the previous week. Imports averaged 5.6 million barrels daily in the week to January 26, essentially unchanged on the week before that.
Prices, meanwhile, trended higher earlier this week, with Brent closing near $83 per barrel and WTI booking a daily gain of more than $1 per barrel on Thursday. These followed an update from the IMF that saw global economic growth improve this year, suggesting stronger oil demand.
The festering geopolitical risk in the Middle East also helped push oil prices higher over the first two days of the week. Offsetting that were trader concerns about the health of Chinese oil demand amid signs of deepening problems in the country’s real estate sector.
Platts Survey: OPEC+ Raised Oil Output in December…….. WTI down by 2.5% after US inventories data
- OPEC saw its crude oil output rise by as much as 160,000 bpd last month compared to November.
- A S&P Global Platts survey sees OPEC+ production rising by 130,000 bpd in December 2023.
- December was the last month of the OPEC+ cuts for 2023, before new reductions of a total of around 900,000 bpd are coming into force in January for the first quarter of 2024.
WTI down by 2.5% after US inventories data
The prices of oil futures continued to decline on Wednesday after the Energy Information Administration (EIA) reported a weekly rise of 1.2 million barrels in the United States commercial crude inventories. Previously, China posted a decline in its manufacturing activity in January, signaling a drop in production and, hence, oil demand. West Texas Intermediate (WTI) for deliveries in March plunged by 2.42% at 11:58 am ET, having lost more than 2.5% moments earlier, to sell for $65.96 per barrel. At the same time, Brent for that month’s settlements fell by 1.35% to go for $81.76 per barrel.
Saudi Oil Flow Continues Through Red Sea Despite Regional Conflict
- Saudi Aramco confirms manageable risk for its tankers navigating the Red Sea despite ongoing conflicts.
- Houthi rebels explicitly allow Chinese and Russian vessels to pass safely, reflecting geopolitical alignments.
- Iran’s recent diplomatic rapprochement with Saudi Arabia possibly contributes to the ‘free pass’ for Riyadh’s oil transits.
China and Russia aren’t the only countries being given a “pass” from Yemen’s Houthi rebels, but Saudi Arabia is also exporting crude oil through the Red Sea as if in perfectly normal times At a moment that especially Western and any and all Israeli-linked vessels are being targeted by rocket and drone attacks out of Yemen, the head of Aramco’s refining, oil trading and marketing division Mohammed Al Qahtani has confirmed to Bloomberg, “We’re moving in the Red Sea with our oil and products cargoes.” He added that the risks remain “manageable” On January 19 a senior Houthi official, Mohammed al-Bukhaiti, mentioned these US rivals by name in an interview with the Russian outlet Izvestia. “As for all other countries, including Russia and China, their shipping in the region is not threatened,” he said, stipulating this will remain in effect as long as they are not linked to Israel or its supporters
S. Arabia orders Aramco to keep production level same
The Saudi Arabian Oil Group, also known as Aramco, announced on Tuesday that the Kingdom’s Energy Ministry ordered it to keep its maximum sustainable capacity (MSC) at 12 million barrels per day (bpd) and not raise it as planned to 13 million bpd. “It is to be noted that MSC is determined by the State pursuant to the Hydrocarbons Law, enacted by Royal Decree M/37, dated 12/20/2017. The Company will update its capital spending guidance when its full-year 2023 results are announced in March,” Aramco said in a written statement. Back in November, Saudi Arabia extended its voluntary oil production cut of 1 million bpd until the end of March 2024 in an effort to contribute to stability in the global energy market. NN: Another red herring. we are talking about nothing here. This expansion in production at best would hit in 2025.