The US oil and gas industry are the envy of the world and in the past has been able to bring back oil and gas production quickly even in the aftermaths of some of the worst catastrophic storms, says Phil Flynn of the PRICE Futures Group.

We've almost come to expect that after hurricanes oil and gas production, especially in the Gulf of Mexico, will come on quite quickly. Yet it appears that the damage caused by hurricane Ida is presenting greater challenges than any gulf storm we've seen perhaps since Harvey or Katrina because of the damage it's done to Port Fourchon, Louisiana, a major staging area for operations in the Gulf of Mexico, and now reports of damage to a key oil platform. The BSEE reported that oil and gas production took a step backward and reported yesterday that approximately 93.55% of the current oil production in the Gulf of Mexico has been shut-in. BSEE estimates that approximately 91.29% of the gas production in the Gulf of Mexico has been shut-in. It's coming back more slowly and is a reason why gas and products are on the rise.

A disturbing report from Shell saying its WD-143 facility in the Gulf of Mexico has been damaged according to Javier Blas at Bloomberg. This is a big deal because it creates a bottleneck for the major Mars, Hersa, and Medusa pipeline systems, which could impact as much as 300,000 barrels of oil flows per day. It also means that the incredible comebacks that the US energy and gas industry has had from previous storms may take a lot longer and this could be just the beginning as we're starting to hear concerns about more damage to Gulf of Mexico infrastructure.

The Louisiana Offshore Oil Port (LOOP) still is shut in and has suspended deliveries. Argus Media reported that, "LOOP accounted for about 6pc of the 3mn b/d of US crude exports from January-June, according to US Census monthly trade data. The LOOP said that following Hurricane Ida, LOOP is working directly with shippers to minimize storm-related impacts. Facility assessments and repairs are underway. The Loop is about 20 miles (32km) off the coast from Grand Isle, Louisiana, is the only US port capable of fully loading very large crude carriers (VLCCs). LOOP can export WTI and similar grades but is primarily known as the main export hub for offshore-produced Mars. Argus Media says that LOOP also operates oil storage facilities in Clovelly, Louisiana, and the local pipeline that connects Clovelly to the oil hub at St James, Louisiana.

Biden gave a speech and basically said that he would do everything in his powers to help the US energy and gas industry recover. He did offer oil from the strategic petroleum reserve and at least one company has already taken him up on it, Exxon Mobil Corp. US Energy Sec. Granholm: Authorized SPR To Conduct An Exchange With ExxonMobil Of 1.5 Mln Barrels Of Crude.

So, hopes for a quick recovery of US oil and gas production as well as refining capacity coming back online quickly are being dashed. This is going to be a long slog and it's going to have an impact on prices and will be another reason why you need to be prepared for upside risk in oil, gasoline, and diesel.

The Biden administration's climate agenda push took a big step back when China said that they want to become more green. The United States is going to have to acquiesce to their viewpoints with Taiwan, trade, and other issues including energy. John Kerry was widely disappointed when the Chinese government told him that they couldn't separate climate goals with the bigger overall political agenda. In other words, if you want China to do their part in saving the planet then you're going to have to give in to them on political issues. Let's just hope and pray that the Biden administration doesn't.

Zero Hedge reported that, “Despite the US long wanting 'climate diplomacy' to remain a separate issue apart from its wider disputes with China, such as on trade and human rights, Chinese Foreign Minister Wang Yi is now warning deteriorating ties to threaten joint efforts to tackle global warming and climate change. Wang informed Biden's US climate envoy John Kerry during the latter's visit to the Chinese city of Tianjin on Thursday that "climate cooperation cannot be separated from the wider environment" of US-China relations. It's widely perceived that if one side or the other links climate with the broader tensions besetting US-China relations, it would greatly slow any substantive climate action.

Perceived weakness from the Biden administration is causing a whole host of issues making the global oil trade more dynamic. Iran, of course, is a number one issue. Iran is telling the world that they are going to raise production no matter what the Biden administration plans to do about it and claim that the sanctions are unfair. They also realize that they can probably get away with it because Joe Biden is viewed as weak and that perceived weakness is also allowing North Korea to restart their nuclear facilities, which of course is going to be a major potential risk to global peace.

Natural gas production being offline is also causing a very bullish situation. We have panic buying in Europe. Russia has been withholding supplies because they are concerned they won't have enough for themselves. The European markets are going through the roof in other commodities, and it looks like we're seeing some weakness in the dollar. There is some strength in aluminum and cocoa.

Strengthening in the euro currency and overall, it looks like commodities as a group is going to start heating up here very quickly. Grains may be a laggard right now because we're into harvest but once people start to realize that the harvest isn't going to be as big as they might want, that should turn around fairly quickly too. I think the grains should be bought on breaks or put on option strategies. We believe the commodity markets as a whole are going to be pretty strong.

Learn more about Phil Flynn by visiting Price Futures Group.