Russia’s war of aggression against Ukraine was funded by a bad energy policy that is causing many in Europe to face a hard reality that climate extremism is the greatest danger to world peace and stability, says Phil Flynn of the PRICE Futures Group.

Even Germany was blind to the risk of becoming energy dependent on the madman Russian President Vladimir Putin, and is causing them to reshape their energy policy. Now if we could only get the Biden administration to do the same.

The green energy madness has brought the world to the brink of nuclear war as Putin puts his nukes on high alert. Oil prices soared and are now pulling back as many people who can avoid buying Russian oil and gas are. The Wall Street Journal reports that, “The US is sanctioning Russia’s central bank to prevent the government from using its emergency reserve currencies to protect the economy from the Western pressure campaign, senior US officials said ahead of the opening of US markets." What is even crazier is that Europe and the US seem to be rushing into a deal with another country that is being run by a madman, Iran, trying to secure a nuclear deal.

As reported by Reuters, BP Oil (BP) is abandoning its stake in Russian oil giant Rosneft in an abrupt and costly end to three decades of operating in the energy-rich country, marking the most significant move yet by a Western company in response to Moscow’s invasion of Ukraine. Rosneft accounts for around half of BP’s oil and gas reserves and a third of its production; and divesting the 19.75% stake will result in charges of up to $25 billion, the British company said, without saying how it plans to extricate itself.

Others are also looking to find ways to avoid buying Russian oil and gas. Germany is waking up to energy realities. Reuters reports that, “Germany signaled a U-turn in key energy policies on Sunday, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, part of a broad political rethink following Moscow’s invasion of Ukraine. Europe’s top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options.”

Germany has learned, but sadly, the Biden administration has not. They seem to want to double down on their anti-fossil fuel agenda. White House Press Secretary Jen Psaki said yesterday that Biden wants to reduce our dependence on foreign oil by using green energy, not by expanding US energy production. Psaki said that, “The Keystone Pipeline was not processing oil through the system. (It would have been by now.) That does not solve any problems. That’s a misdiagnosis or maybe a misdiagnosis of what needs to happen,” said Psaki. “I would also note that on oil leases, what this actually justifies in President Biden’s view is the fact that we need to reduce our dependence on foreign oil, on oil in general…and we need to look at other ways of having energy in our country and others.” So, in other words, repeat the mistake of Europe that has brought the us to the brink of a world war.

The Biden administration of course, over the weekend, agreed with Europe to block certain Russian banks from the swift system—they are still trying to avoid banks that process oil and gas payments, but that might not matter. There are many private companies that are trying to avoid buying Russian oil and gas, apparently because they were aghast at the way President Putin has executed war crimes, but also because they’re afraid they won’t get paid.

Bloomberg reports that European Union foreign ministers agreed to send 450 million euros ($500 million) in military aid to Ukraine for lethal weapons, according to Josep Borrell, the bloc’s foreign policy chief. The aid will be financed by the EU’s European Peace Facility and will see the bloc supply arms to a country at war for the first time in its history. Another 50 million euros will be provided for non-lethal purposes, Borrell said at a press conference in Brussels Sunday.

Oil is going to be moved by headlines and upside price risk is substantial yet there will be some big ups and downs. Talk of more releases from global oil reserves may help but most of that will just be bought up by China. China is buying, not selling, and so should you on breaks. 

EBW Analytics Reports that, “The NYMEX April contract brushed off the loss of 35 gHDDs last week to gain 9.3¢ in volatile trading as the March contract whipsawed into final settlement and Russia’s invasion of Ukraine added to bullish sentiment surrounding energy commodities. Strong production freeze-offs as temperatures plunged in the Rockies and South Central further cut supply as much as 3.5-4.0 Bcf/d at the same time temperatures rebounded into the weekend—supporting heating demand and spot market pricing. This week, however, rapidly falling heating demand and rebounding production—followed by a 17 Bcf/d week-over-week decline in weather-driven demand next week—may create physical market pressure and open the door to downward pressure for the April contract.

Learn more about Phil Flynn by visiting Price Futures Group.