Crude Oil (CL=F) prices are getting slammed as traders are assessing a potential Covid lockdown in China and a surprise by their central bank not to cut interest rates, but also because it appears that the Biden administration wants to do what it can to support our local dictators, says Phil Flynn of the PRICE Futures Group.

There was outrage and indignation when it was revealed that Biden administration officials sent a delegation to Venezuela in an attempt to lift sanctions on the rogue regime. Venezuela dictator Nicholas, the guy who was accused by the UN for being responsible for probable crimes against humanity including judicial killings and the systematic use of torture, seemed pleasantly surprised that the Biden administration would show him so much respect. Yet when an administration is as desperate as this one is to alleviate a diesel shortage and hates the US energy industry and its workers so much, it seems to be their only option—unless you look to the dictators in Iran. Of course, why not support your local dictator if you can.

There was moral outrage across the free world and by both Democrats and Republicans in Congress, which made trying to prop up the Maduro Regime a little unseemly. Yet with the Biden administration, where there is a will there is a way. Reuters reported that the US is near to a deal that will allow Venezuelan “oil for debt” swaps by Chevron, ENI, Respol with further actions by Venezuela.

That by no means says that they are giving up on the Iran nuclear deal. They just love Iranian oil. Yet Reuters is reporting that, “Forty-nine of the 50 Republican US senators said on Monday they will not back an emerging new nuclear deal between Iran and world powers, underscoring their party’s opposition to attempts to revive a 2015 accord amid fears talks might collapse. Citing press reports about a new deal, which has yet to be finalized and could be torpedoed by Russian opposition, the lawmakers said in a statement that Democratic Joe Biden’s administration might reach a deal to weaken sanctions and lessen restrictions on Iran’s nuclear program. They pledged to do everything in their power to reverse an agreement that does not “completely block” Iran’s ability to develop a nuclear weapon, constrain its ballistic missile program, and “confront Iran’s support for terrorism.“ Tehran denies it has ever sought atomic bombs.

Senator Rand Paul was the only Republican member of the Senate who did not sign Monday’s statement. In an emailed statement, he said: “Condemning a deal that is not yet formulated is akin to condemning diplomacy itself, not a very thoughtful position” as reported by Reuters.

China is also a growing concern as lockdowns could hit demand and potential sanctions that could be looming over the country. Bloomberg News reports that, “selloff across Chinese equities deepened on Tuesday, with concerns about the country’s ties to Russia and persistent regulatory pressure sending a key index to its lowest level since 2008. Bloomberg says that China’s equities are looking increasingly risky on concerns that Beijing’s ties with Russia could spark new US sanctions. That’s adding to worries from regulatory developments, including a possible delisting from the US exchanges. While upbeat economic data was a rare bright spot in the market, growing lockdowns in major Chinese cities are dimming the outlook.

China is chummy with Russia but also Saudi Arabia. The Wall Street Journal reports that Saudi Arabia has invited Chinese President Xi Jinping to visit Riyadh as the kingdom looks to deepen ties with Beijing amid strained relations with Washington, people familiar with the plan said. The trip is expected to happen after Islam’s holy month of Ramadan, which begins in early April this year, the people said, in what could be Mr. Xi’s first foreign travel since the Covid-19 pandemic began. Riyadh is planning to replicate the warm reception it gave to former President Donald Trump in 2017 when he visited the kingdom on his first trip abroad, one of the people said. “The crown prince and Xi are close friends and both understand that there is huge potential for stronger ties,” said a Saudi official. “It is not just ‘They buy oil from us and we buy weapons from them’.” The Saudi Foreign Ministry and the Chinese Embassy in Riyadh didn’t immediately respond to requests for comment

The hard break in crude oil is getting the market back to the pre-invasion uptrend. While the trend is down as we broke key support, we believe that this is a break that should allow some hedges to be put on. Spec trading can go both ways with volatility. We are headline to headline, so get ready to move. Tonight, we get the American Petroleum Institute report. Look for crude to be up and products to be down.

Learn more about Phil Flynn by visiting Price Futures Group.