Global oil prices are fluctuating as we put the war premium in and take it back out again, says Phil Flynn of PRICE Futures Group.

The World Bank is warning that a medium oil disruption scenario could equal the 2003 Iraq war and drive fourth-quarter oil prices to the $109 to $121 range. Our target is $111 so in that scenario we’re pretty much right in line with what they are thinking. The risk to global supply is higher than it’s been in probably 50 years. The question is who is to blame.

Who, Us? Don’t blame us. Iran’s foreign ministry spokesman Nasser Kanaani is showing indignation as the US is blaming Iran for the Hamas terror attack on Israel. Mr. Kanaani is telling the United States to stop blaming Iran for the Hamas attacks on Israel. Just because they trained them and funded them doesn’t mean it’s their fault. Besides, was it not the United States that tried to get Iran back into the nuclear deal while turning a blind eye to Iranian oil exports? The US allowed Iranian oil production and exports to hit a five-year high reaping the regime billions of dollars. In fact, under the Biden administration, Iran has overtaken Saudi Arabia as China’s top seaborne oil supplier in October Russia is still at #1 but it shows you that the new axis of evil is feeding off of each other.

Even Bloomberg is turning on Biden. Hal Brands writes, “Every presidency is an evolution because every presidency subjects the ideas that a leader brings into office to the test of global affairs. Nearly three years into Joe Biden’s tenure, the world keeps breaking his bedrock assumptions. After Hamas attacked Israel, Biden’s foreign policy is entering its third phase — one that features crises nearly everywhere and one for which his administration is, intellectually and materially, ill-prepared.”

Argus Media reported that Iran has had a massive destocking of crude from floating storage. Arrivals of Iranian crude have averaged 1.8 million barrels of oil a day month to date which is a new record.

Oil prices pulled back Sunday night on the opening, letting the air out of some of the war premium. Without an immediate disruption in global supplies and signs that Asian oil demand may be easing just a bit allowing the market to sell off.

There are reports that Saudi Arabia could reverse course on increasing Arab light oil prices to Asia for December as refinery margins weaken. Stay tuned.

But make no mistake about it the global oil market is still extremely tight, and we don’t have any room for any disruptions of supply so the pullback may be short-lived as the market awaits more headlines on the progress of the Israeli invasion of Gaza. 

Bloomberg reports that Argentina’s Massa may cut fuel exports because of shortages. Massa said fuel companies must resolve shortages by Wednesday as Argentines deal with gas lines at the pump.

The AP reports that “Israel said Saturday that it was recalling its diplomats from Turkey over “increasingly harsh statements” coming from the government in Ankara. The announcement came after Turkey’s president told a massive protest crowd in Istanbul that his government was preparing to declare Israel a “war criminal” due to its actions in the Gaza Strip.

The Times of Israel reports that Israel on Saturday said it was pulling its diplomats out of Turkey to “reassess relations” as President Recep Tayyip Erdogan continued to lash the Jewish state for its actions in the Gaza Strip. “In light of the escalating rhetoric from Turkey, I have instructed the return of diplomatic representatives from Turkey to reassess Israel-Turkey relations,” Foreign Minister Eli Cohen said in a statement. His announcement came as Erdogan told a mass pro-Palestinian rally in Istanbul on Saturday that his country was making preparations to proclaim Israel a “war criminal” for its actions in Gaza.

Oil Price reports that, “The European Union held an emergency meeting on Friday to discuss the potential for diesel supply shocks stemming from the conflict between Israel and Hamas.

Natural gas is pulling back a little bit after the cold weather hit and wasn’t quite as cold as some people had feared. The pullback comes as the market will focus on US production which fell back from record highs. We still think it’s a good idea to put on your bullish option strategies for winter. 

Learn more about Phil Flynn by visiting Price Futures Group.