Oil is getting a bid back perhaps because they realize that the recent sell-off was way overdone based on global supply and demand or perhaps because someone might find the guts to hold Iran responsible for the terror and unrest and murder they have funded, says Phil Flynn of PRICE Futures Group.

The US pounded Iranian-backed sites in Syria. The EU is at least thinking about sanctioning Iran, the world’s biggest state sponsor of terror and the major funding source for the terror group Hamas. That sounds like a good move considering they have been attacking and injuring US troops. Yet now the New York Times reports that “Biden has ‘rejected more aggressive bombing options proposed by the Pentagon out of fear of provoking a wider conflict with Iran. Is that a sign of weakness from the man who did not want to take out Osama Bin Ladin and criticized President Trump for taking out Iranian general Qassem Soleimani? The man Robert Gates, the former defense secretary under Obama, said that Biden has been wrong on nearly every major foreign policy and national security issue over the past four decades. Biden again is not listening to his generals just like he failed to listen to them on the Afghanistan pull-out.

Still, the question remains as to why the Biden administration allowed Iran to avoid sanctions on oil and make billions that the US had to know was funding groups like Hamas. Despite that fact, there seem to be no moves by this administration to cut off Iran’s oil billions because they invested so much in appeasing them in the hopes that they would somehow change their spots and that they would abide by the JCPOA nuclear deal that was a farce since it was first agreed to.

Now we have a world where because in part of movements by the Biden administration, the US has become more dependent on OPEC and Iran to stop the world from risking a major price spike. US production, while at a record, could have done so much more if it were not for this administration that not only refused to meet with oil companies but accused US oil companies and gas station owners of being price gougers and war profiteers. At the same time, it has allowed Iran to see their oil exports and production soar to four-year highs and now has lifted sanctions on Venezuela.  That is a total insult to the good people in the US oil and gas industry.

Even though this industry has been derided and slowed down by the Biden administration, it continues to produce oil at a near-record pace. The problem is we’re starting to see signs that we could see peak US oil production. Part of the reason why is we’re seeing a lack of investment in the oil and gas industry because of problems when it comes to the uncertainties surrounding the regulatory environment. On Friday Baker Hughes reported that US oil rigs fell 2 to 494. That’s down 127 rigs year to date or down 20% and it’s at the lowest level of the year.

China is also asserting more control over the global energy space. Not only are they sucking down oil from Russia and Iran, they are also moving to control more global production. Reuters reports that “Iraq has signed a settlement agreement with US energy giant Exxon Mobil Corp (XOM.N) to finalize its exit from the West Qurna 1 oilfield and allow PetroChina to become the field’s lead contractor, a senior Iraqi oil executive said on Saturday. “We studied the settlement agreement and the oil ministry with the Basra Oil Company believe that the best option is for PetroChina to become the lead contractor of West Qurna 1,” Hassan Mohammed, deputy Basra Oil Co. manager in charge of oilfields and licensing rounds affairs, told Reuters.

Yet while oil plays technical games as we are in the heart of shoulder season, the reality is that the global market is still undersupplied. We have killed investment and demonized fossil fuel producers and have been sold on inefficient and expensive alternative energy sources that have a negligible effect on greenhouse gas emissions. We are in for a reality check so do not be surprised when it happens.

Natural gas is coming back. I guess the so-called warm-up cooled down again. EBW Analytics reports that natural gas succumbed to gravity last week as the loss of 26 gHDDs and fresh all-time production records catalyzed a 48.2¢/MMBtu (-14%) plunge. Henry Hub day-ahead spot prices averaged just $2.00/MMBtu last Tuesday amid massive spot market oversupply. However, psychological support at the $3.00/MMBtu level is held on a closing basis, and a bullish weekend weather shift may trigger a modest relief rally early this week. Still, the medium-to-long-term outlook leans notably bearish into the end of the calendar year.

The Financial Times reports that “Shell and BP have asked Washington and Brussels to intervene in a bitter dispute with Venture Global LNG, warning the company’s refusal to honor a multibillion-dollar liquefied natural gas supply contracts threatens Europe’s energy security. In correspondence seen by the Financial Times, the oil majors accuse the US LNG provider of “misconduct” for withholding cargo agreed under long-term supply contracts and instead selling LNG on the spot market. Shell alleges Venture Global’s “opportunistic” action has enabled it to reap an $18bn windfall because of a spike in gas prices following Russia’s invasion of Ukraine while denting its ability to meet critical energy supply needs in winter.”

Learn more about Phil Flynn by visiting Price Futures Group.