Iraq’s national oil company, the State Organization for Marketing of Oil, or SOMO, instead of cutting output, has plans to increase deliveries of its Basra oil grades by about 7% to 3.53 million barrels a day. This suggests that non-compliance with the Vienna OPEC meeting is practically assured.
This morning the world awakes to a charred landscape in which markets are frantically rushing to catch up to a suddenly hawkish Fed which not only hiked for the second time in a decade but, as per yesterday's Fed statement and Yellen press conference, realizes it has been behind the curve all along,
"I don't understand why the CIA would say the information came from Russian hackers when they must know that isn't true... Regardless of whether the Russians hacked into the DNC, the documents Wikileaks published did not come from that... The leakers were motivated by disgust at the corruption of the Clinton Foundation and the tilting of the primary election playing field against Bernie Sanders."
On the heels of last night's big crude build, OPEC's overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp.
With crude oil prices up over 50% YoY (the most in 6 years), and retail gas prices up over 10% YoY (the most in 5 years), Bloomberg's Garfield Reynolds suggests the Saudis have sealed it then, 2017 will be the year when inflation takes over.And if that’s curtains for global disinflation then we could see the start of a great unwind in central bank easing, something capable of spurring all manner of extraordinary market disruption.
The Obama Administration seems to be making considerable progress to set up the next U.S. President, Trump, with an “unraveling” situation in Syria, so as to enable Trump to continue Obama’s war against Russia and all its allies (such as Syria). Whether President Trump will continue Obama’s policy isn’t yet clear.
Whether it is retaliation for dumping Treasuries, blackmail to keep to OPEC production quotas, or - more likely - being implicated in war crimes for supporting a Saudi-led air campaign in Yemen that has killed thousands of civilians, President Obama has decided that after shipping billions in weapons to Saudi Arabia, Reuters reports it will halt a planned arms sale to The Kingdom.
While prosecuting and sanctioning people who criticize Islam is becoming more common in Europe, this practice used to be reserved only for Muslim countries officially governed by sharia law, such as Saudi Arabia or Pakistan, where it is forbidden to insult Islam. It is a pity that European courts and other state bodies have begun taking their cues from Islamic law.
"Enemies may want to impose a war on us based on false calculations and only taking into consideration their material capabilities... Such a war would mean the destruction of the Zionist regime (Israel) ... and will engulf the whole region and could lead to a world war,' Iranian Defense Minister Hossein Dehghan said quoted by Mehr.
With oil prices surging to 17-month highs following this weekend's OPEC-NOPEC deal and Saudi promises to cut still more, many Wall Street analysts are skpetical with Goldman Sachs warning that the Saudis are wrong to think U.S. shale production won’t respond to higher prices. However, Nomura and Bernstein see little threat to OPEC from rising U.S. shale production in 2017.