Oil prices surged today as the record spec shorts suddenly realized that the Middle East is shitshow of geopolitical bomb fuses just ready to be lit. WTI spiked dramatically up near $72 on the Iranian missile attack in Israel before fading back a little
“Iran sits astride the world’s most strategic energy region, oil- and gas- production facilities and transit choke points,” said Bob McNally, founder of Rapidan Energy Group and a former adviser to president George W Bush.
“So, when Iran is involved in a shooting war with its neighbours, you have to price in some geopolitical disruption risk, especially when it comes to Israel,” he added.
Will the already low (tank bottoms) crude and Cushing stockpiles get tested further…API
For the sixth week in the last seven, crude stocks fell last week (and distillates inventories tumbled). Cushing stocks increased for the second week in a row… 
Source: Bloomberg
Total crude stocks are back at their lowest since April 2022… 
Source: Bloomberg
WTI was hovering just above $70 ahead of the API print and inched higher on the unexpected crude draw…. 
“This fresh escalation is serious and justifies oil’s jump,” said Bill Farren-Price, a veteran oil market watcher and senior research fellow at the Oxford Institute for Energy Studies.
“But we’ve been here before — the conflict needs to show signs of spreading to the Gulf if it is to ignite a broader and sustained oil price rally. At the moment it has not.”
Helima Croft, an analyst at RBC Capital Markets and a former CIA analyst, said oil traders needed to assess whether Israel would retaliate by directly targeting critical Iranian military and economic assets, including energy infrastructure.
“In April, the Israelis opted for a muted response to the Iranian missile and drone strikes. And yet in the past two weeks the [government of Israeli Prime Minister Benjamin Netanyahu] has demonstrated an increasingly high-risk tolerance for escalatory actions to achieve their strategic objectives.”
Of course President Biden (well – whoever is running the show behind getting ‘her’ elected) will not want to see crude prices rising (nor will Jay Powell, so soon after his mission accomplished 50bps cut out of nowhere).More By This Author:Key Events This Week: Payrolls, Powell, JOLTS And Fed Speakers Galore
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