Re: Crude Oil — Different Dynamics Under Biden. Ironically, I see the potential for much higher oil prices under this Admin. Thoughts follow...

Biden has clearly signaled a pivot back to Iran concomitant with abandonment of Saudi Arabia: 1) halting arms sales, 2) halting support of against Shia-backed Houthis in Yemen, 3) recalling the Nimitz from the ME.

Although I’m fond of saying that the cure to high prices is high prices, between the steep backwardation in oil and Biden’s various green energy initiatives, shale producers aren’t terribly incentivized to increase rig counts despite the recent rise in spot.

The only thing that gives me pause is the relatively high amount of spare capacity from OPEC+ especially if you include the prospect of Iranian barrels.

But given that OPEC+ is made up of all petrostates whose budgets are predicated upon MUCH higher oil prices, I’m guessing they will hold the line in supply longer — especially without fear of Trump tweets about high oil prices.

Biden’s signal to Saudi given recent policies: “You’re on your own now, and the US is OK with you being encircled by Iranian proxies on all sides.”

My predicted Saudi message to Biden: “Fuck you too. Prepare to pay much higher prices for oil.”

The big wildcard imho: https://www.cnbc.com/2021/02/07/biden-says-iran-must-return-to-nuke-deal-before-sanction-relief.html

The departure of the USS Nimitz basically leaves naval primacy over the Strait of Hormuz to Iran. That, coupled with actions to hamstring US shale, is the perfect recipe to get the US back to dependency on ME oil. Brings new meaning to the phrase: “Houston, we have a problem…”