War In The Middle East Oil Dollar and Markets

➡ The ongoing conflict in the Middle East, particularly between Hamas and Israel, is anticipated to impact global oil supply, leading to an increase in oil prices. This is further compounded by geopolitical factors such as broad market fragility, varying global responses to the conflict, and recent actions by Russia and Iran affecting oil supply and distribution.

War in the Middle East. Oil, dollars, gold markets. What’s going on? Now, unless you’ve been living under a rock, you already know that over the weekend, we saw Hamas launch a surprise attack on Israel. By air, by sea, by land. They claimed the lives of over a thousand people. Many of them were civilians. They took more than a hundred people hostage in response. You know this escalates. Israel has vowed a mighty vengeance and has since retaliated with airstrikes on Gaza.

And the death count in Palestine is rising fast. Now, my heart goes out to all the innocent people killed and wounded in this evolving situation, and I have some opinions on all this, but really it’s hard to know the truth. It’s the fact that truth is always lost in the fog of war and the history of the conflict in the Middle East. They go way far back, right? And every expert I look to, that I talk to, they have a different opinion on this.

And since I’m not a geopolitical expert and I can’t find what I consider to be the truth, nor do I really have anything unique or constructive to add, I’m not going to be commenting on the war itself, why it happened, what happened, and what comes next. But I will say that I believe no matter how much oppression somebody may have been under, there’s never justification for what’s been done to innocent people, and specifically women and children.

There’s never an excuse. Now, while most of us try to understand the pain of what those affected must be feeling, the truth is that for most of us, it doesn’t really matter. We live in a world far away, right? But what does matter to each of us is what happens next. What happens in the markets, what happens to our food, what happens to our gas prices, what happens to supply chains, and so much more.

And so with all of that going on, it’s not always easy to find a way to transition to our core focus, which is the markets. But that’s what I’m going to dig into. Now, what happened over the weekend looks to be the catalyst for a potential long drawn out regional conflict that could disrupt the oil supply from the Middle East and therefore the energy markets. Now, I see these factors continuing to put upward pressure on oil prices into 2024 and beyond.

In fact, the US Energy Information Administration, the EIA, has recently put out a forecast for rising oil consumption through 2024. Israel is also currently selling more than 30 billion in foreign reserves to help prop up their currencies at a time when the US treasury market and the FX markets are already extremely fragile. So the question is this what should we anticipate? What could happen with all these things? And how should we prepare? So let’s dig in.

Okay? First, if you’re new to the channel, my name is Mark Moss. I make these videos to change the way you think about money, because almost everything we’ve learned is wrong. Almost everything you see is wrong. And in light of this conflict, war, whatever you want to call it, it’s hard to know what’s real and what’s not. But don’t worry, I’m here to help you navigate through the noise, find the signal.

That’s what we’re doing here. So regarding this situation, the new war, whatever you want to call it, in the Middle East, it’s a big deal. I’m not trying to make light of it. The first thing I want to look at is in the energy markets itself. Now, both Israel and Palestine, they’re not major oil producers, but the conflict sits in a wider key oil producing region. Prices are likely to rise, not so much because the conflict is going to impact, really any oil supply at the exact moment, but on the fear that the conflict could spill over to the rest of the region.

We’ve already seen prices moving. Prices for Brent crude, which is the global benchmark for oil, rose 34% just between late June and late September, mainly on the back of the production cuts by Saudi Arabia and Russia. So it’s already been moving. But now this situation, like I said, these two nations aren’t the largest oil producing nations, but it’s involving Iran. Iran is the 7th largest oil producing nation.

And really, we can see how the Biden administration’s decisions with Iran has impacted this and is potentially going to drag them in. Biden’s decision to give Iran access to about $6 billion in its frozen assets as part of a recent deal to release five imprisoned Americans, as well as his efforts to revive a broader Obama era agreement that sought to ease sanctions while keeping Iran from developing a nuclear weapons, might have actually led this to happen at least faster.

Now Biden’s, facing massive pressure from both Democrats and Republican lawmakers to tighten enforcement of sanctions restricting oil exports by Iran. So Iran is a major oil producing nation. If they restrict sanctions against Iran and their oil, what do you think happens? Less supply, price goes up if Iran gets pulled into war. If war breaks out in Iran, what do you think happens? Less supply, higher oil prices. Now, this is already in light of what’s going on over in Russia, where Russia has already seen an oil slowdown.

As a matter of fact, just recently, oil stopped exporting diesel fuel to the rest of the world. Now, this is a really big deal because Russia is the world’s biggest diesel exporter, and they introduced restrictions on exports back in September, September 21. Now what they did is they temporarily banned most exports of gasoline and diesel, which sent diesel prices soaring. I’ve seen it all over the country here.

I’m sure you have as well. Diesel is the most important fuel because it really moves the world. Diesel is Europe’s economic workhorse. It powers the majority of vans and trucks, ferrying goods and raw materials all around the continent, as well as the key heating fuel for some countries, which is important as we’re going into the winter. Now, Moscow has accounted for over 13% of global diesel supply so far this year.

But since they have put that restriction, they started to soften that up. And now they said they will lift the ban as things starting to loosen up. But here they are, they’re not loosening up. And at the same time in the United States. Janet Yellen the treasury secretary is now threatening Russia. She said that the US. Is preparing a crackdown on Russian oil sanctions, invasion. So is Russia going to want to lift the ban of diesel fuel to help the world out when the world’s trying to crack down on them? What does all this tell us? It tells us that supply is going to continue to get constrained, which means prices continue to go up.

When the price of energy goes up, the price of everything goes up. Now, Janet Yellen said in an interview that the US. Would very likely take steps to enforce the $60 a barrel price limit that the US. And its partners imposed on Russian oil sales. Good luck. That hasn’t worked. Oil is going to be well over $60. It’s probably going to be double that, probably $120. And Russia is going to be getting $120.

They’ll just be selling it to another country like they have been. Other things that Russia is doing is they’re saying, fine, we’ll sell you the oil for $50 a barrel. But what we’re going do is put a massive premium on the shipping. So either way, they’re going to get the money. This is a little bit of a song and dance, but this causes prices to go up. Now, US officials have worried about penalizing industry too much, because if they do, they understand that they’re going to just push the prices up, which then we can look to the largest oil producing nation other than the United States, which is Saudi Arabia, which is caught in this Middle East conflict.

Now, the country recently made a Unilateral decision to withhold 1 million barrels per day of crude oil supplies from the global market, in addition to recent export cuts imposed by the larger OPEC Plus cartel that they have. But Saudi Arabia is getting dragged into this. As a matter of fact, Hezbollah, another group linked to Iran, has praised the Hamas attack as a, quote, message to those seeking normalization with Israel.

So a lot of this comes down to the fact that it looks like Saudi Arabia and Israel were going to strike some sort of a peace accord and those Abraham accords that President Trump put forward. And if that happened, then it disrupts Iran and some of these terrorist organizations like Hezbollah and Hamas. Now, Anthony Blinken from the United States basically said as much. He indicated that suspicions about Iran’s motives are at least plausible.

So who doesn’t want normalization? Well, again, he said Hamas, Ezbola, and Iran. So it wouldn’t be a surprise that part of the motivation may have been to disrupt efforts to bring Saudi Arabia and Israel together, along with other countries that may be interested in normalizing relations with Israel. Now, Saudi Arabia has apparently been agreed to be willing to raise the oil output. They want to raise the oil output to help bring the price down.

If they boost oil production, then hopefully prices could come down. And they were willing to do that to be into this deal as well as to get some protection, some military protection for the United States. But now this move, aimed at winning goodwill in Congress for a deal in which the kingdom would recognize Israel and in return get a defense pact with Washington, looks to have potentially fallen apart.

We’ll have to see. Now, this is all happening at a time where here in the United States, the Strategic Petroleum Reserves, the SPRs, are down to only 17 days left. It’s not good. According to Reuters, the US. Currently has just 17 days of supply left, and that’s about half of the historical average of 33 days, going all the way back to 1990. So the US. Has reserves in case they need them, in case something bad were to happen.

Sort of like conflict in the Middle East that disrupts the supply of oil. Now, the Biden administration has been selling that oil to help try to combat those prices, bring the prices down I’ve talked about already, OPEC plus wants to just restrict the supply to help combat those prices. And now here we are actually having a conflict in the Middle East that could potentially disrupt the oil supply.

And the strategic petroleum reserves in the US are almost empty. On top of that, we have the wardrobe that continues to get beat. Now, unlike the Russia Ukraine war, the recent conflict will likely receive bipartisan support for additional military aid due to Israel’s strong geopolitical alliance with the United States. And we’re already seeing that now. Despite the continuous surge in government spending, defense expenditures remain at historically low levels.

Surprisingly, now the escalation of this conflict will only intensify the demand for an already bloated fiscal agenda. Now, the war machine, it wants to get fed. It wants money. Ukraine’s support has been waning. I’ve talked about this extensively. Most people don’t support Ukraine continuing to get money. Most people understand that the Ukraine war is pretty much already lost. So maybe it makes sense to jump over to a new war that has bipartisan support.

We can continue to fill these war machines up with some more money. We’ll have to wait and see. But we can already see the effect of all of this. Like I said, I don’t want to dig into these rumors because we don’t know the truth. Nobody does. I’ve talked to experts that have varying opinions, and we can all speculate. My best speculation is that there’s not one agenda.

There’s many agendas probably within each country that are all pulling the strings. And so, again, turning it back to what matters for us. We can see that gas prices are already shooting way higher just in the anticipation of this. Sort of like when Russia and Ukraine got into it. Gas prices went through the roof. Oil prices went through the roof, even though oil supply from Russia never got restricted.

And so we’re already starting to see that. We have experts calling for 120 up to $150 barrel oil, which could double gas prices from here. Of course, if gas prices double from here, so does everything else, because everything needs transportation. Your food needs to be transported, your kids need to be transported. The clothes that you bought need to be transported. And this is at a time when the US national debt is growing at an insane pace, way above the previous estimates of $2 trillion per year.

It’s grown by 513,000,000,000 in just the past 18 days. This is all while Biden is tweeting about canceling 127,000,000,000 in student debt. In that same time period, the US added 513,000,000,000 in total debt. I mean, this is just absolutely crazy. So I don’t know what’s going to happen with the conflict, with the war. Is it going to break into World War Three? Potentially. Is it going to drag the rest of the Middle East into it? Potentially.

Could they reconcile and have peace? I sure hope so. That’s what I’m praying for. But we need to be attentive to this, because what we do know is that a lot of money is going to be spent in the war. We know that the aircraft carriers, they’re already going over there. The US is already sending money over there. We know that’s going to happen. We know they’re going to print more money.

We know it’s going to put a crimp in the oil supply. So we can expect more inflation, both from the money that’s being printed, the debt that’s being accumulated. We can expect more inflation from the potential constraints on oil and gas. Other things could be happening as well. But I’m going to keep you posted, so make sure you stay tuned, because these financial markets, they’re going to see the constraints, but we can be okay as long as we navigate them correctly.

So make sure you stay vigilant, make sure you keep an eye out, make sure you stay posted. I’ll keep you posted on what’s going on. Of course. As always, give me comments. Let me know what you think. Let me know if you want me to dig into these topics deeper. Not specifically on my opinion of the war, because no matter what I say, there’s going to be someone on the opposite side of it.

But if you want me to dig into any of these specific examples, let me know in the comments. Of course. As always, give me a thumbs up if you like the video. If you don’t give me thumbs down, that’s okay. But at least tell me why. And that’s what I got to your success. I’m out. .