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Oil prices are heating up, and so are the stocks of <a href="https://www.benzinga.com/topic/energy">major energy companies</a>. 
Shares of Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>), Occidental Petroleum (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OXY#NYSE">OXY</a>), and ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>) were trading in the green at the last check on Friday. The rally follows a Reuters report suggesting the U.S. is preparing its most <a href="https://www.benzinga.com/etfs/sector-etfs/25/01/42919047/oil-nears-80-as-us-prepares-new-russia-sanctions">stringent sanctions yet</a> against Russian oil.
These sanctions, expected to target 180 vessels, major <a href="https://www.benzinga.com/topic/oil?_gl=1&#x2A;1aeuuae&#x2A;_gcl_au&#x2A;MTQ3Nzg4MTMxMi4xNzM1NTczMTA3&#x2A;_ga&#x2A;R1MxLjEuMTczNjUyMjc2NC4xLjEuMTczNjUyMjg4Ni4wLjAuMA..&#x2A;_ga_V7ZK73W7N0&#x2A;MTczNjUyMDk1NC40Ni4xLjE3MzY1MjY3NDYuMC4wLjA.">oil </a>companies, and top executives, have already pushed oil prices to $80 per barrel — a level not seen since October 2024. 
Traders are responding to the anticipated disruption in global oil supply, and some ETFs with oil and energy exposure stand to reap the benefits.
<h3 class="wp-block-heading">What This Means For ETFs</h3>
<ul>
<li>The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) was trading 3.73% higher as of 12.13 P.M. EST</li>
<li>The Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) rose about 3.84%. </li>
<li>The United States 12 Month Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USL#NYSE">USL</a>) posted a 2.21% gain.</li>
<li>The Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOP#NYSE">XOP</a>), with an expense ratio of 0.09% and a 91.26% exposure to the Oil, Gas &amp; Consumable Fuels make it a good bet for investors of oil-focused ETFs. The portfolio includes Exxon Mobil, Chevron and ConocoPhillips.</li>
<li>Vanguard Energy ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VDE#NYSE">VDE</a>) has an expense ratio of 0.10% and like XOP, Exxon Mobil, Chevron and ConocoPhillips enjoys significant weightage in the fund.</li>
</ul>
<h3 class="wp-block-heading">Geopolitics and Market Dynamics</h3>
Sanctions on Russia — one of the world's largest oil producers — are expected to tighten supply. Prices are expected to go higher. Ongoing reduction in U.S. crude stockpiles, particularly at the Cushing, Oklahoma hub, as reported by Reuters, adds to the pressure.
While tighter supplies drive prices upward, concerns about demand persist. China&#8217;s fuel oil imports are likely to fall early 2025 thanks to a hike in oil import tax from Jan. 1. 
Weaker demand from China, one of the biggest crude oil importers, could weigh on prices in the longer term. 
See Next: 
<ul>
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42340255/opec-extends-oil-output-cuts-to-late-2026-what-it-means-for-markets">OPEC+ Extends Oil Output Cuts To Late 2026: What It Means For Markets</a></li>
</ul>
Photo: Shutterstock

Sector ETFs

ETFs

Oil Stocks Rally On Anticipation Of Stricter Russian Sanctions: Here's How ETFs Are Reacting

Oil markets in 2025 could face turbulence if President-elect Donald Trump reintroduces strict <a href="https://www.benzinga.com/topic/iran">policies toward Iran.</a>
According to JPMorgan analyst Arun Jayaram, while non-OPEC supply growth is expected to stabilize prices, the geopolitical wildcard of renewed sanctions on Iran could send shockwaves through the market.
Investors in the United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), the ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) and the Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) may want to closely monitor their holdings.
<h2 class="wp-block-heading">Trump's Maximum Pressure: A Familiar Script?</h2>
During Trump's first presidency, his "maximum pressure" campaign drastically curtailed Iranian oil exports, cutting them to just 400,000 barrels per day. In contrast, under the Joe Biden administration, Iran's oil exports rebounded dramatically, surging to 1.6 million barrels per day by 2024. 
Jayaram suggests that Trump's potential return to sanctions could disrupt up to 1 million barrels per day of Iranian crude—an outcome that could unsettle the fragile equilibrium.
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42340255/opec-extends-oil-output-cuts-to-late-2026-what-it-means-for-markets">OPEC+ Extends Oil Output Cuts To Late 2026: What It Means For Markets</a>
<h2 class="wp-block-heading">Can OPEC+ Play Along?</h2>
Jayaram's analysis highlights a significant challenge for Trump's sanctions strategy this time: OPEC+. Previously, the oil cartel adjusted production to mitigate the impact of lost Iranian barrels. 
However, with shifting alliances and evolving market dynamics, securing similar cooperation may prove far more difficult for Trump 2.0. Without OPEC+ backing, the effectiveness of sanctions in stabilizing prices could be severely limited.
<h2 class="wp-block-heading">What's Next For Oil Markets?</h2>
With non-OPEC supply projected to grow, the baseline for oil prices appears steady. Yet, the prospect of geopolitical brinkmanship introduces uncertainty. 
Jayaram emphasizes that the outcome hinges on Trump's ability to navigate international diplomacy and OPEC+ politics, both of which could determine whether oil markets face disruption or find balance.
The stage is set for a complex and unpredictable 2025, where Trump's Iran policies and shifting market dynamics could redefine the balance of power in oil markets. Investors should remain attentive to how these forces unfold.&#8221;
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/general/market-summary/24/11/42212364/trumps-tariff-threat-to-canada-may-disrupt-oil-markets-inflate-prices-would-likely-raise-the-price-of-fuels-says-analyst">Trump&#8217;s Tariff Threat To Canada May Disrupt Oil Markets, Inflate Prices: &#8216;Would Likely Raise The Price Of Fuels,&#8217; Says Analyst</a></li>
</ul>
Photo: Shutterstock

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Politics

Global

Markets

Analyst Ratings

Trading Ideas

How Trump's Iran Policies Could Shape Oil Markets In 2025

World&#8217;s second largest oil consumer, China has urged Israel and Iran to reduce escalating tensions, emphasizing the need to avoid a &#8220;vicious circle&#8221; of conflict. This appeal was made during separate phone calls on Monday between China&#8217;s top diplomat Wang Yi and his counterparts from both nations.
What Happened: China is actively mediating in the Middle East. Wang Yi also engaged in discussions with Saudi Arabian Foreign Vice-Minister Waleed bin Abdulkarim El-Khereiji. During a call with Israeli Foreign Minister Israel Katz, Wang expressed China&#8217;s deep concern over the escalating tensions with Iran, stressing that renewed conflict is not beneficial for any nation, South China Morning Post <a href="https://www.scmp.com/news/china/diplomacy/article/3282414/china-calls-israel-and-iran-avoid-falling-vicious-circle?module=top_story&amp;pgtype=homepage">reported</a> on Tuesday.
Wang Yi urged for an &#8220;immediate, complete and permanent&#8221; ceasefire in Gaza, highlighting the importance of releasing hostages and returning to the &#8220;two-state solution&#8221; for lasting peace. Katz, in a post on X, stated that he informed Wang of Iran&#8217;s role in destabilizing the region and expressed expectations for China to maintain a balanced stance.
See Also: <a href="https://www.benzinga.com/news/24/10/41307960/volkswagen-ev-sales-drop-10-in-q3-due-to-slowdown-in-us-and-eu-but-china-shines-as-a-bright-spot-wit?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Volkswagen EV Sales Drop 10% In Q3 Due To Slowdown In US And EU, But China Shines As A Bright Spot With 5% Growth</a>
In a separate call, Iranian Foreign Minister Seyyed Abbas Araghchi conveyed Tehran&#8217;s concerns about the risk of further conflict escalation. He urged caution from Israel and welcomed China&#8217;s mediation efforts to restore regional peace and security.
Why It Matters: The call for de-escalation by China comes amid a backdrop of fluctuating oil prices and geopolitical tensions in the Middle East. Recently, oil prices fell over 1% due to concerns over <a href="https://www.benzinga.com/markets/asia/24/10/41257792/oil-dips-to-73-as-china-withholds-stimulus-biden-attempts-to-contain-netanyahu-over-israels-attack-o">weaker demand from China.</a> This occurred after China withheld aggressive fiscal stimulus that analysts had anticipated.
Additionally, <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m">oil prices dropped 2%</a> after OPEC reduced its global oil demand growth estimate for the third consecutive month. This decline in oil prices reflects broader concerns about the Middle East&#8217;s geopolitical stability, particularly as Israel has not yet retaliated against Iran following a recent attack involving over 180 ballistic missiles.
Price Action: At the time of writing on Tuesday during the pre-market, United States Oil Fund, LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) was down by 4.81%, Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) was trading 5.11% lower and ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) was down by 8.13%, according to <a href="https://pro.benzinga.com">Benzinga Pro</a>.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/markets/equities/24/10/41182930/china-was-tipping-into-a-japan-style-lost-decade-of-deflation-and-stagnation-before-late-septemb?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">China Was Tipping Into A Japan-Style &#8216;Lost Decade&#8217; Of Deflation And Stagnation Before Late-September Stimulus Announcements, Says Legal Expert</a></li>
</ul>
Image via Shutterstock
This story was generated using <a href="https://www.benzinga.com/author/benzinga-neuro">Benzinga Neuro</a> and edited by <a href="https://www.benzinga.com/topic/Pooja-Rajkumari" target="_blank" rel="noreferrer noopener">Pooja Rajkumari</a>

News

General

After Pulling Down Oil Prices With Weak Demand, China Urges Israel, Iran To Avoid 'Vicious Circle' Of Conflict

Oil is trading more than 5% higher Thursday on the heels of President Joe Biden&#8216;s statement that the U.S. spoke with Israel about a possible attack on Iran's oil facilities.
"We're in discussions about that,&#8221; Biden said during an interaction with reporters. 
Biden seemingly indicated he wasn&#8217;t partial to the idea of striking at Iran&#8217;s oil facilities, before cutting himself off: &#8220;I think that would be a little&#8230; anyway.&#8221; See video below.
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When one reporter asked whether Biden would &#8220;allow&#8221; Israel to retaliate against Iran, Biden swiftly corrected him: &#8220;First of all, we don&#8217;t &#8216;allow&#8217; Israel. We advise Israel.&#8221;
<a href="https://www.benzinga.com/news/23/10/35136071/israel-under-siege-unprecedented-hamas-attack-sparks-intense-clashes-netanyahu-says-we-are-at-war">Since Oct. 7, 2023</a>, Israel has been fighting Hamas in Gaza as well as Hezbollah in Lebanon. Both groups are considered terrorist organizations by the U.S. 
See Also: <a href="https://www.benzinga.com/news/24/10/41134015/jd-vance-tim-walz-debate-sets-a-different-tone-candidates-discuss-israel-iran-escalation-immigration">JD Vance, Tim Walz Debate Sets A Different Tone, Candidates Discuss Israel-Iran Escalation</a>
<h3 class="wp-block-heading">Oil And The Israel-Iran Conflict</h3>
Iran is the seventh-largest oil producer in the world. The country, which backs the Hezbollah militant group, exports around half its production abroad. 
China, where <a href="https://www.benzinga.com/markets/asia/24/08/40596334/asia-markets-mixed-europe-gains-crude-oil-falls-on-chinese-demand-concerns-global-markets-today-whil">oil demand is weak</a>, is its main customer.
Since Iran's <a href="https://www.benzinga.com/news/global/24/10/41126038/iran-attacks-israel-with-missiles-middle-east-tensions-escalates-s-p-500-stocks-bitcoin-fall-as-oil">missile attack on Israel</a> on Monday, the price of barrels has fluctuated. As of Oct. 3, the price of West Texas Intermediate (WTI) crude oil is $73.83 per barrel. This reflects a 5.32% increase from the previous day&#8217;s close of $70.10.
The price of Brent crude is approximately $77.76 per barrel. It has fluctuated within a range of $74.33 to $77.58 for the day.
The U.S., which is producing more oil under Biden than any other U.S. presidential administration, has been filling its reserves. The Biden administration acquired an additional <a href="https://www.benzinga.com/markets/eurozone/24/10/41146905/geopolitical-risks-may-be-biggest-threat-to-markets-boe-says">6 million barrels of crude</a> just this week.
It&#8217;s worth noting that ongoing violence in the Middle East puts the Straits of Hormuz at risk. A third of tanker traffic and a fifth of LNG frozen gas is transported through that passageway. 
The U.S. and its allies are likely determined to keep the Strait open due to its strategic importance. Any attempt to block the Strait could provoke military intervention.
Iran controls much of the northern coastline of the Strait and has previously threatened to block the passage in response to sanctions or conflicts with Western countries. 
<h3 class="wp-block-heading">Market Reaction</h3>
So far, market reaction to the Middle East conflict is relatively mute compared to February 2022 when Russia invaded Ukraine.
At the time, the oil market reacted with significant volatility and disruption, leading to a sharp rise in global prices. 
Brent crude, the global benchmark, surged above $100 per barrel for the first time since 2014, and by March 2022, it had briefly spiked to $139 per barrel, near the all-time high.
Oil-related exchange-traded funds, or ETFs, were trending up at last check Thursday afternoon. Here&#8217;s where they stand: 
<ul>
<li>United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) is up 4.05% to $75.71</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) is up 4.08% at $15.06</li>
<li>SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOP#NYSE">XOP</a>) is up 3.1% at $139.56</li>
<li>Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) up 1.65% at $92.22</li>
<li>ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) is up 6.59% at $28.81</li>
<li>VanEck Vectors Oil Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OIH#NYSE">OIH</a>) is up 1.89% at $297.58</li>
</ul>
Now Read: 
<ul>
<li><a href="https://www.benzinga.com/trading-ideas/previews/24/10/41170128/jobs-report-preview-could-september-labor-data-shift-feds-interest-rate-path">Jobs Report Preview: Could September Labor Data Shift Fed&#8217;s Interest Rate Path?</a></li>
</ul>
Image: Shutterstock

Oil Prices Rally: Biden Confirms US 'Discussions' With Israel About Striking Iran Facilities

In a virtual meeting held on Thursday regarding the planned output increase for October, OPEC+ reportedly decided to postpone the increase to October and November, citing recent drops in crude prices to their lowest in nine months.
The group also indicated that it may further pause or reverse the output hikes if necessary, Reuters reports.
OPEC said, "The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024,"
The news lifted oil prices by over $1 a barrel, with Brent futures briefly above $74 before retreating. Prices had hit their lowest of the year on Wednesday due to concerns over demand and <a target="_blank" href="https://www.benzinga.com/etfs/sector-etfs/24/09/40715953/oil-prices-retreat-as-opec-discusses-delay-in-production-hikes" rel="noreferrer noopener">production possibly coming back to Libya</a>.
OPEC+ had earlier planned a 180,000 bpd increase for October but is currently withholding 5.86 million bpd—about 5.7% of global demand—to stabilize the market amid demand uncertainty and rising external supply.
Last week, OPEC+ was prepared to proceed with the increase, but concerns about fragile oil market sentiment—due to potential additional supply from OPEC+ and resumed Libyan exports, along with a weakening demand outlook—prompted a reassessment.
As per the report, OPEC+ ministers will hold a full policy meeting on December 1, while the Joint Ministerial Monitoring Committee, which can suggest policy changes, will meet on October 2.
RBC Capital analyst Helima Croft suggested it might be wise for OPEC+ to delay returning extra barrels until December. The planned October increase was intended for the eight OPEC+ members who had agreed in June to begin unwinding the 2.2 million bpd cut—the group's most recent reduction—starting from October 2024 to September 2025.
The remaining OPEC+ cuts of 3.66 million bpd, established in previous agreements, will remain in effect until the end of 2025.
OPEC's statement on Thursday said that after the end of November, this cut will be gradually phased out on a monthly basis, starting on December 1 and continuing until November 2025, "with the flexibility to pause or reverse the adjustments as necessary."
On Wednesday,&nbsp;Citi stated that if OPEC+ doesn't cut production further, the average price of oil could fall to $60 per barrel in 2025, driven by reduced demand and increased <a target="_blank" href="https://benzinga.com/news/24/09/40736234/citi-says-oil-prices-could-plunge-below-60-amid-market-uncertainty" rel="noreferrer noopener">supply from non-OPEC countries</a>.
Nevertheless, Citi noted that while a technical rebound in oil prices is possible, the market may lose confidence in OPEC+ maintaining the $70 per barrel level if the group doesn't commit to extending current output cuts indefinitely.
Last week, Goldman Sachs revised its oil price forecasts, catching the market off guard during a surge in crude prices driven by rising geopolitical tensions&nbsp;in the Middle East. The 2025 average Brent price forecast has also been lowered to $77 per <a target="_blank" href="https://www.benzinga.com/analyst-ratings/analyst-color/24/08/40576919/goldman-sachs-lowers-oil-price-forecasts-says-us-supply-beating-expectations-downpl" rel="noreferrer noopener">barrel from a previous estimate of $82</a>.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

OILK

OPEC+ To Delay Output Increase For 2 Months Till Prices Stabilize: Report

On Wednesday, Citi stated that if OPEC+ doesn&#8217;t cut production further, the average price of oil could fall to $60 per barrel in 2025, driven by reduced demand and increased supply from non-OPEC countries.
In particular, Citi analysts warned that if Brent prices drop into the $60s, financial flows could push them down further, potentially to $50 per barrel before any rebound, reported Reuters.
Nevertheless, Citi noted that while a technical rebound in oil prices is possible, the market may lose confidence in OPEC+ maintaining the $70 per barrel level if the group doesn&#8217;t commit to extending current output cuts indefinitely.
Citi adds that the market now realizes tensions don&#8217;t always result in reduced production or transit issues, turning rallies into selling opportunities. Libya&#8217;s recent production recovery and the expectation of a brief disruption, given the absence of continued hostilities, have prompted some market participants to resume shorting oil.
Consequently, Citi recommends selling into rallies when Brent nears $80, considering current market conditions.
As per the report, on August 1, OPEC+ confirmed a plan to begin unwinding the latest round of cuts—2.2 million barrels per day—starting in October, with the option to pause or reverse the plan if necessary. However, as oil prices hit a nine-month low, OPEC+ is now considering delaying the planned output increase next month, according to three sources from the producer group cited by Reuters.
Last month, Goldman Sachs trimmed Brent crude forecast by $5, setting a new range of $70-$85, citing higher OECD inventories and weaker China demand.
On Tuesday, Goldman Sachs reportedly stated AI could lower oil prices over the next decade by reducing costs and <a href="https://www.benzinga.com/news/24/09/40714152/ai-could-lower-oil-prices-via-improved-logistics-and-resource-allocation-goldman-sachs" target="_blank" rel="noreferrer noopener">increasing recoverable resources, boosting supply</a>.
The bank says that AI&#8217;s impact on energy and metals has largely centered on the demand side, anticipating a rise in power demand. However, a negative effect on oil prices could reduce the incomes of producers, including OPEC+ members.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image by Maxx-Studio via Shutterstock

Media

Citi Says Oil Prices Could Plunge Below $60 Amid Market Uncertainty

On Tuesday, Goldman Sachs reportedly stated AI could lower oil prices over the next decade by reducing costs and increasing recoverable resources, boosting supply.
The bank says that AI&#8217;s impact on energy and metals has largely centered on the demand side, anticipating a rise in power demand. However, a negative effect on oil prices could reduce the incomes of producers, including OPEC+ members.
Goldman Sachs anticipates a modest potential increase in oil demand from AI over the next decade, especially compared to the larger impact AI is expected to have on power and natural gas demand.
Goldman Sachs estimates that AI could reduce the costs of a new shale well by about 30%. Furthermore, AI-driven improvements in recovery factors for U.S. shale could potentially increase oil reserves by 8% to 20%, adding 10 to 30 billion barrels.
Goldman Sachs said in a note, &#8220;AI could potentially reduce costs via improved logistics and resource allocation &#8230; resulting in a $5/bbl fall in the marginal incentive price, assuming a 25% productivity gain observed for early AI adopters.&#8221;
&#8220;We believe that AI would likely be a modest net negative to oil prices in the medium-to-long term as the negative impact from the cost curve (c.-$5/bbl) &#8211; oil&#8217;s long-term anchor &#8211; would likely outweigh the demand boost (c.+$2/bbl),&#8221;
Notably, Brent crude oil prices have experienced significant selling pressure recently, dipping to <a target="_blank" href="https://www.benzinga.com/24/09/40687828/brent-crude-under-pressure-amid-supply-expansion-concerns" rel="noreferrer noopener">77.21 USD per barrel on Tuesday</a>.
Although there has been a slight recovery from earlier lows, the overall market sentiment remains bearish.
Investors are reacting to recent data from OPEC, which indicates that 8 OPEC+ members plan to increase their production by 180,000 barrels per day. This anticipated rise in supply casts a shadow over the oil market, particularly as it coincides with weakening demand indicators from major economies.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image by Pixels Hunter via Shutterstock

Tech

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NVDA

AI Could Lower Oil Prices Via Improved Logistics And Resource Allocation: Goldman Sachs

Source: <a href="https://www.streetwisereports.com/article/2024/04/19/is-a-commodities-super-cycle-on-the-way.html?utm_medium=feed">Streetwise Reports 04/19/2024</a>
Are we at the start of a commodities supercycle? We sat down with McAlinden Research to see what they had to say about the current state of commodities.
McAlinden Research Partners is a global provider of original investment strategy insights. The company&#39;s primary goal is to pinpoint profitable investment opportunities in their early stages and promptly inform their clients about these potential avenues for growth. Its founder, Joseph J. McAlinden, has over five decades of experience in the research and investment space.
With this in mind, we at Streetwise thought it would be good to sit down with some of the McAlinden team to get their take on what is currently going on in the commodities market.
First, we discussed current trends in the commodities space.
The McAlinden team told us, &quot;In the stock market, we have a super bull market. That is not showing any signs of letting up.&quot; However, when it comes to commodities, the market is a mixed bag. They pointed out that some commodities, such as cocoa, have soared while others, like lumber, have been struggling.
<h2>AI and Y2K</h2>
In terms of a parallel, the McAlinden team said, &quot;Market cycles don&#39;t repeat, but they do rhyme&quot; and this reminded them a bit of the late 90s and early 2000s. People thought the world was going to end with Y2K, which led to high revenue in technology companies. However, once the world realized the sky wasn&#39;t falling, it led to a major correction.
The McAlinden team compared this to the current excitement surrounding AI. Eventually, the market will learn if AI has lived up to the hype.
Was it as scary as everyone predicted?
Maybe it won&#39;t be as advanced as we had previously thought, and when that happens, corrections will be made like with technology during Y2K.
<h2>A Geopolitically Influenced Market</h2>
Now, the McAlinden team explained that commodities are influenced by similar fears and movements in the world. They said, &quot;Throughout history, you see that commodities are very heavily impacted, more impacted by geopolitics than equities.&quot;
For example, OPEC&#39;s oil embargoes significantly impacted the prices of oil in the 1970s, and this alliance of oil producers continues to have a profound impact on the price of energy commodities today.
&quot;Now, within OPEC, or this OPEC+Syndicate, you have countries like Russia and Saudi Arabia, which are both countries within or right on the edge of war zones&quot; the McAlinden team explained. &quot;They depend . . . the free movement of trade that is subject to a lot of risk. And that is definitely pushing up some of the commodity prices, particularly in energy.&quot;
<blockquote class="callOut left">Still, the team made it a point to note that they don&#39;t believe we are at the beginning of a commodities super cycle yet, though &quot;we may get there in the next couple of years.&quot;</blockquote>
Though the team pointed out that there has been a lot of chatter about &quot;worst-case scenarios&quot; that is not what has happened yet.
&quot;There&#39;s been a lot of chances [where we thought] this could get really bad, this could spiral out of control, but for the most part, the state actors have been pretty rational in trying to avoid these cataclysmic events that might create something like a supercycle.&quot;
They continued, &quot;I think that that has saved the world. [Still] there&#39;s only so many times you can really go right up to the edge of that risk cliff and not end up falling into it. And that&#39;s what you always have to be looking out for in commodities.&quot;
Still, the team made it a point to note that they don&#39;t believe we are at the beginning of a commodities super cycle yet, though &quot;we may get there in the next couple of years.&quot;
Once this happens, almost all commodities could appreciate in value simultaneously, but right now, they are still mixed and dependent on a myriad of factors, including geopolitics and weather.
<h2>Closer and Closer to a Recession</h2>
We then went on to discuss the current state of inflation, as commodities are also affected by this.
The McAlinden team said, &quot;The Fed suggested they were going to cut [interest rates] three times, and traders basically ignored that, and we&#39;re talking six or seven cuts . . . the data for the year started to show sticky inflation, and strong employment at the headline level; however, this was a bit misleading . . . there are reasons to expect inflation to improve, but [we] doubt it is going to happen in the next six months.&quot;
When asked about the misleading nature of the employment readings, the McAlinden team turned to current headlines regarding increased job creation in the U.S. Though the most recent reports show that job growth is beating the highest estimates of economists, this does not take into account the impact of part-time / contract work accounting for the entire net increase in payrolls over the past several months. So, while job creation is accelerating, full-time work is not.
<blockquote class="callOut right">The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment.</blockquote>
A small part of this is the emphasis among the young workforce to enter the so-called &quot;gig economy.&quot; More and more working millennials and Gen Z are leaning toward freelance and contract work rather than full-time employment.
A larger aspect, according to McAlinden&#39;s team, is &quot;this wave of immigration that the United States is experiencing right now, which is starting to inflate the supply of labor.&quot; People are coming to the United States to gain work visas. However, many of these workers tend to end up in part-time work. &quot; The number of part-time workers is exploding, but the number of full-time workers is falling, and it&#39;s falling at a rate we haven&#39;t seen in some time.&quot;
This is leading us closer and closer to a recession.
<h2>The Impact of the 2024 Election</h2>
Commodities are often influenced by federal policies. With this in mind, we spoke about how commodities may be impacted based on the results of the 2024 election. The current candidates are incumbent Democrat Joseph Biden and Republican nominee Donald Trump.
&quot;The outcome of the election will be important&quot; the McAlinden team told Streetwise.
Oil is one commodity in particular that may be affected. &quot;Trump is essentially running on this drill, baby drill mantra&quot; they said. &quot;One of his big campaign points is that [energy companies are] going to drill more when he&#39;s president . . . despite the fact that we have seen oil kind of go up to record highs, it&#39;s only slightly higher than where we were going back to 2020. Back in 2020, production was at 13.1 million barrels, which was the record . . . Today, we&#39;re [still] only at 13.1 million barrels. We were at 13.3 a couple of months ago.&quot;
<blockquote class="callOut left">&quot;If Trump was to win [that would be] bearish for oil prices because, if production is up, we&#39;re going to see prices come down&quot; they explained.</blockquote>
This is largely because &quot;The Biden White House&#39;s Interior Department is very hostile to oil companies, and oil companies don&#39;t really feel very comfortable investing a whole lot in North America right now because of the administration. So one president is saying drill, baby drill, the other is very concerned about climate change.
The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment, a lack of . . . leasing federal land to [energy] companies, and things like that. So, there definitely will be commodity implications from the election. And we think that really is going to be pronounced in energy commodities.&quot;
All in all, the current policies in today&#39;s White House and the policies Trump&#39;s administration will put in place if he is elected may be significantly different.
&quot;If Trump was to win [that would be] bearish for oil prices because, if production is up, we&#39;re going to see prices come down&quot; they explained.
<h2>The Weakening of the US Dollar</h2>
Another factor in a possible commodities supercycle is the status of the U.S. dollar.
&quot;We&#39;ve seen the dollar remain very strong over the past couple of years. It&#39;s weakened a little bit since 2022 when the dollar index broke 20-year highs, but when the dollar depreciates versus other currencies, commodities tend to benefit from that since . . . commodities are priced in dollars.&quot;
<blockquote class="callOut right">If the Federal Reserve stays tight and keeps the dollar strong, that&#39;s probably not so good for commodities.</blockquote>
This will allow other countries to buy even more commodities as their local currencies will be able to purchase more product in dollar terms.
They continued, &quot;The path of commodities will be heavily influenced by what the United States Federal Reserve does. If the Federal Reserve stays tight and keeps the dollar strong, that&#39;s probably not so good for commodities.
However, if the Fed is as dovish as everyone else or more dovish (it doesn&#39;t look like it&#39;s gonna be the case right now), that would weaken the dollar and would probably be good for commodities, assuming that there&#39;s not some major economic downturn that&#39;s causing those rates to come down like that.&quot;
<h2>ETFs</h2>
In summation, it looks like we are not yet at the starting line of the commodities super cycle, but we may get there in the next couple of years. With this in our back pocket, we asked the McAlinden team if they had any ETFs they thought might be impacted.
&quot;Unfortunately, things have gotten harder for equity investors trying to acquire commodities exposure&quot; they said. &quot;Last year, 21 commodity ETNs were actually closed out by Barclays.&quot; These covered most commodities across the board, and some of the pure plays that just focused on one commodity, like cocoa, had been some of the highest returning ones.&quot;
Still, the team had a handful of solid commodity-focused ETFs they were looking at.
Invesco&#39;s family of funds is one of these that covered a pretty broad allocation of commodities.
Another is Invesco DB Commodity Index Tracking Fund (ARCA:DBC), though McAlindnen shared more segmented ETFs such as Invesco DB Agriculture Fund (ARCA:DBA) for ags as well.
&quot;These are the kinds of the products that we&#39;re looking at to represent the performance of some kind of ideas that we might highlight as themes at some point&quot; they said.
Continuing on with their list, they shared mining ETFs such as Global X Copper Miners ETF (ARCA:COPX) and VanEck Gold Miners ETF (ARCA:GDX).
As for energy, they pointed out Invesco DB Oil Fund (ARCA:DBO), Energy Select Sector SPDR Fund (ARCA:XLE), and Sprott Uranium Miners ETF (ARCA:URNM).
Important Disclosures:
<ol>
<li>Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.</li>
<li>This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports&#39; terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.</li>
</ol>
McAlinden Research Partners Disclosures 
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data. 
McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

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Is a Commodities Super Cycle on the Way?

In a significant development in the energy sector, Iraq is set to reactivate a previously dormant pipeline to Turkey, which could substantially impact regional oil exports and negotiations.
What Happened: Iraq is reviving a pipeline to Turkey, potentially exporting 350,000 barrels per day by month&#8217;s end, Reuters reported on Sunday. This move comes amid stalled negotiations with the Kurdistan Regional Government (KRG).
The Kirkuk-Ceyhan pipeline, inactive for a decade, offers an alternative to the KRG&#8217;s pipeline, which has been closed for a year. Baghdad views the KRG&#8217;s oil deals with foreign companies as illegal and demands that companies negotiate with the federal government for oil sales through the revived pipeline.
Islamic State attacks halted the pipeline&#8217;s operations in 2014. It was responsible for about 0.5% of the world&#8217;s oil supply. 
&#8220;Major crude pumping station with storage facilities has been completed,&#8221; said Basim Mohammed,  Iraqi deputy oil minister for upstream affairs, indicating the pipeline&#8217;s readiness to restart flows soon.
After an arbitration court ruling last year, the KRG&#8217;s pipeline was shut down, citing treaty violations. Discussions to reopen it have been complicated by conflicting demands from Turkey, the KRG, and the federal government.
See Also: <a href="https://www.benzinga.com/markets/cryptocurrency/24/04/38104437/bitcoin-ethereum-dogecoin-surge-despite-hawkish-remarks-from-fed-president-analysts-predic?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Bitcoin, Ethereum, Dogecoin Surge Despite Hawkish Remarks From Fed President—Analysts Predict King Could Now Go Vertical With Several Critical Indicators In Alignment</a>
Despite the friction, the Kurds and Baghdad rely on each other politically and economically. Kurdish oil exports typically pass through a pipeline to Turkey. Early tests on the pipeline within Iraq revealed leaks, prompting accelerated repair efforts.
The current Iraq-Turkey oil pipeline agreement is set to expire in mid-2025, and the resumption of the old pipeline&#8217;s operations will be a key topic in the extension talks, according to a government energy adviser.
Why It Matters: As the global oil market grapples with tight supply and rising demand, the reactivation of the Kirkuk-Ceyhan pipeline by Iraq could have significant implications. Earlier this month, oil prices were <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38073267/crude-prices-could-hit-95-this-summer-oil-is-fighting-the-fed-again">expected to potentially hit $95 per barrel</a> this summer due to these market conditions, coupled with ongoing geopolitical tensions.
Moreover, the reestablishment of this route could alter the dynamics of regional oil politics, as Baghdad asserts its authority over oil exports, challenging the KRG&#8217;s independent oil deals.
Read Next: <a href="https://www.benzinga.com/markets/equities/24/04/38107547/hertzs-mega-tesla-gamble-backfired-due-to-sky-high-repair-costs-unusually-high-accident-rates-an?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Hertz&#8217;s Mega Tesla Gamble Backfired Due To Sky-High Repair Costs, Unusually High Accident Rates And Customers&#8217; Charging Anxiety, Report Reveals</a>
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Iraq To Resume Oil Exports To Turkey Via Pipeline Shuttered A Decade Ago Amid Kurdish Negotiation Deadlock

Amid rising tensions in the Middle East, Helima Croft predicts &#8220;serious Iranian retaliation&#8221; that could lead to broader regional conflict.
What Happened: On Thursday, Croft, an analyst at RBC Capital Markets, expressed concerns over the potential repercussions of the recent escalation in the Middle East.
During CNBC &#8220;Last Call,&#8221; Croft warned, &#8220;We are bracing for serious Iranian retaliation.&#8221;
&#8220;You could see a serious escalatory tit-for-tat cycle that leads to a wider war in the region.&#8221;
Croft added that Iran has the potential to repeat its playbook from 2019 when it allegedly attacked oil tankers in the Strait of Hormuz, a critical waterway for oil import and export. She expressed that Iran only needs to launch attacks on a few oil tankers to push the oil prices higher. 
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">"We are bracing for serious Iranian retaliation," says <a href="https://twitter.com/CroftHelima?ref_src=twsrc%5Etfw">@CroftHelima</a> as geopolitical tensions in the Middle East impact markets. "You could see a serious escalatory tit-for-tat cycle that leads to a wider war in the region." <a href="https://t.co/JusnMdXQ81">pic.twitter.com/JusnMdXQ81</a>
&mdash; Last Call (@LastCallCNBC) <a href="https://twitter.com/LastCallCNBC/status/1776026486765424854?ref_src=twsrc%5Etfw">April 4, 2024</a></blockquote>
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See Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38062930/ross-gerber-blames-elon-musks-toxic-behavior-for-ev-makers-crappy-q1-sales-calls-fo?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">&#8216;He Can't Even Tell He's An Idiot:&#8217; Elon Musk Furious As Ross Gerber Accuses Tesla CEO&#8217;s &#8216;Toxic&#8217; Behavior</a>
Why It Matters: The assassination of a top Iranian general by Israel has <a href="https://www.benzinga.com/24/04/38049998/israel-kills-top-iranian-general-oil-rises-not-great-for-stock-markets-no-inflation-story">led to a spike in oil prices</a> and is negatively affecting stock markets as investors worry about the potential for inflation. This event has heightened concerns of a broader conflict, which could have far-reaching consequences for global markets. The situation is particularly tense as Iran has vowed revenge against Israel, causing Israeli-related stocks and exchange-traded funds (ETFs) to suffer due to investor apprehension.
While large tech companies seem to be weathering the storm, the broader <a href="https://www.benzinga.com/markets/asia/24/04/38099623/irans-revenge-promise-against-israel-is-taking-down-its-stock-market-but-large-tech-companies-appear">Israeli market is facing downward pressure </a>as the threat of Iranian retaliation looms over the region.
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/24/04/38039504/solana-founder-announces-new-coin-as-april-fools-prank-and-a-mimic-token-surfaces-soaring-?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Solana Founder Announces New Coin As April Fools&#8217; Prank—And A Mimic Token Surfaces, Soaring 4000%</a>
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Analyst Warns Of 'Serious Escalatory Tit-For-Tat Cycle' If Iran Strikes Back, Raising Fears Of 'Wider War' In Middle East

If there's one sector where contrarian investing should be the rule, it's the <a href="https://www.benzinga.com/topic/mining">mining sector</a>.
That's a lesson that Rick Rule, founder and president of Rule Investment Media, learned after being involved in <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37868388/3-top-stock-picks-in-metals-mining-sector-to-consider-right-now">natural resource investing</a> for over 50 years.
"As an investor in resources, if you aren't a contrarian, you're going to be a victim. It's as simple as that," said Rule in an exclusive interview with Benzinga's Chief Content Officer Brad Olesen at the 2024 edition of the PDAC Convention in Toronto.
Rule highlighted the importance of going against market trends in a sector that's known for its volatility and fluctuating cycles.
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"These businesses are capital intensive and cyclical, meaning that the cure for low prices is always low prices, and the cure for high prices is always high prices," said Rule.
Yet swimming against the current can be a real challenge for faint-hearted investors, as "easy money ends up being hard, psychologically."
This means that to be a true contrarian, one needs to invest in commodities that are so deeply out of favor that their selling price tends to be priced below the industry average cost of production.
"You have to have the guts to invest in industries in liquidation," said Rule.
The reason to do that is that some industries will continue to function even when their players are not meeting their sustaining capital requirements, to eventually climb back to sustainable levels.
In 2020, when the price of oil went below $20, it still cost the industry $60 to produce a barrel. The result was obvious: either the price of oil had to climb back to $60 "or your car wouldn't start," said Rule.
Also read: <a href="https://www.benzinga.com/news/24/03/37874531/alaska-governor-wants-overhaul-of-mine-permitting-seeks-700b-in-economic-losses">Alaska Governor Wants Overhaul Of Mine Permitting, Seeks $700B In Economic Losses</a>
<h3 class="wp-block-heading">Is The Uranium Boom Over?</h3>
From late March 2023 to mid-January of this year, <a href="https://www.benzinga.com//node/37459629">Uranium experienced a boom, with its price climbing more than 100%</a> in less than a year. Yet in recent months, the mineral began to drop.
"I would say in this market, the easy money's been made," said Rule.
The right moment to get aboard the Uranium wave was late 2022, but at the time, most investors were not willing to take the risk.
However, Rule believes that the Uranium market has one key characteristic that makes it stand out from other markets within the natural resource space.
&nbsp;"Unlike any other mineral commodity business I know, there's a very, very big <a href="https://www.benzinga.com/money/what-are-futures">contract market</a>," he said.
As more of the investment volume goes from the securities to contracts, producers will have price certainty for a very long time, and that's something Rule believes doesn't happen with any other commodity.
Certainty in topline revenue will make it so that in five years, the capital cost of setting up a mining production for uranium will be lower, and the equity multiples, higher.
Cameco Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CCJ#NYSE">CCJ</a>) should be first in line in the eyes of investors looking to get into the Uranium market, who are now willing to do the legwork to choose one of the more speculative names.
Last month, Cameco&#8217;s President and CEO, Tim Gitzel <a href="https://www.benzinga.com/news/earnings/24/02/37039843/cameco-highlights-2023-growth-benefits-of-nuclear-power-are-clearly-in-focus-ceo-says">said that 28 countries around the world have declared support for tripling nuclear power capacity</a> to reach the goal of achieving zero emissions by 2050.
Global X Uranium ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/URA#NYSE">URA</a>) and Sprott Uranium Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/URNM#NYSE">URNM</a>) are the two largest ETFs following the Uranium market.
<h3 class="wp-block-heading">Oil And Gas Thrive Despite Market Rejection</h3>
Following his long-standing contrarian stance, Rule believes that the easiest market for investors to make money within natural resources today is <a href="https://www.benzinga.com/topic/oil-and-gas">oil and gas</a>.
"The market hates them, but they're great big businesses," he said.
While many political leaders <a href="https://www.benzinga.com/news/24/03/37811556/saudi-aramco-ceo-amin-nasser-says-abandon-the-fantasy-of-phasing-out-oil-and-gas">share the view that conventional hydrocarbon fuels will go away by 2030</a>, that — in Rule's view — is "totally insane."
"Our species has invested $5 trillion in alternative energies over forty years. We've reduced the market share of hydrocarbons from a high of 82% all the way down to 81%," he said sarcastically.
The half-life of oil and gas reserves is probably 2060, says Rule, which leaves "a lot of life left in that business."
The largest ETFs for the oil and gas sector are United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), United States Natural Gas Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UNG#NYSE">UNG</a>) and Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>).
Now read: <a href="https://www.benzinga.com/markets/24/03/37463812/us-oil-and-gas-companies-profits-skyrocket-as-the-us-becomes-the-energy-supplier-of-choice">US Oil And Gas Companies Profits Skyrocket As The US Becomes The Energy Supplier Of Choice</a>
Shutterstock image.

Exclusives

EXCLUSIVE: Oil And Gas Aren't Going Anywhere, But Uranium Is Dead — Rick Rule's Keys For Understanding Mining

European investigators probing the Nord Stream natural gas pipeline sabotage say that the Polish officials have been slow to share information and have withheld key evidence related to the movements of alleged&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/government/23/02/30840477/nord-stream-blast-european-investigators-trying-to-cover-up-says-russia" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">saboteurs on Polish soil</a>.
Officials investigating the attack, which occurred in&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/22/09/29046190/watch-nord-stream-leaks-cause-1-kilometer-of-gas-bubbles-in-the-baltic-sea" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">September 2022</a>, suspect the involvement of a Ukrainian crew, potentially operating through Poland.&nbsp;
However, the lack of complete cooperation from Polish authorities has hindered efforts to ascertain whether the attack had any connection with the former Polish government.
With a new government in office since December, senior European officials are considering contacting&nbsp;Donald Tusk, Poland&#39;s new prime minister, hoping for improved collaboration.
While investigators haven&#39;t directly linked the Polish government to the explosions, their obstruction has fueled suspicions, the Wall Street Journal&nbsp;<a class="editor-rtfLink" href="https://www.wsj.com/world/europe/nord-stream-probe-faces-resistance-from-poland-962aa5f9?mod=latest_headlines" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">noted</a>.&nbsp;
Most Western security officials believe a Ukrainian crew was involved, although both Ukraine and Russia have&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/02/30937747/russia-slams-us-for-nord-stream-pipelines-destruction-demands-proof-of-non-involvement" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">denied any participation</a>.
Citing European officials, the WSJ reported that while prosecutors and the border guard in Poland cooperated during the investigation, representatives from the internal security agency ABW and other branches avoided answering questions, provided confusing information, or gave conflicting details regarding the case.
The investigation revealed that a leisure yacht named Andromeda, with a crew suspected of involvement, made stops in several countries, including Poland.&nbsp;
However, Polish authorities delayed sharing vital information until pressed by German counterparts, creating further skepticism.
Disclaimer:&nbsp;This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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The International Energy Agency (IEA) has projected an enduring slowdown in oil demand until 2024, a viewpoint that starkly clashes with the optimistic forecasts of the Organization of the Petroleum Exporting Countries (OPEC).
What Happened: As <a href="https://www.cnbc.com/2023/12/14/iea-says-oil-demand-slowdown-to-persist-in-2024-amid-oversupply-fears.html">reported</a> by CNBC on Thursday, the IEA perceives a softening global oil demand, predicting this trend to persist into 2024. The stance is strikingly different from that of OPEC and its affiliates, collectively referred to as OPEC+.
The IEA has observed a &#8220;decidedly bearish&#8221; sentiment in the oil market in recent weeks, despite OPEC+&#8217;s November 30 announcement of voluntary production cuts in the first quarter of the upcoming year.
See Also: <a href="https://www.benzinga.com/markets/cannabis/23/12/36212369/30-40-times-higher-thc-levels-than-permitted-found-in-mississippi-weed-products-gop-rep-will-add?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">30-40 Times Higher THC Levels Than Permitted Found In Mississippi Weed Products, GOP Rep. Will Address Si</a>
In its latest monthly oil market report, the IEA anticipates global oil demand to increase by 2.3 million barrels per day to 101.7 million barrels per day in 2023. Nonetheless, it cautions that this forecast &#8220;masks the impact of a further weakening of the macroeconomic climate.&#8221; 
The IEA projects a halving of oil consumption growth next year, reducing to 1.1 million barrels per day as global economic growth remains subpar in major economies and Covid-19-related distortions diminish.
On the other hand, OPEC, in its most recent monthly report, expressed &#8220;cautious optimism&#8221; about oil market dynamics in 2024 and sustained its relatively high oil usage forecast for the coming year.
Why It Matters: The IEA&#8217;s warnings of a continual oil demand slowdown come on the heels of the <a href="https://www.benzinga.com/news/23/12/36215596/oil-prices-under-pressure-as-cop28-climate-summit-agrees-to-energy-transition">COP28 climate summit&#8217;s landmark agreement</a> to transition from fossil fuels and enhance commitments to renewable energy sources. The decision has placed oil prices under pressure.
On Wednesday, crude oil prices were trading under strain while the United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), an ETF tracking the price of light sweet crude, was down 0.2% in pre-market trade following a 3.8% loss on Tuesday. 
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/23/12/36170646/as-bitcoin-ethereum-correct-340m-in-long-positions-liquidated-peter-schiff-says-king-crypt?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">As Bitcoin, Ethereum Correct, $340M In Long Positions Liquidated: Peter Schiff Says King Crypto &#8216;Getting A Bigger Beatdown Than The Eagles&#8217;</a>
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IEA Forecasts Slowdown In Oil Demand, Contrasts Positive Outlook By OPEC+

The COP28 Presidency released a proposed climate deal text on Wednesday, emphasizing a significant shift from fossil fuels to combat climate change. 
What Happened: Reuters reports that this development marks a first in the COP summit&#8217;s three-decade history, proposing &#8220;transitioning away from fossil fuels in energy systems&#8221; to achieve net zero by 2050, aligned with scientific recommendations. However, the deal has sparked controversy for insufficient financial and equity provisions for developing nations and resistance from major oil-producing countries, including OPEC members.
See Also: <a href="https://www.benzinga.com/news/23/12/36190857/12-year-old-climate-activist-storms-cop28-summit-in-dubai-demands-ending-fossil-fuel-usage">12-Year-Old Climate Activist Storms COP28 Summit In Dubai, Demands Ending Fossil Fuel Usage</a>
Why It Matters: The proposal&#8217;s significance lies in its potential to redefine global energy policies, despite facing opposition from oil producers and criticism for overlooking financial support for vulnerable nations. This echoes concerns <a href="https://www.benzinga.com/news/23/12/36192212/cop28-drafts-overlook-of-fossil-fuel-phaseout-sparks-international-outcry-there-are-elements-that-ar">raised at the summit</a>, where key stakeholders expressed disappointment over the previous draft&#8217;s failure to enforce fossil fuel phase-out. 
Sultan Al Jaber, COP28 President and CEO of the Abu Dhabi National Oil Company, has reiterated respect for scientific findings while seeking greater flexibility from participating nations. 
Read Next: <a href="https://www.benzinga.com/pressreleases/23/12/n36064820/cop28-the-rockefeller-foundation-acen-corporation-monetary-authority-of-singapore-partner-to-explo">COP28: The Rockefeller Foundation, Acen Corporation, Monetary Authority of Singapore Partner To Explore Green Finance Options</a>
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COP28 Draft Proposes Historic Shift From Fossil Fuels Amid Global Debate

U.S. oil production is at record levels, as data from the Energy Information Administration puts 2023 production of crude oil on its way to break <a href="https://www.benzinga.com/topic/oil">pre-pandemic records.</a>
The U.S. has been the top world producer of crude oil since the mid-2010s, a fact that has gone under the radar for much of the public. The latest data, from September, show a daily production of 13.2 million barrels a day, beating the previous record set in November 2019 of 13 million barrels.
The global oil market entered<a href="https://www.benzinga.com/news/23/12/36112158/oil-enters-bear-market-as-crude-prices-slump-to-five-month-low"> bear territory last week</a>, even as OPEC+ nations agreed on new oil cuts. U.S. record oil production is helping push the needle towards declining prices as stockpiles in the U.S. beat market expectations.  
On Monday, the national average price for regular gasoline was $3.15 per gallon. This average peaked at $4.84 per gallon in June 2022 during a period of extremely high inflation and dipped to as low as $2.97 in December 2022.
<a href="https://www.axios.com/2023/12/06/oil-production-biden?utm_source=twitter&amp;utm_campaign=editorial&amp;utm_medium=social">According</a> to Axios, the Biden administration walks a thin line between publicizing its efforts to ramp up production and jeopardizing its strong position against global warming.
&#8220;I&#8217;m going to get those gas prices down again, I promise you,&#8221; said President Joe Biden during a September speech aimed at harnessing support for his reelection.
While the president is keen on using oil prices as a way to increase support for the upcoming election, he has held back on taking credit for the increased production, as it conflicts directly with efforts to bring down carbon emissions, which are a key point in the Democratic political agenda.
Also Read: <a href="https://www.benzinga.com/news/23/12/36184372/tesla-cybertruck-early-reservation-spots-fetch-big-bucks-on-ebay-would-you-pay-10k-to-get-yours-asap">Tesla Cybertruck Early Reservation Spots Fetch Big Bucks On eBay: Would You Pay $10K To Get Yours ASAP?</a>
Oil markets took a dive last week after Sultan Al Jaber, president of the COP 28 climate conference, expressed skepticism about the relationship between <a href="https://www.benzinga.com/news/large-cap/23/12/36070489/al-jaber-controversy-at-cop28-events-president-says-no-science-comments-misrepresented">fossil fuels and climate change</a>.
The United States Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) is down 8.4% in the past month but recovered 0.4% on Monday. ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) gained 1.3% on Monday but added 13.1% in losses over the past month. Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) is also down 8.4% in the past month, recovering 0.9% on Monday.
Al Jaber has been one of the most controversial figures<a href="https://www.benzinga.com/markets/esg/23/11/36031535/what-cop28-says-about-geopolitics-u-s-uae-relations-and-the-fate-of-the-oil-sector"> of the climate conference</a> given his role as CEO of the Abu Dhabi National Oil Company, a United Arab Emirates state-owned oil company that ranks as the 12th largest producer in the world and 14th largest greenhouse gas polluter.
Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) was also under the spotlight of criticism during the COP28 as CEO Darren Woods defended a strategy of carbon capture <a href="https://www.benzinga.com/markets/equities/23/12/36070049/exxon-defends-carbon-capture-amid-skepticism-at-cop28-report">to fight climate change</a>, which the IEA has called "implausible."
Exxon shares are down 5% in the past month, and closed 0.07% higher on Monday. Other U.S.-listed oil giants are also down this month as US oil production increased include: ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>) is down 2.7% while Devon Energy Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DVN#NYSE">DVN</a>) is down 2.2% and Shell PLC (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) is down 3.2%.
In spite of heavy pressure from climate groups to reduce emissions, global crude oil production increased by a record 5.4% rate in 2022.
Now Read: <a href="https://www.benzinga.com/trading-ideas/long-ideas/23/12/36182507/market-strategists-expect-these-2-magnificent-7-ai-sleepers-to-outperform-apple-stock-in">Market Strategists Expect These 2 Magnificent 7 AI &#8216;Sleepers&#8217; To Outperform Apple Stock In 2024</a>
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SHEL

Crude Conundrum: US Oil Production Hits Record Levels, But Energy Stocks Aren't Pumping

The launch of COP28 on Thursday is the latest glimpse at the ongoing effort <a href="https://www.benzinga.com/markets/equities/23/11/36028451/cop28-climate-summit-a-moment-of-reckoning-for-oil-execs-or-just-d-ja-vu">to decarbonize the global economy.</a>
Whether its goal is to be a force for good or, as the BBC recently <a href="https://www.bbc.co.uk/news/science-environment-67508331">revealed</a>, serve "as an opportunity to strike oil and gas deals" remains unclear. 
Either way, the so-called &#8220;Conference of the Parties&#8221; says a lot more than what's coming from its climate talks: it's lending a view into geopolitics, political alliances, power friendships, and the fate of the oil sector.
Earlier this month, a report by the UN&#8217;s Environment Program warned that the emissions goals set during the landmark Paris Agreement of 2015 <a href="https://www.benzinga.com/markets/esg/23/11/35883432/stocks-to-watch-as-the-world-turns-to-the-2023-un-climate-change-conference-cop28">are not enough to keep global temperatures under the established limit</a> of 1.5°C (2.7°F) below pre-industrial levels.
Current projections put the course of average temperatures at a catastrophic 2.9°C (5.2°F) rise above pre-industrial levels before 2100.
The UAE Paradox: The designation of Sultan Al Jaber as president of the climate conference has been a major source of controversy. After all, he is the CEO of the Abu Dhabi National Oil Company, a UAE state-owned oil company that ranks as the 12th largest producer in the world and 14th largest greenhouse gas polluter.
The BBC, citing leaked documents, reported this week that the UAE intends to use its role as host as a way to close fuel deals with 15 other nations.
The paradox of having an oil baron at the helm of the world's most important summit on climate change, which itself is being held in Dubai, a city built by wealth made from oil extraction, has been pointed out by several high-profile critics as outrageous.
Al Gore, climate activist Greta Thunberg, and hundreds of climate organizations from around the globe signed a collective letter in January. The letter denounced the Abu Dhabi National Oil Company as a major entity responsible for greenhouse gas emissions.
Production and use of oil and gas are top contributors to climate change. They contribute to a combined 55% of greenhouse gas emissions, according to the International Energy Agency.
"This decision threatens the legitimacy and efficacy of COP28," wrote the signing parties, adding that the company has launched programs to expand its oil output in years to come.
What some climate activists have found even more worrying is the friendly relationship between Al Jaber and former Secretary of State John Kerry. 
Kerry&#8217;s work under the Obama administration was key in securing the Paris climate deal in 2015.
"It may or may not work," Kerry <a href="https://time.com/6335225/sultan-al-jaber-cop28-interview/?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=editorial&amp;utm_term=climate_climate-change&amp;linkId=248438394">told</a> Time magazine earlier this month. "Some might call it an experiment to have an oil-and-gas-­producing entity host COP. That's the big question."
According to Politico, Kerry and Al Jaber met 22 times in the two-and-a-half years since Kerry took the job of U.S. Special Presidential Envoy for Climate under Biden.
Their unusually tight relationship has become a cause for concern for climate activists, who fear that economic incentives from oil production could come in the way of climate goals.
As the first and seventh-largest oil and gas producers in the world, respectively, the U.S. and the United Arab Emirates have more than enough reasons to maintain good relations.
"The U.S. has much more interests aligned with the Emirates than we do," said a senior European diplomat to Politico.
The push towards reducing carbon emissions will have its effects on stocks from several sectors, including oil and gas, as well as those associated with ESG (Environmental, Social, and Governance) policies.
The world needs to reduce its carbon emissions by 42% by 2030 to keep on track toward Paris Agreement goals. This means a huge drop in sales for oil and gas producers. 
While Al Jaber has publicly expressed the need to reduce carbon emissions, the Abu Dhabi National Oil Company which he leads continues to have the largest expansion plans for oils and gas production of any other company in the world, according to data from the Global Oil and Gas Exit List <a href="https://www.theguardian.com/environment/2023/nov/15/cop28-host-uae-oil-plans-data">quoted</a> by The Guardian.
Last year, the company's board presented a $150 billion plan to upsize oil production to 5 million barrels a day by 2027. These expansion plans put it at the top of a list of companies whose expansion plans go against goals to reduce carbon emissions.
In this top-five are also Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) and Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>).
According to the data, the 1600 largest oil producers have spent $170 billion in the search for new fossil fuel resources since 2021.
Optimists expect the COP28 to give birth to real commitments and plans to reach the needed reduction in greenhouse gas emissions. These plans would go directly against the current business models of major oil companies, whose transition to a renewables-based market is still not a guarantee of maintaining the profitability levels of today.
ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>), Devon Energy Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DVN#NYSE">DVN</a>), Phillips 66 (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PSX#NYSE">PSX</a>) are also liable to shifts related to climate policy.
<a href="https://www.benzinga.com/money/best-oil-etfs">The largest ETFs in the oil sector</a>, by amount of assets, are:
<ul>
<li>United States Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>)</li>
<li>ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>)</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>)</li>
</ul>
Shutterstock photo.

What COP28 Says About Geopolitics, US-UAE Relations And Fate Of The Oil Sector

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have collectively decided to implement an additional 1 million barrels a day of oil supply cuts, reinforcing Saudi Arabia&#39;s recent extension of its equivalent voluntary reduction.&nbsp;
Oil prices moved higher, with WTI trading at $77.82 and Brent crude oil moving around 83.90.
Citing&nbsp;UBS&nbsp;analyst Giovanni Staunovo, Bloomberg&nbsp;<a class="editor-rtfLink" href="https://www.bloomberg.com/news/articles/2023-11-30/opec-agrees-on-1-million-barrels-of-additional-oil-output-cuts?srnd=premium&amp;sref=TBDibEcD" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">noted</a>&nbsp;these developments&#39; potential significance, &quot;If those numbers get confirmed, it shows OPEC+ wants to keep their hands on the oil wheel.&quot;&nbsp;
He emphasized the alliance&#39;s proactive approach, especially in light of anticipated lower demand at the beginning of 2024.
As the meeting of the Joint Ministerial Monitoring Committee (JMMC) began today, Staunovo&nbsp;<a class="editor-rtfLink" href="https://twitter.com/staunovo/status/1730223137013281244" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">notes</a>&nbsp;that OPEC+ could be discussing deeper oil production cuts for the first quarter of 2024 and that total cuts could be close to 2 million barrels per day (bpd).
The decision stemmed from Saudi Arabia&#39;s move to enforce a voluntary extra cut of 1 million barrels per day since July.&nbsp;
Thursday, sources close to the Saudi delegation told the&nbsp;<a class="editor-rtfLink" href="https://www.ft.com/content/b809994d-6a1b-40e0-b75c-a659c46ffedd" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">Financial Times</a>&nbsp;that Saudi Arabia won provisional approval for additional cuts, to which other OPEC+ members will contribute, too.
The FT noted that Saudi Arabia warned other OPEC+ members that it could unwind its voluntary 1 million bpd cut if other producers don&#39;t agree to cut deeper.
Reuters, citing one source,&nbsp;<a class="editor-rtfLink" href="https://www.reuters.com/markets/commodities/opec-ministers-meet-discuss-additional-oil-output-cuts-2023-11-30/" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">noted</a>&nbsp;that Russia will cut 500,000 bpd, adding that Saudi&#39;s output of some 43 million bpd already reflects cuts of about 5 million bpd to support prices and stabilize the market.
The oil prospects have dimmed in the last couple of months due to abundant supplies and a worsening economic situation.
Prices may decline further next year, aligning with predictions from entities like the International Energy Agency, which foresee a significant deceleration in demand growth.

OPEC+ Approaches Preliminary Agreement For Deeper Oil Production Cuts In 2024

A subsea gas pipeline and a telecommunications cable connecting Finland and Estonia under the Baltic Sea have suffered damage in what appears to be a deliberate act, according to the Finnish government.&nbsp;
The Balticconnector gas pipeline was shut down due to concerns about gas leakage from a hole in the 77-kilometer pipeline, and it may take months to repair. Additionally, the damaged telecommunications cable raised concerns about connectivity in the region.
While Finnish Prime Minister&nbsp;Petteri Orpo&nbsp;described the damage as &quot;worrying,&quot; he assured Finland&#39;s energy supply remained stable. He also highlighted that it was premature to conclude the cause of the damage, and an investigation is underway.
European gas prices surged in response to the news, reaching a six-month high, Reuters noted, fueled by concerns over tensions in the Middle East and the belief that external activity may have caused the pipeline damage.&nbsp;
Despite the damage, the Balticconnector pipeline gas system operators do not foresee shortages, and Finland&#39;s alternative gas supply arrangements are expected to cover demand.
While the exact cause of the damage remains unclear, authorities are not ruling out the possibility of sabotage, drawing parallels with deliberate acts of sabotage on the Nord Stream gas pipelines in 2022. Finland has diversified its gas imports, primarily relying on liquefied natural gas (LNG) from the United States.
Finnish telecommunications operator Elisa confirmed that the damaged cable, primarily used for backup purposes, did not disrupt its services, providing a measure of continuity.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Suspected Deliberate Act Damages Subsea Gas Pipeline and Telecom Cable Linking Finland And Estonia

The U.S. Justice Department is intensifying its efforts to clamp down on violations of sanctions imposed on Russia&#39;s energy exports, with a particular focus on&nbsp;Murtaza Lakhani, the founder and CEO of&nbsp;Mercantile &amp; Maritime Group, an oil trading and shipping company headquartered in Bahrain and Singapore.&nbsp;
The ongoing investigation aims to determine if charges will be filed against Lakhani, WSJ&nbsp;<a class="editor-rtfLink" href="https://www.wsj.com/economy/trade/u-s-probe-of-russia-sanctions-busting-focuses-on-major-oil-trader-fac754da?mod=latest_headlines" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">notes</a>, whose company has a history of operating in complex regions, including Saddam Hussein-era Iraq, Iraqi Kurdistan, and Venezuela.&nbsp;
Lakhani&#39;s connection to&nbsp;Rosneft Oil, the Russian state-backed energy giant, is also under investigation, specifically examining his business relationship with Rosneft Chief Executive&nbsp;Igor Sechin, a close ally of Russian President Vladimir Putin, whom the U.S sanctions.
To reinforce oil sanctions against Russia, the U.S. government has established Task Force KleptoCapture, targeting entities involved in sanctions violations and asset seizures.&nbsp;
The surge in oil prices beyond the Western-imposed price cap has raised concerns about Russia&#39;s ability to profit from its oil sales, which prompted the Justice Department&#39;s renewed focus on enforcing these sanctions.
Although Western companies are legally permitted to trade and transport Russian petroleum if prices adhere to the $60 cap set by the G-7 countries, there are concerns about the reputational risks associated with financing Russia&#39;s activities.&nbsp;
The recent oil market price spikes have further complicated the situation, leading some major commodities traders to withdraw from Russia. Russian producers have turned to companies operating under opaque ownership structures in Dubai and Hong Kong to transport their oil, often called the &quot;shadow fleet.&quot;
Disclaimer:&nbsp;This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

US Authorities Probe Sanctions Enforcement in Russian Oil Trade

In response to rising gasoline price concerns,&nbsp;Tai Milder, the director of California&#39;s Division of Petroleum Market Oversight (DPMO), has&nbsp;<a class="editor-rtfLink" href="https://www.energy.ca.gov/news/2023-09/state-officials-provide-update-gas-prices-unusual-petroleum-market-transaction" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">sent</a>&nbsp;a four-page letter to Governor&nbsp;Gavin Newsom&nbsp;and legislative leaders in Sacramento.&nbsp;
Milder&#39;s division reviewed recent data, revealing that some refineries failed to maintain adequate gasoline levels or import enough fuel to compensate for production shortfalls during the summer.&nbsp;
These supply disruptions have contributed to the surge in prices and planned and unplanned refinery outages.&nbsp;
One specific event highlighted in the letter is an &quot;unusual transaction&quot; on the California spot market, where gas prices surged by 50 cents per gallon on September 15.
The rising cost of crude oil has driven up prices not just in California but across the world. For the last 18 months, Russia&#39;s invasion of Ukraine has caused crude oil prices to climb and remain&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/money/most-volatile-stocks/" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">volatile</a>.&nbsp;
As of September 20, 2023, crude oil obtained by California refiners from a global market cost $2.27 per gallon, compared with $2.25 one week ago, $2.04 four weeks ago, and $2.18 one year ago.
DPMO contacted refineries to discuss plans for future maintenance and plans to backfill to maintain adequate statewide supply.

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