Our market participants are forced to hang around the Iran street corner as would disgruntled teenagers waiting for something to do. It is hard to squeeze out any more words on the subject of ‘will he?’ or ‘won’t he?’ as Donald Trump keeps us guessing on his military intentions towards the Islamic State. Oil’s fraternity would do well to take heed of the many and varied influences that are pressing in on the edges of importance, but none can breach the bubble of binary thinking dominating price considerations. 

A better-late-than-never EU beginning of adherence to the disqualification of distillate imports from Russia, and those that refine its crude such as India is causing localised and intriguing geographical disparities in supply. Forced to find diesel from other sources, according to Kpler and seen on Reuters, January saw Europe take a record amount of 336kbpd from the US which itself is still in the throes of deep winter. Such a bullish late development in seasonal influences might have many believing that come the warmer weather in a few months, such demand for diesel would be solved. However, and returning to the Strait of Hormuz, this would be nothing compared with the millions of barrels of refined products entering the market from Persian Gulf states. The Geneva meeting cannot come quick enough, but its outcome is most definitely not assured and nor is the mind of the mercurial US President. As we circle this all-encompassing driver the updraft will keep prices propped, and more issues such as diesel supply will emerge and be placed in the bullish in-tray of price consideration.

Time for another spate of Dollar collywobbles

There has been a calming of US Dollar doubts of late. The existential threat to the US currency under the banner of de-dollarisation had found many ports of supportive call. There does not seem to be a time in recent memory when the US was at loggerheads with itself on funding the very people that do Uncle Sam’s business with either last gasp financing, interim spending bills or any other sort of continuing resolutions. But the budget passed on February 3rd took away the jitters of possibly tens of thousands of people going without pay. Additionally, the future management of the country’s economic sentinels, the US Federal Reserve, had started to be lumped in a suppositive attitude where it would lapdog to the White House whims on interest rates. However, what with, arguably, a Federal Reserve not only shying away from executive influence, but dare one say becoming a little more hawkish in outlook due to better-than-expected data in employment and stubbornness in inflation, the temporary reprieve in ‘sell America, sell the Dollar’ saw the global currency marker rally by over 2 percent based on the US Dollar Index. What has recently added a little pep to proceedings internationally are better PMIs from the likes of Europe and the UK which are seemingly adapting to the International Emergency Economic Powers Act invoked by the US administration in applying tariffs, and with increased activity in foreign economies trade fears have subsided and US Customs coffers filled.

The recent partial shutdown of the US Government seemed on the face of it easily solved because the world’s eyes were turned elsewhere in the normal haze of geopolitical intrigue and incessant heaves and haws of every trading market imaginable. However, for US President Donald Trump to sign a $1.2 trillion budget bill to end the partial government shutdown at the beginning of this month involved a two-week delay in the budget extension for the Department of Homeland Security. This suspension in decision was deigned apposite as both sides of the political aisle sought to mend differences and with relative quiet and sparsity of the reporting of what negotiations and concessions looked like, political observers have been led to believe that there was a seriousness to achieving an equitable solution. However, once battle lines are drawn up in such adversarial politics witnessed today, the filibustering and what looks like a Democrat Party refusal to allow any extension of the DHS budget unless its Immigration and Customs Enforcement arm changes policy and tactics in its immigration campaigns, means no such accord will happen any time soon. A partial shutdown is back on, agencies that are covered by the remit of the DHS such as borders guards (TSA), Federal Emergencies (FEMA) and the US Coast Guard are now working gratis or worse, furloughed. Productivity and consumer confidence can only be but dented and all then point to a shift lower in economic standing. There are no prizes for guessing the Democrats are using a convenient coincidence in making sure the shutdown extends into the US President’s State of the Union Address, and if one has been lacking in attending any performative arts recently, there will be enough drama, intrigue and charade tonight, so tune in to get one’s fill. 

Conflict springs eternal and the dulling of trade relationship angst have swiftly sharpened. The striking down of the International Emergency Powers Act by the US Supreme Court, the law in which Donald Trump covered himself as armour in his campaign to strike better trading deals for the US, has left the building, and those that have felt the pejorative language and arm twisting of the current US Administration are lining up for a re-deal and a new hand in this change of table. No matter how hard the US Treasury shouts that current trade terms should stay unchanged, according to Bloomberg, the European Union is poised to freeze the ratification process of its trade deal with the US. The bloc is not alone. China’s Ministry of Commerce has commented that it will assess the ruling and consider its position. This comes at a very inopportune time for the US President as he is due to travel to China in April to meet Xi Jinping with the current trade détente very much threatened as Trump is subjected to friendly fire from his normally stalwart Supreme Court ally. The keepers of law in the US have up until now been an enabler for the current American government and has sided with it for nearly all actions. The American President now finds himself in a multi-way domestic battle as he tries to get the DHS budget ratified, his wish list in the US Federal Reserve’s attitude to interest rates listened to and a higher authority to not now go ahead and strike down section 122 of the US Trade Act, which has been fallen back on but legally has only 150 days of longevity whatever might happen if this fresh application of part of the balance-of-payments law is subject to challenge. ‘Uncertainty’ has been rife in this report since January 2025, do not bet against it being wheeled even more after this recent turn of US political events. Furthermore, and way more importantly, with such a cloudy outlook eyes will turn to the enormous US debt, the servicing of interest payments, the rising costs of funding an ageing population and funding tax cuts; do not bet against US Dollar bears re-emerging from hibernation, providing whatever assistance they can to oil prices, together with the fundamentally supportive geopolitical backdrop.

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