It is time to party! Again! It appears that the Greek parliament approved tough austerity measures despite rioting in the streets. The US stock market is soaring on the happy news and oil is also joining in the fun, which is progress considering the “Flash Crash” that occurred when the Greek Parliament passed an austerity package in the past.
Of course this came against a backdrop of a tightening noose around the Iranian oil industry neck. Bloomberg News reports, "Iran sanctions tightening after Overseas Shipholding Group, Frontline Ltd. and owners controlling more than 100 supertankers said they would stop loading cargoes from the Organization of Petroleum Exporting Countries’ second-largest producer. OSG, based in New York, said Feb. 10 that the pool of 45 supertankers from seven owners in which its carriers trade will no longer go to Iran. Four OSG-owned ships, managed by Tankers International LLC, called at the country’s biggest crude-export terminal in the past year, ship-tracking data compiled by Bloomberg show. Nova Tankers A/S and Frontline, with a combined 93 vessels, said Feb. 9 and 11 they won’t ship Iranian crude. Bloomberg says that previous efforts to curb Iran’s oil income and stop it from developing nuclear weapons failed because the structure of the shipping industry means vessels are often managed by companies outside the U.S. or European Union. An EU embargo on Iranian oil agreed to Jan. 23 extended the ban to ship insurance. With about 95 percent of the tanker fleet insured under rules governed by European law, there are fewer vessels able to load in Iran."
So now the question is, what will Iran do in response? Kuwait, according to Dow Jones News, says that they are unlikely to try to shut down the Straits of Hormuz and it also seems that Gulf States really do not have a plan if they do! I guess we will have to wait to see what, if anything, actually happens.
In Asia we are getting some mixed signals about the economy. In Japan the strong yen and weakness in European demand seems to have caused a contraction in the economy to the tune of about 2.3%. In China it seems that the government is trying to avoid a credit meltdown. The Financial Times reported that, "China has instructed its banks to embark on a mammoth roll-over of loans to local governments, delaying the country’s reckoning with debts that have clouded its economic prospects. China’s stimulus response to the global financial crisis saddled its provinces and cities with Rmb10.7tn ($1.7tn) in debts — about a quarter of the country’s output — and more than half those loans are scheduled to come due over the next three years."
Another day, another refinery goes down and RBOB gasoline futures rise across the globe as refiners are going into maintenance.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.