As crude oil traders focus on rising rig counts and the potential for OPEC production cuts, a critical battle against ISIS has been unfolding in Iraq overnight. Reuters News reports that Iraqi government forces, with air and ground support from the U.S.-led coalition, launched an offensive to drive the Islamic State from the northern city of Mosul, the militants' last major stronghold in the country.
Crude oil prices are on the rise as traders are starting to see signs of production destruction. What is production destruction? It is the opposite of demand destruction. When prices go too high we see demand destruction or demand fall. When prices go too low, we see cut backs in spending and investment that will call production to fall. We are now seeing the early stages of production destruction of a mammoth scale that will be felt for years to come.
Russia said it launched air strikes against Islamic State in Syria on Wednesday after President Vladimir Putin secured his parliament's unanimous backing to intervene to prop up the Kremlin's closest Middle East ally.