In his podcast addressing the markets today, Louis Navellier offered the following commentary.
Energy Payoff
OPEC+ announced a surprise 1.1 million barrel day daily cut in crude oil production, so crude oil prices are definitely headed higher. Saudi Arabia led the way by announcing that they will be reducing their crude oil production by 500,000 barrels a day.
Additionally, Russia also extended its 500,000 barrel cut it announced in March would continue through July, so 1.6 million barrels per day will be removed from world oil markets, just as demand rises in the Spring and Summer months. As a result, I remain confident in my big energy bet will continue to pay off.
Q4 2022 hedge fund letters, conferences and more
Saudi Arabia/China/Russia Alliance
When President Biden was a candidate, he said that he planned to make the Saudis “pay the price, and make them in fact the pariah that they are.” Additionally, regarding the Saudi royal family, he said that there is “very little social redeeming value in the present government in Saudi Arabia.”
Due to the war in Yemen, President Biden ordered an end to arms sales and other support for Saudi Arabia. Clearly, the U.S. policy on Saudi Arabia is now having profound consequences.
Under the Trump Administration, Saudi Arabia welcomed President Trump in an elaborate ceremony, became Israel’s ally and the U.S. authorized record arms sales.
Now Saudi Arabia has (1) reestablished diplomatic relations with Iran, (3) helped China expand its refining capacity to process Russian crude oil and (3) bought cheaper heavy, Russian crude oil for electricity generation, so Saudi Arabia could sell more of its lighter grade crude oil. In other words, whatever influence the U.S. has had over Saudi Arabia has been squandered.
China, Russia and Saudi Arabia are now formidable opponents. Since India also refines a lot of Russian oil, so it can export refined products, I could add India to this China, Russia, and Saudi Arabia alliance.
The Biden Administration can release more crude oil from the Strategic Petroleum Reserve (SPR) to try to curb soaring crude oil prices, but the SPR has been drained to over a 40-year low and the U.S. is now in the midst of soaring season demand that will be much stronger in the summer months.
Obviously, any time energy prices soar, it hurts the Biden Administration, so it will be interesting to see how they respond since demonizing Saudi Arabia and its Royal Family is not working.
EU Food Inflation
While in the U.S. we worry about energy inflation, in Europe, food inflation is accelerating. The “green” policies that seized 30% of the farmland in the Netherlands is apparently now having consequences.
Furthermore, the mandate that many European countries have to shift away from more efficient chemical fertilizers to organic fertilizers to reduce carbon dioxide emissions is just making food prices soar.
No wonder there are protests in Britain, France and Germany. The European Union is trying to fight food inflation with price caps, but that is just causing shortages. As a result, lines for certain food stables may become more common in Europe.
Coffee Beans
Seiichi Sano, an 89-year-old Japanese surfer, has been named the world's oldest person to surf. Sano said he was inspired to take up surfing shortly after he climbed Mount Fuji at age 80. He went surfing for the first time three days later and was instantly hooked, and now surfs year-round. Source: UPI. See the full story here.
