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FOX News national security analyst KT McFarland and Platts director of news John Kingston weigh in on the state of the oil market
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-- -- -- let's dig deeper on the unfolding situation in the Middle East and the oil market joining me now is KT McFarland Fox News national security analysts and John Kingston.
Director of research at flats John we were just watching what -- -- was saying.
What do you think this big sell off mean this is a big move we were up above a hundred we saw that big move down at the end of the day on Monday and it's continuing today.
Well a couple things crucible I think this market was -- products -- market for the past few weeks if you look at the price of gasoline.
Not the published in the spot markets -- gasoline diesel that -- went up at a lot higher rate -- crude so it was dragging crude up.
And that kind of situation can never last.
The other thing too is so referred to -- I think -- had more of an impact and -- were originally thought it was going to have.
And the market is kind of restocking.
New products -- come back online imports are coming back in so I think you kind of getting back to a balance the and I think impact.
What I didn't think so 23 weeks ago but it was significant.
Yeah cheat the situation in the Middle East -- -- you here -- eight -- talking about the comments out of the saudis today's thing that they're gonna flood the market when the oil anytime you hear them say something like that.
-- -- -- is always on the other end of that are they talking down on the price to train -- to -- Actress -- right out the saudis -- -- the Saudi -- our strategic petroleum reserve and we have since the 197 that's a great mom and in the nineteen days for example I was in the Reagan administration the saudis.
Flooded the world with loyal.
What did that do -- drove down the price of -- -- -- bankrupted the Soviet Union.
Which is why we won the Cold War.
They're trying to do it again why I think that if you look around -- Middle -- it's all going to happen claims he added it is not just that -- isolating Israel Israel feels this very isolated now on if they get to the point.
-- they think they're the only 12 stop a run back gives them an incentive to start.
A war -- were they can't finish that they could start and then the other thing is if you look throughout northern Africa and the Middle East and Egypt.
What's next to each of the Sinai the Suez peninsula of the Suez Canal Sinai Peninsula if that causes trouble what may not affect your price.
But also all the trade that's going from Europe.
Through the Suez say Asia yeah John why isn't the oil market more kids.
Are right now about as KT said -- -- and Italy's going up appoints Rick.
Well I think you're good to the Iran situation the sanctions on Iran as a whole bunch of -- -- shipping sanctions and the EU ban on imports.
They've been very effective at cutting a rainy and supplies out of the market yet OPEC itself has really stepped up and fill that gap.
So the world actually if you if you look at a very simple number the OPEC -- which is what does OPEC need to produce to keep inventories of balance OPEC has been producing over that.
For months now even despite the significant drop -- -- supplies.
So the OPEC nations have stepped up there's about two and a half million barrels us spare capacity that's homicide.
I'm gonna disagree -- Phil said.
I think there's going to be an SPR -- I I think he gets it will be politically driven and the rash not will be given is with the US import dependence down so much.
We don't need to hold the same amount and inventories that we did previously.
I connected to be part of what you're same part of a strategy to continue to put the pressure on Iran which.
Even though it certainly is putting pressure on -- lower prices certainly lower exports.
You know if it if it -- the most impoverished his people to a large degree these sanctions ultimately don't matter that won't release the SP otherwise we all know only has a temporary impact but this oil markets and -- this won't be a release this will be the way they used to sell surplus metals and they used to have.
The US government used to have these.
Vast stocks of metals and other materials on the idea that what were you may have to fight another two front war but OK so silly -- they wouldn't put -- oil not worry that they would put out oil every single day.
They would -- oil every single day.
Until they sold off.
Although the figures are in the tens of millions of barrels the Dow right now relative to import.
ETU back Toronto because it's what's he's sick with what John says is true that Iran has lost its power of single Saber rattling.
With what.
I mean if we haven't up oil from elsewhere but it's not having it is what does that mean Iranian economy is that is about half of what it was a year ago their currency -- falling by half they have massive inflation.
But it hasn't been enough to have a regime change -- that you should watch -- in that part of the world in Saudi Arabia's the one country.
-- hasn't had an Arab Spring why largely because they've been wealthy enough.
Had to make things -- -- cushion for their own people but of instability spreads and it spreads to -- rain.
More Saudi Arabia yeah -- -- that's an existing board had been in the kingdom -- number of times and they are able to keep a lid on it but it's still there -- simmering there's no doubt about it the etiquette and -- that -- John thanks so much such great insight we appreciate it.
