Mueller Investigation In Jeopardy As “Witch Hunt” Accusations Play Out In Court

A funny thing happened on the way to impeaching Donald Trump. After two-years of investigations by a highly politicized FBI and a Special Counsel stacked with Clinton supporters, Robert Mueller’s probe has resulted in the resignation of National Security Advisor Michael Flynn, the arrests of Paul Manafort and Rick Gates, and the indictment of 13 Russian nationals on allegations of hacking the 2016 election – along with the raid of Trump’s personal attorney, Michael Cohen.

The nation has been on the edge of insanity waiting for that much-promised and long awaited link tying President Trump to Vladimir Putin we were all promised, only to find out that there is no link, the deck appears to have been heavily stacked against Donald Trump by bad actors operating at the highest levels of the FBI, DOJ, Obama admin and Clinton camp, and the real Russian conspiracy in the 2016 election was the participation of high level Kremlin sources used in the anti-Trump dossier that Hillary Clinton paid for.

Now, as the out-of-control investigation moves from the headlines and into court, the all-encompassing “witch hunt,” as Trump calls it, may be in serious jeopardy

As of Friday, three separate Judges have rendered harsh setbacks to the Mueller investigation – demanding, if you can believe it, facts and evidence to back up the Special Counsel’s claims – in unredacted format as one Judge demands, or risk having the cases tossed out altogether. 

The first major setback happened in February, when the federal judge assigned to the criminal case against Trump’s former National Security Judge Emmet G. SullivanMueller’s team to turn over any “exculpatory evidence” to Flynn’s defense. 

Oddly, Flynn’s legal team never made this request. Instead, Judge Emmet G. Sullivan issued the order “sua sponte,” or at his discretion, invoking the “Brady Rule” – which requires prosecutors to turn over previously unfiled evidence that might have a material impact on a defendant’s case. Two days before Sullivan’s order, Mueller filed a motion for a protective order regarding the use of evidence in the case, including “sensitive materials,” which would be provided to Flynn’s lawyers by the office of the Special Counsel.

Judge Emmet G. Sullivan

This development generated a significant buzz in conservative circles, with the implication being that perhaps Flynn might not have pleaded guilty in light of certain evidence

We also know that the FBI agents who interviewed Flynn – one of whom was anti-Trump counterintelligence agent Peter Strzok, did not think Flynn was lying to them – something James Comey was recently caught lying about himself. 

Fox‘s Judge Andrew Napolitano thought Sullivan’s decision at the time was a complete bombshell. 

“Why would he we want that after General Flynn has already pleaded guilty? That is unheard of. He must suspect a defect in the guilty plea. Meaning, he must have reason to believe that General Flynn pleaded guilty for some reason other than guilt.” –Andrew Napolitano

And as we noted yesterday, some have suggested that Flynn pleaded guilty due to the fact that federal investigations tend to bankrupt people who aren’t filthy rich – as was the case with former Trump campaign aide Michael Caputo, who told the Senate Intelligence Committee “God damn you to hell” after having to sell his home due to mounting legal fees over the inquiry. 

“Your investigation and others into the allegations of Trump campaign collusion with Russia are costing my family a great deal of money — more than $125,000 — and making a visceral impact on my children.”

Let’s not forget about the time Mueller’s team at the FBI massively screwed up the 2001 anthrax case after 9/11 – ruining the life of SAIC employee Steven Hatfill when it mysteriously leaked that he was the FBI’s prime suspect. Mueller assured Congress in a closed-door January, 2003 session that Hatfill was their man based on shaky evidence which was later deemed unreliable. Effectively, he needed a scalp. Hatfill was professionally and financially ruined until he sued the US Government for $5.8 million.

It’s like death by a thousand cuts,” Hatfill, who is now 56, says today. “There’s a sheer feeling of hopelessness. You can’t fight back. You have to just sit there and take it, day after day, the constant drip-drip-drip of innuendo, a punching bag for the government and the press. And the thing was, I couldn’t understand why it was happening to me. I mean, I was one of the good guys.” –The Atlantic

Then there’s the judge in the Manafort Case, who excoriated a Special Counsel attorney on Friday during a “motion to dismiss” hearing. A leaked transcript of the heated exchange between attorney Michael Dreeben and Eastern District of Virginia Judge T.S. Ellis reveals that the entire Manafort case is in jeopardy if the Special Counsel doesn’t produce an unredacted copy of the original order from Deputy AG Rod Rosenstein authorizing the original investigation.

Judge Emmet G. Sullivan

Ellis also said that Mueller shouldn’t have “unfettered power” to prosecute Manafort for charges that have nothing to do with collusion between the Trump campaign and the Russians, and called out the DOJ’s efforts in the case as an attempt by Mueller to gain leverage over Manafort.

“You really care about what information Mr. Manafort can give you that would reflect on Mr. Trump or lead to his prosecution or impeachment or whatever. That’s what you’re really interested in.” –Judge Ellis

The Judge also notes that the Special Counsel’s indictment against Manafort doesn’t mention:

(1) Russian individuals
(2) Russian banks
(3) Russian money
(4) Russian payments to Manafort

To which Dreeben provided an unsatisfactory lawyerly response about how everything is connected to everything (including, apparently, whether Trump paid a woman to keep quiet about consensual sex). 

Lastbut we’re quite sure not least, was last week’s ruling by federal Judge Dabney Friedrich, a Trump appointee, denying Mueller a trial delay over the high-profile February indictment of 13 Russians for interfering in the 2016 US election.

Mueller accused 13 Russian nationals and three Russian entities – one of which was Concord Management and Consulting, of “knowingly and intentionally” conspiring to interfere with the election by using social media to disparage Hillary Clinton and support Donald Trump. 

And Concord Management decided to fight it… 

As PowerLine notes, Mueller probably didn’t see that coming – and the indictment itself was perhaps nothing more than a PR stunt to bolster the Russian interference narrative. 

I don’t think anyone (including Mueller) anticipated that any of the defendants would appear in court to defend against the charges. Rather, the Mueller prosecutors seem to have obtained the indictment to serve a public relations purpose, laying out the case for interference as understood by the government and lending a veneer of respectability to the Mueller Switch Project.

One of the Russian corporate defendants nevertheless hired counsel to contest the charges. In April two Washington-area attorneys — Eric Dubelier and Kate Seikaly of the Reed Smith firm — filed appearances in court on behalf of Concord Management and Consulting. Josh Gerstein covered that turn of events for Politico here. –Powerline Blog

Politico’s Gerstein notes that by defending against the charges, “Concord could force prosecutors to turn over discovery about how the case was assembled as well as evidence that might undermine the prosecution’s theories.”

In a mad scramble to put the brakes on the case, Mueller’s team tried to say that Concord never formally accepted the court summons related to the case, wrapping themselves in a “cloud of confusion” as Powerline puts it. “Until the Court has an opportunity to determine if Concord was properly served, it would be inadvisable to conduct an initial appearance and arraignment at which important rights will be communicated and a plea entertained.”

The Russians hit back against Mueller’s attempt to delay – filing a response on Friday to let the court know that “[Concord] voluntarily appeared through counsel as provided for in [the Federal Rules of Criminal Procedure], and further intends to enter a plea of not guilty. [Concord] has not sought a limited appearance nor has it moved to quash the summons. As such, the briefing sought by the Special Counsel’s motion is pettifoggery.

And the Judge agreed

A federal judge has rejected special counsel Robert Mueller’s request to delay the first court hearing in a criminal case charging three Russian companies and 13 Russian citizens with using social media and other means to foment strife among Americans in advance of the 2016 U.S. presidential election.

In a brief order Saturday evening, U.S. District Court Judge Dabney Friedrich offered no explanation for her decision to deny a request prosecutors made Friday to put off the scheduled Wednesday arraignment for Concord Management and Consulting, one of the three firms charged in the case. –Politico

In other words, Mueller was just denied the opportunity to kick the can down the road, and will likely be forced to produce the requested evidence or withdraw the indictment, potentially jeopardizing the PR aspect of the entire “Trump collusion” probe.  

As Mueller’s “witch hunt” moves from the headlines to courtrooms with no-nonsense Judges, dismissals and withdrawn cases risk further delegitimizing the already-beleaguered Special Counsel investigation of President Trump and the 2016 US election. 

One wonders how much this whole thing has cost taxpayers so far?

WTI Tops $70 For First Time Since Nov 2014 As Iran Deal Deadline Looms

With the Iran Deal looking increasingly fragile, front-month WTI futures have just traded above $70 for the first time since Nov 2014.

$70 just happens to be the 50% retracement from the Aug 2013 highs to the Feb 2016 lows…

As’s Tsvetana Paraskova notes, US President Donald Trump has another week to decide whether to waive the sanctions against Iran. Expectations that he would not waive the sanctions this time around have supported the price of oil over the past month, with Brent briefly breaching above $75 to its highest price level since November 2014.

Analysts are still struggling to quantify the impact of possible fresh sanctions on Iran and prices are expected to be volatile as the deadline for President Trump’s decision is getting closer.

The month of May could be a very important one for oil prices with geopolitical risks stacked and too close to call. Apart from the Iran sanctions waiver, the market will be looking to the Venezuela presidential election that socialist leader Nicolas Maduro has scheduled for May 20.

“The geopolitical landscape will therefore remain tense and price conditions volatile,” Stephen Brennock, an analyst at PVM Oil Associates, told Platts on Friday.

Commenting on the Iran sanctions waiver, Commerzbank analysts said in a note:

“This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a backseat until this has been resolved”.

Even more worrisome, as’s Kent Moors writes, is that Trump walking away from the deal, and possibly re-imposing sanctions on Iran could throw the oil market into chaos.

An agreement is an agreement, or so it’s said.

Tensions are skyrocketing after Israeli Prime Minister Netanyahu’s claim that Iran has violated the Joint Comprehensive Plan of Action (JCPOA) agreement.

This is the deal that was meant to shut down Iran’s nuclear weapons program.

Whether Netanyahu is correct or not, it puts the ball in President Trump’s court. Remember, he has questioned the JCPOA since before his election.

But while the talking heads on TV will tell you that cancelling the JCPOA and renewing sanctions on Iran will drive oil prices up…

The truth is much messier. Here’s what’ll really happen…

Iran’s Restrictions are Extensive – and Controversial

As we await a Trump decision on whether to continue the Iranian nuclear accord, the uncertainty is beginning to have an impact on oil’s pricing volatility.

The accord signed during the Obama administration is officially called the JCPOA. It was agreed upon in Vienna on July 14, 2015 after some 20 months of negotiations.

Signatories include the five permanent (and veto carrying) members of the UN Security Council (U.S., UK, France, China, Russia), Germany and the European Union (P5+1+EU) on the one hand, and Iran on the other.

Under JCPOA, Tehran agreed to eliminate its stockpile of medium-enriched uranium, reduce its store of low enriched uranium by 95 percent, and decrease the number of gas centrifuges for 13 years by some 67 percent.

Additionally, for a period of 15 years, JCPOPA states that Iran would do the following:

  • Not enrich uranium beyond 3.67 percent, enough for energy use but well below weapons grade;

  • agree to forego the building of any new heavy-water plants, essential to control nuclear reactions, over the same period, and

  • limit enrichment to a single location employing first generation centrifuges for a period of 10 years.

In return, the P5+1+EU agreed to begin phasing out – subject to a sequence of verifications – economic and trading sanctions imposed by the U.N., the U.S., and the E.U.

However, during the 2016 presidential campaign Trump heavily criticized JCPOA and pledged to scrap the accord…

America Wants More from the Agreement

In President Trump’s view, matters not part of the agreement – such as Iranian support for global terrorism, continued development of ballistic missile programs, and support for enemies of Israel and Saudi Arabia in the Persian Gulf region – need to be added to the arrangement.

As a result, the White House announced in October of last year that it would not provide the periodic JCPOA certification as required under U.S. law.

However, the administration did not end the agreement.

This week, Israel released documents claiming that Iran has continued its nuclear program in violation of JCPOA. The presentation was less than compelling, including little tangible information about the post-accord environment.

Both the International Atomic Energy Agency (IAEA) and independent watchdog organizations have said that there is no evidence to support the contention that Iran is evading JCPOA. The IAEA has the responsibility under JCPOA to monitor Tehran’s compliance.

Now, my Iranian contacts were quick to note the obvious: Each of the new demands made by Washington are not part of what is covered by JCPOA.

“One does not revise an international arrangement after the fact to pander to one’s own internal politics,” a source in the Iranian National Oil Company said over the weekend.

There is also strong support from other permanent UN Security Council members, Germany, and the EU to continue the agreement.

Yet all other parties are very aware that JCPOA will not survive if the U.S. pulls out.

And neither will the current oil environment…

The Future without the JCPOA Is Bleak

The global pricing of crude oil is now feeling the impact of the politics swirling about Washington.

I expect that the current intent inside The Beltway is to develop evidence to support the Israeli claims. But there seems to be little leverage to accomplish such an objective, even if the administration can figure out what it wants to add.

This is an exceptionally dangerous play with no clearly identifiable upside beyond delivering on a campaign pledge and a few tweets.

Trump may have made a threat to scrap JCPOA a central theme for his political support base and has said that a better replacement is needed, but that development has a very low probability.

Throwing out JCPOA will certainly put Iran back into full weapons development with a corresponding rise in geopolitical uncertainty.

And there will be a direct impact on oil prices.

Renewal of U.S. sanctions will increase the cost of Iran’s crude exports, cut Tehran off from easy access to global banking and capital, and in all likelihood reduce the country’s predictable export volume.

These are factors that would contribute to an upward pressure on international global oil prices.

But there are other things to consider – factors that could be even stronger and ultimately drive prices in the other direction.

For one thing, Iran would certainly stop any pretense of abiding by the OPEC-Russia production cuts. That, in turn, would prompt defections by others.

Moreover, the enticement for a spike in production will be almost irresistible for U.S. companies – which are both the quickest sources of additional oil coming into the market, and the main source not subject to production caps.

But the main destabilizing factor emerges from the acceleration in volatility itself.

Any perception of additional security challenges in the Persian Gulf – and make no mistake, the end of JCPOA will heighten tensions between Iran and Saudi Arabia – will contribute to a near-term rise in global prices.

The resulting uncertainty will quickly give way to a widening application of competing short and long plays, which, in a whipsaw effect, will result in higher highs and lower lows in the oil price band and make genuine pricing determinations more difficult.

Ask any trader.

Predictability is more important than anything else. Ending JCPOA thrusts the Iranian factor into the center of the equation.

And that will not be a preferable development.

FBI Refuses To Pursue Personal Strzok-Page Texts; Grassley Goes Nuclear

The FBI is refusing to pursue work-related text messages and emails sent on the personal devices of Peter Strzok and Lisa Page – the FBI “lovebirds” discovered to harbor extreme political bias for Hillary Clinton and against Donald Trump while actively involved in cases against each candidate during the 2016 US election. Clinton was of course exonerated by the FBI despite overwhelming evidence of criminal conduct, while Trump’s entire presidency has been tainted by the spectre of unproven Russian collusion.

Over 50,000 text messages between Strzok and Page were discovered by the Department of Justice’s internal watchdog, the Office of Inspector General (OIG), leading to their removal from special counsel Robert Mueller’s Russia investigation – which has since devolved into trying to embarrass the President over allegedly paying a porn star not to discuss consensual sex. Of note, Page tendered her resignation on Friday.

In a Wednesday letter to the Senate Judiciary Committee, FBI Director Christopher Wray said that the FBI was not “obligated” to collect all communications between employees, and would not be pursuing communications Strzok and Page sent to each other on their personal devices.

In response, Committee Chairman Chuck Grassley (R-IA) went nuclear – reminding Wray in a Friday letter cc’d to Deputy Attorney General Rod Rosenstein and Dianne Feinstein (D-CA) that “Although, as your letter notes, the FBI is not “obligated” to collect all communications between employees, it is obligated to collect and preserve federal records.” 

Grassley goes on to note that previously released text messages between Strzok and Page “show substantial reason to believe government work was performed on non-government systems during the course of a high-profile investigation,” and that those communications could prove vital to the Committee’s investigation.

The work-related communications on nongovernment systems could shed more light on how the FBI handled the Clinton investigation and would constitute federal records that the FBI would be obligated to retrieve and preserve under the Federal Records Act. –Sen. Grassley to FBI Director Wray

The letter then provides several examples in which Strzok and Page explicitly referred to exchanging work-related information over their personal devices.

“For example, in two text messages Strzok said to Page:”

Gmailed you two drafts of what I’m thinking of sending Bill, would appreciate your thoughts. Second (more recent) is updated so you can skip the first.

Yep. Sent something to your gmail, work-related. Think I’m going to pull here and send to Kortan….

“In another text message, Strzok and Page appear to use the encrypted iMessage application on their personal Apple devices to discuss work-related material:”

Strzok: Want to imsg it to me, or want to do it in person?

Page: It’s not that sensitive.

Strzok: Ok. You can imsg just for convenience of typing, too, if you want

Strzok: And I have no good, awful, sh*tty terrible (work) news. I can’t say it here, and you can’t share with Andy (yet). I’m upset.

Page: Can you share it on imsg?

Strzok: Yes just sent[.]8

Grassley then excoriates the FBI – comparing Strzok and Page’s use of personal devices for work purposes to Hillary Clinton’s mishandling of classified information on her personal server – which Strzok and Page were investigating

“Under 18 U.S.C. § 2071, it is illegal to willfully and unlawfully conceal, remove, or destroy a federal record. Secretary Clinton alienated thousands of federal records when she used a nongovernment server and email for official work, many of which were deleted rather than returned to the State Department when the Department requested them. Ironically, as FBI employees tasked with investigating Clinton’s similar conduct, Strzok and Page appear to have used nongovernment systems for official work as well. This Committee has yet to receive a satisfactory explanation as to why the FBI apparently let Secretary Clinton off the hook for multiple § 2071 violations. It is disturbing that even at this late date, and with all the litigation surrounding Secretary Clinton’s use of a private email server for official business, the FBI seems similarly uninterested in even attempting to retrieve federal records of its own employees that appear to have been alienated as well.

Grassley then asks three questions of Wray, noting that he expects the response to be unclassified:

  • Why has the FBI not requested from Ms. Page or Mr. Strzok any official work-related material from their personal devices and email accounts?
  • Why has the FBI not conducted searches of non-FBI-issued communications devices or non-FBI email accounts associated with Mr. Strzok or Ms. Page for official work-related material?
  • The FBI’s May 3, 2018, response letter also failed to answer questions 1-5, 8, and 11. Please provide answers and the requested documentation by the deadline. 

Full letter below

BofA: “The Best Leading Indicator Of Global EPS Just Turned Negative”

When it comes to the recently passed $1+ trillion US fiscal stimulus, there are two opposing views in the market: one is that it was an unnecessary, ill-timed diversion, which the US economy with its near record low unemployment rate does not need, which will prompt a surge in inflation and will unleash a debt-funding crisis as the US Treasury is forced to sell record amounts of debt at every greater yields. This is the view typically held by those who are politically aligned against President Trump.

On the other hand, there are those who say the impact of US fiscal stimulus has been extremely visible in US business & consumer surveys (which have predicted >5% growth in real GDP) and together with tax reform, has been instrumental in send the S&P 35% higher since the Trump election. Supporters of president Trump tend to see more positives than negatives in the fiscal plan.

And yet, the reality is that to date US tax cuts have had little if any tangible impact on actual economic activity according to Bank of America economists. In a note released earlier today by BofA’s Michael Hartnett, the chief investment strategist highlights the following:

  • US capital goods orders in the past 5 months are very surprisingly flat despite corporate tax cuts, record profits & stock prices (Chart 6); and there is no evidence of Make American Wages Great Again (wage growth stuck around 2.5%)

  • The $1600 gain from tax cuts in 2018 for average US households (Brookings Institute) has thus far been saved (personal savings rate is up from 2.4% to 3.1%), used to reduce debt (42% of respondents BofAML’s US consumer survey said they plan to use the tax cut to “save” or “pay down debt”), or used to fund an extra $320 in gasoline bills (gasoline prices are up on average 16% this year)

However, no matter what one thinks of Trump or the ultimate relevance of the fiscal stimulus, a bigger concern – according to BofA – is that a “visible stimulus” will be critical in the coming months for two reasons:

  • First, the blockbuster corporate earnings bonanza is coming to an end as BofA’s model suggests global EPS will slow from 20% to 6% in coming quarters as Asian export growth slows and global PMIs normalize, as predicted by the yield curve.

  • Second, and far more important, is that both profit and economic growth is suddenly in jeopardy: according to Hartnett South Korean export growth, a notoriously good global cyclical indicator, turned negative for 1st time since 2016.”

And, as a further reminder, the last time South Korean export growth turned negative in the downward direction was just around the time of China’s devaluation in the summer of 2015, when global markets were on the verge of a 20% bear market, and only the Shanghai Accord of February 2016 prevented a free fall in risk assets.

If the South Korean “advance indicator” is as accurate as it has always been, forget about soaring earnings for the coming quarters: an earnings recession is just around the corner!

Saudi Arabia’s Needs Have Become Iran’s Problems

Authored by Tom Luongo,

While Israel has been the barking dog pushing hostilities against Iran, it is the Saudis that are truly most threatened by Iran’s return to the global economy.  They are as much, if not a bigger, agitator for tearing up the Iran Nuclear Deal as Israel has been.

A report earlier this week from the International Monetary Fund argued that Saudi Arabia still needs oil trading at $88 per barrel to balance its budget and pull off the structural reforms the country needs.

Crown Prince Mohammed bin Salman’s Vision 2030 plan, which has the usual suspects in Washington salivating at the prospect of leaching off of, will require a complete make-over of Saudi society.  It will likely cost trillions.  And the Saudis still have a big budget deficit.

It is set to shrink to a more manageable 7% of GDP this year while expanding government spending by more than 5%.

2018 Cuts the Deficit to 7.3% of GDP, thanks to $70/bbl Oil

And the only thing keeping this budget deficit moving lower is, of course, higher oil prices.  Last year’s breakeven point was just $70 per barrel. But that rises this year to $88 according to the IMF because Bin Salman has begun the spending associated with Vision 2030.

Now, since the implementation of the Iran Nuclear Deal (JCPOA) Iran’s oil output has risen back to its pre-sanctions level of around 3.8 million barrels per day.

Iran’s Oil Production Now Exceeds, on Average, it’s Pre-Sanctions Level in 2012

With new exploration and production deals signed by European, Chinese and Russian oil majors Iran’s output over the next few years could easily push over 4 million barrels if not closer to 5 million.

While at the same time Saudi Arabia wants to both cut back on production and its exports to raise the price per barrel to the level it needs.  So, it shouldn’t take a genius to see the incentive here to try and bribe President Trump with hundreds of billions in arms sales and promises of fighting Iran in Syria to get him to de-certify the JCPOA and have the deal fall apart.

U.S. Mob Rule

The Saudis, to some extent, are being shook down by Trump, Mafioso-style, for our nuclear shield.  In exchange for help bottling up Iran and raising oil prices the Saudis will have to spend a lot of their savings pump-priming the U.S. economy with new refineries in Texas and more planes to drop bombs on weddings.

You know, win/win.

If the Saudis need $88 per barrel oil then Iran has to have its output cut to offset the rising price per barrel.

With the reports that U.S. Green Berets are present on the battlefield in Yemen should tell you that the Trump Administration is uninterested in any outcome in the Middle East that doesn’t end with Iran’s capitulation to Israeli and Saudi (and therefore U.S.) needs and Russia and China’s humiliation for backing Iran.

The White House is fully staffed with people willing to commit or condone the worst human rights violations in Yemen and Syria in order to stop Iran.

The question is, “Stop Iran from what?”  The conventional answer from Trump and K-Street foreign policy ‘experts’ is, “Gaining a nuclear weapon.”  The real answer, however, is much simpler than that.

Iran will not be allowed to re-join the global economy as an independent actor.  That position will be maintained even if the theocracy is overthrown.  Because this supposed existential fight to the death between Saudi Arabia and Iran has little to do with religion and old enmities.

It has to do with oil.   Saudi Arabia wants Iran back to less than 3 million barrels a day to support higher prices.  Israel and the U.S. want to starve the Iranian government of money, so pulling out of the deal will allow the U.S. to re-impose sanctions on Iran, cutting it out of the global banking system again.

But Iran being back to pre-2012 production levels and removing the U.S. dollar from its oil trade officially means that China has a different partner to buy its oil from.  And that supports the fledgling petroyuan system developing in Shanghai financial markets.

The China Syndrome

Sinopec is set to curb imports of Saudi Oil another 40% this month citing inexplicable high prices from the Saudis during a time when a significant portion of Sinopec’s refineries are down for annual maintenance and other producers are happy to offer more for less to grab market share.

Last month, a Unipec official told Reuters, “Our refineries think these are unreasonable prices as they do not follow the pricing methodology.” Besides Sinopec, a source from another two refineries in northern Asia said they will be cutting their imports from Saudi Arabia by ten percent as oil buyers have a hard time grasping how the Kingdom is calculating the price for its most popular grade.

The price increase came as a surprise to the biggest market for crude in the world.

Aramco is pushing China at a time when it’s clear it has other options in the oil market and no longer wants to pay for oil in dollars.  Brazil’s imports to China have risen sharply.  Iran’s imports to India, tangentially related, are set to double this year to nearly 400,000 bbl/day.

Trump may want the Saudis, again mafioso-style, to raise its prices to get China to import U.S. oil as the Brent/WTI spread continues to widen, now over $6, to combat the U.S. trade deficit with China.  Not that that makes a lick of sense, but then again, Trump is a mercantilist, which also doesn’t make any sense.

So, at least its consistent.

U.S. production keeps surging and will continue for likely the rest of 2018 and beyond as new fracking techniques lengthen the production time of new wells, albeit at lower daily output.

So, even if rig counts fall, which they show no signs of doing, U.S. shale oil output will keep rising.  Brent output is falling, U.S. production is rising.  So, the Brent/WTI spread will continue to widen if new ‘markets’ aren’t opened up for U.S. shale producers.

This again, brings me back to the Iran Nuclear Deal being all about oil and not about bombs.  Ending the deal will allow Iran to restart its program which the conventional wisdom says they can spin up to a viable weapon within 18 months, quicker if its partner North Korea was successful in producing a viable warhead.

But, having removed Iran from the SWIFT financial payments network and seen Iran survive it, the threat of sanctions and SWIFT expulsion seem hollow. Both China and Russia have viable SWIFT alternatives and Iran has so few ties to both U.S. and European banking institutions after nearly a decade of hostilities.

Moreover, Turkey, who helped Iran survive without SWIFT in the past, is more than happy to stick it to the U.S. after its backing the Syrian Kurds.  In short, Iran has a lot more friends today than it did in 2012.

China and Russia are immensely stronger.  Israel and Saudi Arabia far weaker.  And that means that regardless of what Trump does on May 12th, the world is already prepared for the next steps.