I’m not surprised oil prices have popped up in the past few months. Europe is finally showing a pulse. Spain, France and even Italy have moved out of the intensive care unit, making it easier for them to sneer at feeble Greece’s plight. The U.S. benchmark crude now bobs at $60 a barrel, way up from its March low of $44. (Unfortunately, higher gasoline prices are starting to pinch U.S. consumers.)
So now, of course, fidgety and foaming speculators are starting to bet on a sharp move back into the $80s and up towards $100. No so fast. While a small pop up in prices makes sense on hopes for European growth, do not forget the massive number of oil rigs resting on the sidelines ready to pump again if oil shoots higher. The U.S. rig count plummeted from about 1,500 to about 660 in the past year, according to Baker Hughes. And if President Obama forces through his Iran nuclear agreement and lifts sanctions, Iran will spin on its spigots, pumping another million barrels of oil onto the market each day. (The sanctions squeezed Iran’s exports down from 2.5 million to 1.1 million.) Iran ranks number four in proven crude oil reserves and number two in natural gas. The mullahs need moolah. And even President Obama is helping to bring more crude to market, approving Shell’s plan for Arctic drilling. For his decision, Obama was accused of the most vicious crime of the heart and mind that can be hurled by the Left: an op-ed in the New York Times called him a climate change denier.