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Expand chart
Data: EIA; Chart: Andrew Witherspoon/Axios

Oil prices have been rising this week. But here's the more interesting thing: they're not going bananas these days, not at all, despite a good dose of geopolitical turbulence and market intervention, including U.S. sanctions.

The big picture: Prices are up in recent days (Brent is pushing $62 per barrel and WTI is above $54), but they're still more than $20 below the elevated early-October levels, which were four-year highs.

Why it matters: It's a sign of an oil market that has been transformed by the rise of U.S. shale production and other forces. Center for Strategic and International Studies analyst Sarah Ladislaw summed things up in a tweet yesterday...

"Just wanted to point out that we are living in a scenario where the U.S. is sanctioning Venezuelan crude oil exports (effectively) and Iranian oil exports, OPEC is cutting, Alberta is curtailing, and oil price today is still around $60/54 (brent/WTI)."

The intrigue: I chatted with Ladislaw about why this is happening, when it really should be a cocktail for very high prices right now.

  • "We are in a time where there is a lot of market intervention for geopolitical reasons and there is little to no geopolitical risk in the price right now," she tells me.
  • "It's hard to move prices when the prevailing sentiment is that markets are very well supplied in a number of different directions, and there is an economic malaise around expectations for oil demand growth," Ladislaw adds.
  • Yes, the sanctions are sending Gulf Coast refiners who use heavy Venezuelan oil searching for replacement barrels and that will affect pricing for specific grades. Venezuela is an important supplier, as the chart above shows.
  • But, overall, the market is absorbing the news for now.

Where it stands: U.S. production, already at record levels, continues to rise and is now approaching 12 million barrels per day. Ladislaw notes that it has consistently been beating expectations.

  • Venezuelan production has been cratering for a while, so that's somewhat baked into the cake.
  • But she points out that the landscape has changed in other ways that also temper the friction, such as: "We have already done Iran sanctions once before. There is a little bit of muscle memory in the market for dealing with an environment in which you have to find alternatives for Iranian barrels."

The latest: Via Reuters, "Oil prices steadied after two days of gains on Thursday, as lower-than-expected U.S. fuel stock rises and U.S. sanctions on Venezuelan output boosted investor confidence but U.S.-China trade tensions weighed on sentiment."

Go deeper: Unpacking Trump's Venezuelan oil move

Go deeper

"Atmospheric river" swings Northern California from drought to flood

Satellite view of the bomb cyclone swirling off the coast of the Pacific Northwest and the atmospheric river affecting California on Oct. 24. Photo: CIRA/RAMMB

A series of powerful "atmospheric river" storms are delivering historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest — triggering widespread power outages and flooding.

Why it matters: The strong atmospheric river, packing large amounts of moisture, is causing Northern California to whiplash from drought to flood.

“You blew it”: GOP activist turns on corporations over vaccine mandates

The chairman of the American Conservative Union said on "Axios on HBO" he accepts "Joe Biden is my president, and I want him to succeed," but predicted Republicans retake the House and Senate in 2022 — with greater than 50% odds Donald Trump runs in 2024.

The big picture: In a joint interview with his wife, Mercedes, Matt Schlapp also refused to share their vaccination status. And he told corporate America "you blew it" by embracing vaccine mandates and liberal social stances that have alienated GOP voters and politicians.

3 hours ago - Politics & Policy

Pelosi expects “billionaire’s tax” to pay for Biden social spending

Photo: Yasin Ozturk/Anadolu Agency via Getty Images

House Speaker Nancy Pelosi (D-Calif.) said Sunday she expects the chamber to pass the bipartisan infrastructure plan by week’s end, and alternatives to corporate tax hikes and a “billionaires tax” will be used to finance President Biden’s promised expansion to the social safety net.

Why it matters: Pelosi’s comments come as House and Senate leaders try to wrap up a deal. What will get cut — and how the remainder will be paid — are linchpins to a final agreement.