Oil prices are on the rise as President Trump warns the world that anyone trading with Iran will not be trading with the USA. That pronouncement is directed at the EU who yesterday said that “We deeply regret the re-imposition of sanctions by the U.S., due to the latter’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA),” the statement issued in Brussels said. Yet, the tough talk may have changed some minds a bit after Iranian President Hassan Rouhani said he would welcome talks with the U.S. “right now.” “I don’t have preconditions. If the U.S. government is willing, let’s start right now.”

Yet, at the same time, Rouhani said that “If you’re an enemy and you stab the other person with a knife and then you say you want negotiations, then the first thing you have to do is remove the knife.” He also wants the U.S. to apologize for past actions against the Iranian people. I think if he is waiting for President Trump to apologize, he had better just wait for hell to freeze over.

China has turned to Iran to replace U.S. crude, but what is Iran to profit if they gain China and lose India? Reuters is reporting that U.S. crude oil producers appear to have found an alternative buyer for cargoes no longer heading to China, with India on track to import record volumes in August.

India has booked a total of 9.94 million barrels of crude, about 319,000 barrels per day (bpd), to arrive from the United States this month, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts. This would be almost triple the 119,000 bpd India imported from the United States in July, and well above the 190,000 bpd for November last year, the previous record for a month.

Oil bears have received a reality check. Shale oil output is slowing, and pipelines are full. Saudi oil production fell, raising concerns about their ability to replace Iranian oil. The oil supercycle, that we told you was born in 2014 and 2015, is on full display. Normal seasonal weakness is overshadowing on what will turn out to be one of the tightest winter markets we have seen in over a decade. This as the oil market gets prepared for what should be a very bullish American Petroleum Institute (API) report.