Risk level: ORANGE - High

RED: Severe (+/- 4%) ORANGE: High (+/- 2%)  YELLOW: Elevated (+/- 1%)  BLUE: Guarded (+/- ½%)

THE BOOSTER SHOT

•             Watch your Twitter feeds to see if Trump stirs the economic or geopolitical pot

•             Libyan instability resurfaced during the weekend, while Iraqi unrest is concerning

•             Keep calm and mind the trade war

The big headline moving into the third week of July is Monday's meeting between the Russian and U.S. presidents, a meeting overshadowed by the recent U.S. indictment of 12 Russian intelligence officers. The Helsinki meeting could offer the Kremlin a chance to showcase its position of strength, not only because of President Putin's KGB background, but also because of its growing energy influence in the European gas market and its seat at the OPEC table. Beneath the headlines, however, remains uncertainty about the state of affairs in Libya. It was the lifting of force majeure on Wednesday that helped sink the price for Brent crude oil 6 percentage points. A short few days later and security fears escalated once again when staff members at the Sharara oil field were abducted. We've learned so far there is no room for risk in an ever-tightening market. In a testament to increased volatility, we erred a bit on the side of caution with last week's Orange alert, with Brent falling 2.9 percent for the week ending July 13. That's the second week in a row for a similar decline. We expect that volatility to continue.

Deputy U.S. Attorney General Rod Rosenstein dropped a bombshell on Friday by charging Russian intelligence officers with hacking into Democratic computer networks in the waning months of the last election cycle. With Rosenstein calling for a united front against foreign interference, the indictments did little to heal U.S. political wounds. The president took to Twitter to deflect blame toward his predecessor, falsely, for not raising the issue of Russian meddling. Democrats, meanwhile, said the meeting with Russian President Vladimir Putin should be cancelled in light of the latest findings.

One of the aspects of interdependent relations in the global system is the drawing near of adversaries. A Hezbollah with a stake in the Lebanese political game, for example, is less likely to act out than if it were isolated. For Russia, Mikhail Gorbachev united socialism with democracy under perestroika in the waning years of the Soviet Union. A post-Soviet involvement in the G8 later tied the Russian economy closely to the rest of the world. For President Trump, cooperation may be his way of containing Russia. The administration may see leverage in addressing concerns about Russia's grip in the European energy sector through the Nord Stream gas pipeline to Germany with Putin at the table. For oil, with Trump concerned about the domestic fallout over higher gasoline prices, pressing for market stability may be easier on friendly terms.

But this is not Gorbachev's Russia -- it's Putin's. What the fallout from the Russia indictments tells us is that Putin's Russia is deft at pulling strings and dividing U.S. politicians. It's Russia that's seated next to Saudi Arabia at an OPEC steering committee, not the U.S. president. For Trump, then, market stability depends on a certain degree of appeasement. In gas, Germany's support for the Nord Stream pipeline, in defiance of Trump, runs deep through the post-World War II geopolitical narrative. Though U.S. oil continues to flow through the global market, the optical era of global affairs may leave Trump facing energy security headwinds.

Elsewhere, there are lingering security concerns for some of OPEC's largest producers. On Saturday, the Libyan National Oil Corp. said armed assailants kidnapped four workers at the Sharara oil field, but later released two of them. Operations at the facility were shutdown, all workers were evacuated and production was cut by 160,000 barrels per day. Libyan security challenges were net positive for the price of Brent during early July, though a brief halt in the violence sparked a sharp correction on Wednesday. Clashes in June left some of the storage tankers at the Ras Lanuf terminal heavily damaged and facing a long repair timeline. Weekend security issues, meanwhile, show it may be a long time before Libya returns to its 1 million bpd capacity.

Digging deeper beneath the ever-present Trump headlines reveals brewing unrest in the oil-rich southern Iraqi province of Basra. It's from here that most of the oil from OPEC's second-largest producer flows. The Iraqi Oil Ministry said total exports for the first half of the year were up 5 percent from last year. Frustrated residents in Basra, however, have blocked access to the port of Umm Qasr in a possible sign of emerging Iraqi bottlenecks. That would only heighten the frustration in Iraq as it works to form a coalition government after the bloc led by influential Shiite cleric Moqtada Sadr won in May parliamentary elections.

And let's not forget about the implications of global trade tensions. Chevron and Royal Dutch Shell secured relief from tariffs on steel imports last week. Those tariffs are complicating the strain on pipeline capacity in the United States as production trends pick up. The Baker Hughes rig count for the United States is increasing, albeit at a slow and steady pace, so the U.S. industry's pleas for relief remain something to watch.

We anticipate a jump in crude oil prices Monday in response to the latest unrest in Libya. On Friday, The Wall Street Journal reported the Trump administration may be considering a release from the Strategic Petroleum reserve as part of its strategy to get more oil on the market. The lack of spare capacity is concerning and turmoil in the Middle East only complicates the matter. Times are lean on the supply side of the oil market, though there are indications the global economy is starting to cool off and ease demand.

On Tuesday, we have U.S. Fed Chair Powell testifying before a Senate panel. Wednesday offers a glimpse of British inflation at the height of Brexit complications. While the Trump-Putin summit, whether it actually takes place of not, will dominate the headlines for the week, we're monitoring instability in Iraq and Libya. But keep your eyes on your Twitter feeds to see if Trump stirs the economic or geopolitical pot over the next 48 hours and into the week. We're sticking with an Orange alert, expecting the price for Brent crude oil to exhibit more volatility in the week ahead. Middle East issues would push oil prices higher for the week, while any concessions from major producers would have a negative impact on the price for Brent.