Iraq is moving troops around the Kurdish region of Iraq, putting at risk about 600,000 barrels of daily oil production at a time when global oil supply is tightening. Oil is also getting support from the Trump Administration’s decision to decertify the Iranian nuclear deal and kicking the can to the U.S. Congress that will have to either change the deal or the U.S. may pull out. Yet, because all the major commodities that show growth like copper and palladium are on the move the real reason behind the oil rally may be simply a case of rip-roaring demand at a time when global oil production is falling.

You must feel sorry for the Kurds, the people without a country. The vote for independence did not go over well with Iraq or Turkey.Iraq launched a military operation to take over the region from Kurdish forces and captured several positions south of Kirkuk from Kurdish fighters on Monday in their bid to regain control of the city.Reports are that Kurdish leaders agreed to hand over control of North Oil and North Gas company facilities who belong to the state and that the oil and gas facilities should stay out of the conflict. Still, the oil market will be worried that the supply from the area could be at risk.

The U.S. oil and gas rig count are showing more signs of topping out. Baker Hughes’ reported that the oil rig count fell by five in last week to 743. Rigs drilling for natural gas also fell by 2 to 15. Offshore oil rigs fell by 2 which put oil rigs 3 below year-ago levels. There will be more pullback in oil rigs as cost per rig is rising and a tight supply of rig and frac crews. Hot money is pulling back from shale as returns have been disappointing.

 Forget about Peak demand.OPEC Secretary General Mohammad Barkindo say that oil demand will grow at a “healthy pace” over the next five years. He says that crude oil demand will increase an average 1.2 million barrels a day through 2022 and slow to 300,000 barrels a day in 2035 to 2040 in a giving a preview of OPEC’s 2017 World Oil Outlook set to be released Nov. 7 according to Bloomberg.

The share of fossil fuels in the global energy mix will slip below 80 percent by 2020 and fall to 75.4 percent by 2040, he said. Wind, solar, geothermal and photovoltaic sources will be the fastest-growing energy, increasing by an average of 6.8 percent a year from 2015 to 2040, though still accounting for less than 5.5 percent of the world’s total energy mix by 2040, he said.

The oil story really is about supply and demand. From the generational low that we hit when oil double bottomed near $26 a barrel back in 2016 to the fight to break above $50 we have battled with since. The failure to breakout above $60 because of some short-term misperceptions about shale oil may be the cause of a much larger upside move down the road. There is clear evidence that shale oil production expectations are falling short and there is a lack of investment right before global demand is set to take off. Global spare production capacity will tighten as demand rises. Increasing geopolitical risk now matter more than it has in some time.

Natural gas is pulling back a bit as temperatures ease up. Andy Weissman of EBW AnalyticsGroup says that because of a much larger-than-expected natural gas production losses due to Nate (a category 1 storm) coupled with a major pipeline outage on the TETCO system have unexpectedly cut supplies by 25 Bcf, largely offsetting the impact of very mild weather and pushing futures higher. The November natural gas contract is likely to retreat early this week due to very mild weather and restoration of production. There continue to be signs, though, that weather could turn colder by early November. If this trend continues, prices could head back up again soon. Milder temperatures are expected to sap electricity demand during the coming week, softening day-ahead prices at most eastern hubs. The exception may be NEPOOL, which could see day-ahead prices rise due to maintenance outages at the Millstone nuclear power plant.