The oil market is getting less rattled by the headlines surrounding Iran. Iranian threats to shut down the Straits of Hormuz or cut off supply to Europe in a preemptive strike, have been like the old story of the Little Boy Who Cried Wolf. So is it any wonder that the market is ignoring some of the provocative headlines coming from Iran. It seems that the oil market has been getting prepared for this show down for months and we have the oil supplies to prove it. Even the story that Defense Secretary Leon Panetta thinks that Israel will attack Iran over the next few months failed to rattle a market that has been expecting nothing less for months if not years.

We have seen this preparation from oil producers across the globe. For example we know that Saudi Arabia is producing just 50,000 barrels a day below their 30 production high and the OPEC cartel is also producing oil at a three year high according to a Bloomberg Survey. OPEC production increased by 183,000 barrels, or 0.6 percent, to an average 30.9 million barrels a day in January from a revised 30.717 million the prior month which put output at the highest level since November 2008. The December total was revised higher by 50,000 barrels a day. But to focus just on OPEC production really does not give you a sense why supplies are rising so quickly. The crude and liquid fuels production and refinery processing gains in countries outside of the OPEC accounts 59% of the world's production in 2011. OPEC crude and liquid fuels production is expected to grow at 0.9 million barrels per day in 2012, followed by growth of 0.8 million bbl/d in 2013. Yet total crude and liquid fuels production in 2012 is expected to grow by about 1.4 million bbl/d and projected demand will increase by about 1.3 million bbl/d created a short term glut that will leave production out pacing global demand by the widest margin we have seen since 2008. The Energy Information Agency says that this glut is expected to be relatively short-lived, however, as projected consumption growth of about 1.5 million bbl/d in 2013 significantly outpaces non-OPEC supply growth in that year.

This outlook is why the market is not seemingly being moved by Iran. It is because we already have an incredibly hefty Iranian premium built in. War talk or no war talk the fundamentals are heavy. In others words, the world has already taken steps to replace Iraqi oil before we have lost it Still we are seeing Brent crude stay strong as supplies rise in the US and they are still scrambling to replace oil that may be never lost.

Yet with euro refineries shuttering, it is Asia that is really supporting Brent crude. Bloomberg New Reports that, we are seeing more North Sea or Brent oil being shipped to Asia than at any time in the past eight years as prices fall to the lowest levels in 15 months compared with Middle East alternatives. Bloomberg says that Brent traded at $2.41 a barrel more than Dubai crude on Jan. 13, the smallest difference since October 2010. Companies led by BP Plc and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid-December, equivalent to six days of U.K. production. That's the most for any month since 2004, data from Galbraith's Ltd., a London-based shipbroker, show.

Bloomberg reports that rising production in Libya, refinery closures from the U.K. to Switzerland and a drop in U.S. gasoline demand have created a surplus that is weighing on the price of low-sulfur, or sweet, crude produced in the North Sea and West Africa. That is making it profitable for companies to transport the raw material more than 16,000 miles (25,700 kilometers) to Asia, where demand is outpacing the rest of the world. Bloomberg points out that while still more expensive than Middle East grades, Brent's narrowing premium is making it more attractive to Asian refiners because it's cheaper and easier to process into higher-value products such as gasoline and diesel.

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