Tag Archives: Oil

Trump offered to suspend sanctions while negotiating with Iran, Khamenei rejected the offer, more attacks expected, by Elijah J. Magnier

Posted on June 17, 2019 | Leave a comment

The Iranians may inflict a lot of pain on world oil markets before they negotiate with Trump, if they ever negotiate with Trump. From Elijah J. Magnier at ejmagnier.com:

Japanese Prime Minister Abe Shinzo conveyed a message from US President Donald Trump to the Iranian leadership, asking the release of 5 US prisoners and inviting Iran to sit around a negotiation table, adding “he [Donald Trump] would be ready to suspend all sanctions only during the negotiations”. No guarantee was offered to freeze or revoke the sanctions. Sayyed Ali Khamenei, the Leader of the revolution, rejected the message and any dialogue with the US President and told his guest that he considers Trump unworthy to “to exchange a message with”.

Informed sources close to Iranian decision makers repeated the words of President Hassan Rouhani and the Iranian advisor to Sayyed Khamenei for international affairs, Ali Akbar Velayati, namely that  “if Iran can’t export oil through the Persian Gulf, no-one in the Middle East will be able do this”. The source “expects further attacks in the future, given the US decision to stop the flow of oil by all means at all costs. Thus, oil will stop being delivered to the world if Iran can’t export its two million barrels per day”.

Two tankers  – Kokuka Courageous and Font Altair – were attacked in the Gulf of Oman on Thursday, putting at risk the supply of oil to the West and making oil tanker navigation in the Middle East very unsafe. “One more attack and insurance companies are expected to increase their fees. More attacks and no insurance company will agree to cover any oil tanker navigating in Gulf waters, putting Iran and other oil-exporters at the same level. Moreover, let us see what justifications Trump and Europe will offer their people when the price of oil becomes unaffordable”, said the source.

“Tensions in the Gulf can be eased only when sanctions are lifted on Iran. Otherwise, more objectives may be targeted and the level of tension will gradually increase. The US is selling weapons which are inadequate to protect oil tankers or to protect oil pipelines delivering oil to harbours. If Iran is in pain, the rest of the world will suffer equally,” said the source.

“The selling of oil was compared to a horde of wolves hunting together: when one is unable to hunt, others replace him. When Iran was under sanctions unable to sell its crude oil production daily, Saudi Arabia and Russia replaced Iran and increased their production and delivery. This is why Sayyed Ali Khamenei told the Iranian leadership to no longer consider any country as a durable friend and ally.”

Today, the Gulf of Oman has become the operational stage to attack oil tankers. The oil tankers suffered multiple attacks. Had the attackers aimed to sink the oil tankers, this would have created an ecological disaster in the Gulf of Oman and the Indian Ocean. Iran wants everybody to sit around the negotiation table, including the Gulf countries, but only once the sanctions are lifted.

“President Trump is betting on maintaining the status-quo. This doesn’t suit Iran, because its economy will suffer dearly. Binding the deep economic wound and holding on until Trump ends his first mandate is playing into Trump’s hand and this is not going to happen. The tension in the Gulf was generated when Trump decided to pull out of the nuclear deal (known as the JCPOA). Let him pay the price now. If Iran cannot export its crude oil it means the country must be ready for war”, continue the source.

Russia advised Iran to remain within the JCPOA and Iran promised to withdraw only gradually. The Iranian leadership believes Trump would like to see Iran pull out completely from the nuclear deal so he can accuse Tehran of moving towards a nuclear bomb.

It is a real war that is unfolding in the Middle East today, a war where oil tankers and oil delivery to the world (30% of world oil supply goes through the Gulf) are the targets. President Trump and his Middle Eastern allies will have to bear the responsibility of the losses and the increase in the oil price worldwide due to attacks on oil tankers that are not likely to stop even in the face of US threats.

If Iran considers the sanctions detrimental to the survival of its population in the medium term, it means Iran is ready to go to war and accept the consequences. It is not possible to threaten a country that is already foundering economically. However, for Trump to lift sanctions would provide ammunition for the Democrats to attack Trump in his forthcoming campaign.

The other choice would be to lift sanctions and invite Iran to negotiate. And the last choice would be to challenge Iran, confront it and accept that the entire Middle East will go up in flames. After all, the Iranian leadership welcomed the US aircraft carrier coming to the Gulf and called it a “shooting gallery”. The ball is firmly in the US court.

 

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How Trump’s “Maximum Pressure” Campaign Against Iran Now Works Against Him, by Moon of Alabama

Posted on June 16, 2019 | Leave a comment

President Trump may be the second president, after Jimmy Carter, to see his reelection hopes dashed by Iran. From Moon of Alabama at moonofalabama.org:

There is no evidence that Iran was behind Friday’s attack on tankers in the Gulf of Oman.

There are many parties in the Middle East and in the United States who are interested in goading the U.S. into a military confrontation with Iran. Most of these parties have the capability to launch clandestine attacks on civilian vessels. That the U.S. government would blame Iran for any such attack is obvious. But even Israeli analysts doubtthat Iran is responsible for the recent incidents. The German government doubts that video the U.S. presented shows anything of significance. Others point at the suspicious timing of the incident.


biggerIsrael is of course the foremost candidate for such a false flag attack. Prime Minister Netanyahoo agitated against Iran for the last 25 years. He multiple times threatened to directly attack the country but would prefer that the U.S. would do so. The Israeli clandestine service Mossad is capable of far reaching operations. Israel’s submarines are known to have operated in the Arab Sea.

The Saudis are under pressure from Houthi forces at their southern borders. The Houthi receive some material support from Iran. If the U.S. would attack Iran, the Saudis would be relieved. The Saudis need oil prices way above the current $60 per barrel to finance their state. Anything that drives up the price, like the tanker attacks, is obviously in their interest. The murder of Jamal Khashoggi in Turkey demonstrated that the Saudis developed extensive clandestine capabilities and have no qualms to use them.

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Did the B-Team Overplay its Hand Against Iran? by Tom Luongo

Posted on June 16, 2019 | Leave a comment

Like a lot of fights the US picks, the blowback may be hell. From Tom Luongo at tomluongo.me:

An oil tanker is on fire in the sea of Oman, Thursday, June 13, 2019. Two oil tankers near the strategic Strait of Hormuz were reportedly attacked on Thursday, an assault that left one ablaze and adrift as sailors were evacuated from both vessels and the U.S. Navy rushed to assist amid heightened tensions between Washington and Tehran. (AP Photo/ISNA)

Iranian Foreign Minister Javad Zarif has a term of endearment for Iran’s enemies, “The B-Team.”

The “B-Team” consists of U.S. National Security Advisor John Bolton, Israeli Prime Minister (nee Dictator) Benjamin Netanyahu, Saudi Crown Prince Mohammed Bin Salman and the UAE’s Mohammed bin Zayed.

When we look seriously at the attacks on the oil tankers in the Gulf of Oman this week the basic question that comes to mind is, Cui bono? Who benefits?

And it’s easy to see how the B-Team benefits from this attack and subsequent blaming Iran for it. With Japanese Prime Minister Shinzo Abe in Tehran opening up a dialogue on behalf of U.S. President Donald Trump the threat of peace was in the air.

And none of the men on the B-Team profit from peace in the Middle East with respect to Iran. Getting Trump to stop hurling lightning bolts from the mountain top the B-Team guided him up would do nothing to help oil prices, which the Saudis and UAE need/want to remain high.

Bin Salman, in particular, cannot afford to see oil prices drop back into the $40’s per barrel. With the world awash in oil and supply tight, even with OPEC production cuts, Bin Salman is currently on very thin ice because of the Saudi Riyal’s peg to the U.S. dollar, which he can’t abandon or the U.S. will abandon them.

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Trump Thinks US Oil Is His Strength When It’s His Achilles’ Heel, by Tom Luongo

Posted on June 14, 2019 | Leave a comment

It’s hard to call shale oil a US strength when so much of it is produced at a loss and funded by borrowed money. From Tom Luongo at strategic-culture.org:

Headlines abound about the massive surge in US shale oil production. The energy independence-cheering punditocracy hail this as a great victory. This includes President Trump.

And it would be if this surge in production was built on financially stable ground. But it isn’t. The fracking industry continues to bleed massive amounts of cash. As I pointed out in an article earlier this week, when accounting for this inconvenient truth much of the U.S’s return to dominance in the energy space is a lot of hot air.

Nick Cunningham’s article at Oilprice.com tells the tale.

Heading into 2019, the industry promised to stake out a renewed focus on capital discipline and shareholder returns. But that vow is now in danger of becoming yet another in a long line of unmet goals.

“Another quarter, another gusher of red ink,” the Institute for Energy Economics and Financial Analysis, along with the Sightline Institute, wrote in a joint report on the first quarter earnings of the shale industry.

The report studied 29 North American shale companies and found a combined $2.5 billion in negative free cash flow in the first quarter. That was a deterioration from the $2.1 billion in negative cash flow from the fourth quarter of 2018. “This dismal cash flow performance came despite a 16 percent quarter-over-quarter decline in capital expenditures,” the report’s authors concluded.

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Why Trump now wants talks with Iran, by Pepe Escobar

Posted on June 6, 2019 | Leave a comment

Somebody in the Trump administration looked at a map of the Middle East and figured out that if Persia (Iran) blocked the Strait of Hormuz access to the Persian Gulf, it would send the price of oil sky high. That might gum up the global economy, financial markets, and Trump’s reelection bid. From Pepe Escobar at atimes.com:

Why Trump now wants talks with Iran

Iranian soldiers take part in National Persian Gulf Day in the Strait of Hormuz on April 30, 2019. There is concern about a blockade of the Strait and the disastrous impact that could have on the price of oil and world financial markets. Photo: AFP / Atta Kenare

If Tehran blocks the Strait of Hormuz it could send the price of oil soaring and cause a global recession
Unlike Deep Purple’s legendary ‘Smoke on the Water’ – “We all came out to Montreux, on the Lake Geneva shoreline”, the 67th Bilderberg group meetings produced no fire and no smoke at the luxurious Fairmont Le Montreux Palace Hotel.

The 130 elite guests had a jolly good – and theoretically quiet – time at the self-billed “informal discussion forum concerning major issues”. As usual, at least two-thirds were European decision-makers, with the rest coming from North America.

The fact that a few major players in this Atlanticist Valhalla are closely associated with or directly interfering with the Bank for International Settlements (BIS) in Basel – the central bank of central banks – is of course just a minor detail.

The major issue discussed this year was “A Stable Strategic Order”, a lofty endeavor that can be interpreted either as the making of a New World Order or just a benign effort by selfless elites to guide mankind to enlightenment.

Other items of discussion were way more pragmatic – from “The Future of Capitalism”, to “Russia”, “China”, “Weaponizing Social Media”, “Brexit”, “What’s Next for Europe”, “Ethics of Artificial Intelligence” and last but not least, “Climate Change”.

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Sanctions Are a Bitch – U.S. Refiners Importing Russian Oil Like Mad, by Tom Luongo

Posted on May 23, 2019 | Leave a comment

The law of unintended consequences catches up to Trumps trade and sanctions policies. From Tom Luongo at tomluongo.me:

It’s a headline so funny I literally ruined a keyboard spitting out my coffee yesterday.

Working off a stub from Bloomberg, Sputnik took a lot of joy in amping up the irony.

The market needs to be fed. And refiners will buy whoever has the best cargo at the best price. It is only politicians who don’t understand that you can’t dictate to the markets.

Now refiners in the U.S. have been under pressure with rising oil prices but Russian oil isn’t brought in to supply the tight gasoline market. Russian Urals grade is considered heavy-sour which is better for refining into diesel and other heavier grades.

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Iran Squeezed Between Imperial Psychos and European Cowards, by Pepe Escobar

Posted on May 14, 2019 | Leave a comment

The pathological haters of Iran in the US government hate for three dishonorable reasons. Iran kicked out the US’s puppet in 1979, Iran is conducting the oil trade in currencies other than the dollar, and Iran is a linchpin of the Belt and Road Initiative. From Pepe Escobar at consortiumnews.com:

Berlin, Paris and London assumed Tehran could not afford to leave the JCPOA even if it was not receiving any of the promised economic rewards.  Now the EU3 are facing the hour of truth, writes Pepe Escobar.

The Trump administration unilaterally cheated on the 2015 multinational, UN-endorsed JCPOA, or Iran nuclear deal. It has imposed an illegal, worldwide financial and energy blockade on all forms of trade with Iran — from oil and gas to exports of iron, steel, aluminum and copper. For all practical purposes, and in any geopolitical scenario, this is a declaration of war.

Successive U.S. governments have ripped international law to shreds; ditching the Joint Comprehensive Plan of Action is only the latest instance. It doesn’t matter that Tehran has fulfilled all its commitments to the deal — according to UN inspectors. Once the leadership in Tehran concluded that the U.S. sanctions tsunami is fiercer than ever, it decided to begin partially withdrawing from the deal.

President Hassan Rouhani was adamant: Iran has not left the JCPOA — yet. Tehran’s measures are legal under the framework of articles 26 and 36 of the JCPOA — and European officials were informed in advance. But it’s clear the EU3 (Germany, France, Britain), who have always insisted on their vocal support for the JCPOA, must work seriously to alleviate the U.S.-provoked economic disaster to Iran if Tehran has any incentive to continue to abide by the agreement.

Protests in front of former U.S. embassy in Tehran after U.S. decision to withdraw from JCPOA, May 8, 2018. (Hossein Mersadi via Wikimedia Commons)

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Posted in Currencies, Energy, Eurasian Axis, Foreign Policy, Geopolitics, Governments, History

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War on Iran and Calling America’s Bluff, by Pepe Escobar

Posted on April 24, 2019 | Leave a comment

Iran can inflict major damage on energy markets and the global economy. From Pepe Escobar at consortiumnews.com:

Vast swathes of the West seem not to realize that if the Strait of Hormuz is shut down a global depression will follow, writes Pepe Escobar.

The Trump administration once again has graphically demonstrated that in the young, turbulent 21st century, “international law” and “national sovereignty” already belong to the Realm of the Walking Dead.

As if a deluge of sanctions against a great deal of the planet was not enough, the latest “offer you can’t refuse” conveyed by a gangster posing as diplomat, Consul Minimus Mike Pompeo, now essentially orders the whole planet to submit to the one and only arbiter of world trade: Washington.

First the Trump administration unilaterally smashed a multinational, UN-endorsed agreement, the JCPOA, or Iran nuclear deal. Now the waivers that magnanimously allowed eight nations to import oil from Iran without incurring imperial wrath in the form of sanctions will expire on May 2 and won’t be renewed.

The eight nations are a mix of Eurasian powers: China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece.

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Trump Kicks the Sanctions Can on Iran Oil, by Tom Luongo

Posted on April 23, 2019 | Leave a comment

Trump’s slithering away from full sanctions on Iran because the US can’t enforce them and it would disrupt the oil market the year before the 2020 election. From Tom Luongo at tomluongo.me:

Sanctions on Iran have failed. The weakness of the U.S. position in the oil markets is now complete. Donald Trump’s Energy Dominance strategy has failed.

The announcement by Secretary of State Mike Pompeo (R – The Eschaton) that no more sanctions waivers will be granted to importers of Iranian oil. Those that do so will face sanctions.

But let’s look at what is actually on the table. Waivers will be extended to a year from now during a ‘wind-down’ period. But, I thought these past six months were the ‘wind down’ period Don?

I told you these would get extended the minute they were granted. Because three of these countries — India, Turkey and China — are in open revolt over the policy.

And they have built plenty of infrastructure to get around these sanctions when or if they are ever implemented.

Three of the eight countries granted waivers — Italy, Greece and Taiwan — do not need waiver extensions as they’ve already cut their imports to zero.

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Time’s Running Out for World’s Most Indebted Oil Company, by Don Quijones

Posted on March 11, 2019 | Leave a comment

Venezuela is not the only country with “problems” in its oil company. Mexico’s appears to be going down the drain, too. From Don Quijones at wolfstreet.com:

US rating agencies pressure Pemex and the new Mexican government. But Pemex is too big to fail. 

The financial pains and strains continue to grow for the world’s most indebted oil company, Petroleos de Mexico (Pemex). Standard & Poor’s became the latest in a succession of rating agencies to downgrade the company. Pemex is state-owned. So S&P has two credit ratings for the company: One, as if it were a stand-alone company; and one for the company as part of the Mexican state.

S&P slashed its stand-alone rating of Pemex three notches to ‘B-‘ from ‘BB-‘ on growing worries that financial support pledged by the government might not be enough to prop up the company and might not be enough revive declining production. Anything below ‘BBB-‘ is non-investment grade, or “junk.” ‘B-‘ is six notches into junk (see our corporate credit rating scales by Moody’s, S&P, and Fitch).

S&P left unchanged its rating of Pemex-as-part-of-the-Mexican-state, at ‘BBB+’, the same as its rating of Mexican government debt, but lowered its outlook for both to negative from stable, and warned that Mexico faces a one-in-three chance of being downgraded in the coming year. This, in turn, triggered a cascade of outlook downgrades for many of Mexico’s biggest corporations and 72 financial institutions, including the country’s biggest banks and insurance companies.

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