$100 oil on hold
So much for $100 oil. The war between Russia and Georgia — which had zero impact on oil prices last week — suddenly has put a floor under oil as the new week begins, at least for the moment.
The proximate reason is the shutdown of oil shipments (and all other shipments) from Georgian ports, coupled with Georgia's claim that Russia tried to bomb the Baku-Tbilisi-Ceyhan (BTC) pipeline that runs from the Azerbaijan to Turkey, through Georgia.
But here's something the markets aren't yet factoring in — the possibility that Georgia's pro-Washington president launched an attack on ethnic Russian enclaves in Georgia to create a diversion for Russia in the event of a U.S. or Israeli attack on Iran.
Let's back up for a moment. Middle East newspapers are buzzing with reports that two U.S. aircraft carriers, the Roosevelt and the Reagan, are heading toward the Persian Gulf. (The Lincoln is already there.) The Roosevelt took part in war games along with British and French vessels off the U.S. East Coast a few weeks ago — a fact that leads a blog called Europe Business to speculate all three of those nations are preparing a naval blockade of Iran. Here's what makes that so interesting:
There is a great fear that Russia and China may oppose the naval and air/land blockade of Iran. If Russian and perhaps Chinese naval warships escort commercial tankers to Iran in violation of the blockade it could be the most dangerous at-sea confrontation since the Cuban Missile Crisis. The US and allied Navies, by front loading a Naval blockade force with very powerful guided missile warships and strike carriers is attempting to have a force so powerful that Russia and China will not be tempted to mess with. This is a most serious game of military brinkmanship with major nuclear armed powers that have profound objections to the neo-con grand strategy and to western control of all of the Middle East's oil supply.
The Russian Navy this spring sent a major battle fleet into the Mediterranean headed by the modern aircraft carrier the Admiral Kuznetsov and the flagship of its Black Sea Fleet, the Guided Missile Heavy Cruiser Moskva. This powerful fleet has at least 11 surface ships and unknown numbers of subs and can use the Russian naval facility at Syria's Tartous port for resupply. The Admiral Kuznetsov carries approximately 47 warplanes and 10 helicopters. . . .
A strategic diversion has been created for Russia. The Republic of Georgia, with US backing, is actively preparing for war on South Ossetia. [Ed. note: This was written the day before the war broke out.] The South Ossetia capital has been shelled and a large Georgian tank force has been heading towards the border. Russia has stated that it will not sit by and allow the Georgians to attack South Ossetia. The Russians are great chess players and this game may not turn out so well for the neo-cons.
Of course, there's no telling if this is how it will play out. The foreign-policy insider website Swoop ignores this scenario in its weekly Monday-morning briefing, focusing instead on what the lame-duck government in Israel might do.
At the July 30th US-Israel strategic dialogue, US officials cautioned Israel against military action. However, they recognize that Israel will act according to its own interests, not in accordance with US instructions. A senior State Department official told us: “The reality is that we would not necessarily be able to detect an Israeli attack until shortly after it is launched.”
You'd think for $3 billion a year in aid, Washington might get a 48-hour heads-up to move forces into position. But maybe not.
In any event, either of these scenarios — a U.S. blockade or an Israeli attack — could quickly drive oil from $117 to $200. And of course, there are other scenarios under which it could happen, too. We'll be keeping our eye on the ball here while establishment media focus on the Olympics and the extramarital affairs of former presidential candidates.
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I am so disgusted with both the mainstream political establishment and the corporate news media. If the U.S. gets drawn into a disastrous Iran War, the public should rebel against both. Go with the alternative/internet media and vote 3rd party this fall!
Comment on August 11, 2008 @ 9:50 am
I agree with the third party vote. Send the message to Washington.
Comment on August 11, 2008 @ 1:38 pm
Bah, all the news last week and the weirdness over the weekend and into this week has me thinking the MSM is doing its best to say “ignor the imploding economies behind the green curtain”. The usual suspect central banks have played the ol “prop the dollar for the short term” sending the USD index to the 76 level in about same time it takes to state the fact.
Comment on August 11, 2008 @ 2:49 pm
To all who don’t want to do anything about Iran:
If Iranian-born nukes arrive in the U.S. via Al Queda, and if they are inevitably going to explode in someone’s “backyard”, I hope its not mine but instead yours.
Comment on August 11, 2008 @ 2:52 pm
Ed,
I will ignore the fact that your post is almost entirely off-topic and just tell you why you are an idiot.
You present what is called a “false-dichotomy”. It is a propaganda technique in which someone tries to convince an individual or group that there are ONLY TWO CHOICES, when in fact, there are many more.
You insinuate that the only two choices are:
1.) Attack Iran militarily, under the idiotic pretense that in so doing, we will be assured safety in the future.
2.) Don’t attack Iran and be assured, under the same idiotic pretense, that the US suffers nuclear destruction at the hands of Iran.
Are you starting to see that you make the arguments of a 10 year old on this subject - anyone reading your comment could see it in the “I hope its not mine but instead yours” line. There are far more possibilities than the 2 you insinuate and by exhibiting the attitude of a 10 year old (mentally and emotionally)I have no doubt that most individuals that read DR and its associated sites will simply ignore your silly-little-war-mongering comments.
Come back to the table for an adult conversation when you can discuss topics like an ADULT - you know, when you can actually think something out for yourself instead of parroting off-topic lines of resource-coveting-blind-nationalism from the mainstream news.
Comment on August 11, 2008 @ 4:10 pm
wkwillis
There is one thing I don’t understand. Why don’t we just shut down the Iranian electricity grid till they shut down their uranium enrichment project? We do have an airforce, you know.
They will blockade the Gulf in retaliation, of course, but how will that affect us? We can’t pay for the oil anyway if the Chinese and Russians don’t loan us the money and they certainly aren’t going to loan us the money if we are shooting up their warships, will they?
Why get Russia (and indirectly, China) involved at all? Why not just confine the war to Iran and the US?
The Russians will cheerfully sell the Chinese all the 200 dollar a barrel oil the Chinese want to buy, and accept Chinese construction of industrial facilities in Siberia in exchange. Russia needs modern industrial facilities. It needs consumer goods as well.
Comment on August 11, 2008 @ 5:08 pm
You know, I get real pi**ed when Americans with the biggest nuclear arsenal in the world complain about Iran wanting to enrich urainium now so that they will have power later when their oil runs out (and it will)
It makes perfect sense for them to use the oil money now to make a nuclear power industry for power later.
Comment on August 12, 2008 @ 4:04 am
What is the big commotion over Iran? Iran signed the nuclear non proliferation agreement so they have legal rights to develop commercial nuclear power. The US and Israel did not sign the agreement. I wonder why! It is Israel and the US that wants a confrontation. Iran doesn’t. So what is the problem? You don’t nukes going off in the US, then start getting along with the rest of the world rather than threatening them into submission to our Imperial decree.
I agree with Tom and daddysteve. But think we should all march on Washington and throw the bums out. They have all sold us out, ruined our economy, destroyed our good will with the rest of the world, and will continue to do so.
Comment on August 13, 2008 @ 11:45 pm
The hubris from some of these posters (and esp. the Talk Radio tools) is filling the air like a popcorn fart. Why should we want to be involved at all? Shut down the Iranian grid? Third Party vote? Iranian nukes landing here?
Sell that fear shit to the sailors and suckers FOB, the market’s good for them.
We need to get out, stand down, come home and get to work on re-creating America. Maybe this time we won’t let the morons have their way. And when that day in some imaginary future comes, we will beat our children when they say, “I’m going to become a banker.”
Comment on August 14, 2008 @ 6:04 am