Middle East Focus: Oil Games, Nuclear Games, Western Games, OPEC Games……

Arabia Deserta

Oil Games, Nuclear Games, Western Games, OPEC Games……

BFF

“Oil prices jumped to a nine-month high above $105 a barrel on Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program. By early afternoon in Europe, benchmark March crude was up $1.91 to $105.15 per barrel in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May. The contract rose 93 cents to settle at $103.24 per barrel in New York on Friday. Markets in the United States are closed Monday for the Presidents Day holiday. Iran's oil ministry said Sunday it stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union after the bloc imposed sanctions on Iran's crucial fuel exports. They include a freeze of the country's central bank assets and an oil embargo set to begin in July. Iran's Oil Minister Rostam Qassemi had warned earlier this month that Tehran could cut off oil exports to "hostile" European nations…………..”

The Iranians apparently singled out Britain and France for supply cut-off because they correctly judge these two countries were behind the push for tighter EU sanctions on Iranian oil (the original push was American). It is a smart Iranian move: these two nations import little Iranian oil, but the impact of this news is already pushing crude price up, increasing Iran's oil revenues. The Westerns governments must have seen it coming; hell, even I saw it a couple of weeks ago and posted about it. Now the Iranians may make up with increased prices for what they will lose from lower exports to Europe.
Export volume is actually unlikely to suffer much: India, China, Turkey, Pakistan, among others, will not join the American-British-French-Saudi boycott. Japan and Korea and others are likely to ask the US for exemptions. There are reports that the Saudis may not be able to keep their promises to their Western allies about making up for lost Iranian exports, not soon enough.
The Saudi regime needs the extra oil revenues almost as much as the Iranian regime does. Even without any sanctions being imposed on it, Saudi unemployment is in double digits and is in the high double digits for the young. Housing is expensive and in short supply (that doesn’t include the princes and their flunkies). Within a few years, the decline in Saudi reserves will very likely become more pronounced, and the major “new” sources will be Venezuela, Iran, and Iraq plus some of the smaller GCC countries like the UAE and Kuwait.
Cheers
mhg

m.h.ghuloum@gmail.com