Doomstead Diner Menu => Energy => Topic started by: RE on June 24, 2019, 12:55:03 AM

Title: 🛢️ Oil Resource Wars
Post by: RE on June 24, 2019, 12:55:03 AM
New Official Thread for all war actions globally that are directly connected to oil.  They are all connected of course, but some are super-obvious.

RE

https://oilprice.com/Geopolitics/International/The-West-Just-Made-A-Big-Mistake-In-Middle-East.html

The West Just Made A Big Mistake In Middle East
By Cyril Widdershoven - Jun 23, 2019, 4:00 PM CDT

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US politics have always been a bi-partisan affair. Two blocks fighting each other without taking into account possible repercussions of their decisions on global geopolitics and markets.

The current decisions made by the US Senate put Washington now in the same league as the UK, which finds itself in a political stalemate due to Brexit crisis. At a time that the world is watching a possible show-down in the Persian Gulf, the US Senate, in all its wisdom, has decided to increase US pressure on one of its only remaining allies in the region, Saudi Arabia. Not only has Washington put Saudi Arabia on a blacklist of countries that do not play a sufficient role in fighting human trafficking, the US Senate has also voted to block further military deals with the Kingdom. For some to add a country to a list is not a real newsworthy move, but in Saudi Arabia, currently leading the US sponsored anti-Iran block, it will be seen as a slap in the face.  The legal repercussions are small, as countries normally will shrug it off without any problems, but at a time of regional conflict and a possible Iranian military action, the U.S. needs full support of its Gulf-based allies.

What makes the situation worse, is that due to a geopolitical-military strategy put in place by US president Trump, targeting the removal of the Iranian regime, Arab Gulf countries are on the receiving side of Iran’s wrath at present. The widely published attacks on tankers in the Gulf of Oman, the downing of an US drone above Iranian waters, and the continuing barrage of rockets and drones coming from the Iran-supported Houthi controlled areas in Yemen on energy infrastructure and airports, put Saudi Arabia and the UAE as targets on the frontline.

Without US military support, Saudi Arabia, the UAE and Bahrain, will be at the mercy of Iran and its proxies, as the Arab militaries in the Gulf cannot stand up to Iranian aggression. Other partners in the region include Egypt and Israel, but these countries are looking to stay out of the conflict. To confront Iranian proxies in the region, Western arms are needed to keep the balance in place, and will work as a deterrent against Iranian proxy attacks.  The US Senate vote to block new military supplies and sales to Saudi Arabia could tip the scales in the next couple of weeks. Even if President Trump is expected to veto the Senate decision, Arab leaders again are confronted by the inherent political volatility of dealing and relying on Western support. Ever since the Arab Spring, these countries are already wondering where their future lies, will it be within the Western sphere of influence or will they look to the (far)-East? Washington’s behavior could also tip this into a pro-Russia or China move very soon.

Related: Is This The Beginning Of The End For Tesla’s Solar Business?

At the same time, European partners, such as Germany and UK, are also showing an increased anti-Arab sentiment. After the almost factual German blockade of military sales to the region, the only real strong partner for Saudi Arabia and the UAE, the UK now also could be ending their military support very soon. A British court has ordered that arms sales to the region are illegal, as they are or could be used in the Yemen conflict, with Saudi Arabia as the main perceived culprit.

The Arab Gulf States, except Qatar, now find themselves looking for a new arms dealer. For most Arab countries this move is not only a threatening development, but is also seen in the light of the continuing military contracts signed with Qatar, at present a semi-outcast in the Gulf region, due to its close ties with Iran and Turkey.  The one-sidedness of the US-UK and even German strategies is flabbergasting for the Sunni Arab countries in the Gulf and Egypt.

For the US and UK the current moves could become a Rubicon situation. Trump needs the Arab support to form a front against Iran, while access to Arab military is needed in case of a military confrontation with Tehran. At the same time, Washington and London need to be at the Arab tables to discuss not only security but also energy politics. By affronting people such as Saudi Crown Prince Mohammed bin Salman, Egypt’s president Sisi or Abu Dhabi’s Crown Prince Mohammed bin Zayed, an anti-US front also could emerge, even within the OPEC+ discussions the coming weeks. Until now US-Western energy security has been incorporated in the OPEC+ discussion. The latter could change dramatically soon, putting Riyadh/Abu Dhabi firmly in the corner of Russia for the foreseeable future.

Related: Is Bakken Oil Production Set For An Unexpected Drop?

With no access to defense technology and hardware from the West, Arab nations will have to find other solutions. The main available supplier is Russia and its defense industry is more than happy to jump into the gap. By binding Arab Gulf states and Egypt to Moscow, a new geopolitical reality could emerge, threatening the West’s economic and energy interests directly. All of this could happen at a time that the future of the Gulf is in peril, and energy markets are very volatile. Western leaders need to reconsider their approach.

MBS/MBZ and Sisi will not go public and threaten Trump at present in the media. The Arab leaders are used to play chess on several boards. It will be very interesting to see the views of the respective ministers of oil the coming weeks if the U.S. and Europe start to complain about oil prices. The Arab reactions will be very icy, while Russia will be reaping the rewards. Oil and gas analysts should be very aware of the geopolitical impact on crude if Arab producers are not looking at supply and demand constraints, but are led by security threats coming from US Senators or UK Courts. In the end, even for OPEC, “power comes out of the barrel of a gun”. Looking at the current situation in the Gulf region, this needs to be taken literally. Trump’s party has an Elephant as its symbol, but Arab leaders are like Elephants in reality, they never will forget!
Title: 🛢️ Oil Pipelines Sabotaged In Syria
Post by: RE on June 24, 2019, 06:35:27 PM
So far, these "sabotage" events seem calculated to raise the FEAR level rather than do any major damage.

RE

https://oilprice.com/Latest-Energy-News/World-News/Oil-Pipelines-Sabotaged-In-Syria.html

Oil Pipelines Sabotaged In Syria
By Irina Slav - Jun 24, 2019, 11:30 AM CDT

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Five underwater pipelines carrying crude oil were sabotaged this weekend, the Syrian Petroleum and Mineral Resources Ministry said, as reported by state news agency SANA.

The ministry said a leak from the pipelines was discovered on Saturday and divers carried out an inspection to find out that not one but five pipelines had been damaged. The damage done, however, must not have been extensive, because the ministry also said repairs have started immediately and the pipelines would return to normal operation in hours.

A later statement by the Minister of Petroleum and Mineral Resources, Ali Ghanem, said that six pipelines had been vandalized. The network carries crude oil from the coast to tankers at the port of Banias. The port city houses one of Syria’s two refineries. The other is located in Homs, in central Syria.

Last month U.S.-led forces blew up three oil tankers in Syria in the latest push against the Syrian government which is fighting rebel groups in their last remaining stronghold in Syria, in Idlib.

Syria is heavily dependent on crude oil imports through the Mediterranean, with a lot of the oil coming from Iran. Before the civil war broke out in 2011, the country produced some 350,000 bpd, the AP reports, while now production averages some 24,000 bpd, while consumption is about 136,000 bpd.

U.S. sanctions against Syria and Iran have affected supply gravely, however, with a series of fuel shortages resulting from the U.S. and European sanctions against Syria and the U.S. sanctions on Iran that have caused a squeeze in Iran’s shipments abroad. According to Kpler data, Iran’s crude oil loading over the first half of June averaged 645,000 bpd, but most of this did not end up at an importing country’s ports: according to the data provider, some 82 percent of the oil is still floating in the Persian Gulf.

By Irina Slav for Oilprice.com
Title: 🛢️ What's behind the seizure of the Iranian oil tanker in Gibraltar?
Post by: RE on July 06, 2019, 08:52:55 AM


What's behind the seizure of the Iranian oil tanker in Gibraltar?
Iran condemned 'illegal' seizure of oil tanker in Gibraltar and demanded its immediate release.

05 Jul 2019 17:58 GMT Iran, Middle East, War & Conflict, Spain, United States


An Iranian oil tanker is at the centre of a growing international dispute.

British marines boarded and seized the ship on Thursday as it was sailing near Gibraltar, a British territory on Spain's south coast.

The UK believes it was violating European Union sanctions by carrying Iranian oil to Syria.

Spain said it was the United States that ordered the vessel be stopped.

Iran condemned what it called an illegal interception.

So what's behind this dramatic move? And as tension increases between the US and Iran, is Europe caught between a rock and a hard place?

Presenter: Imran Khan

Guests:

Hassan Ahmadian - Assistant professor of political science at the University of Tehran

Ali Fathollah-Nejad - Visiting fellow at the Brookings Doha Center

Jeff Stacey - Former US State Department official under President Barack Obama

Source: Al Jazeera News
Tell us what you think
Title: 🛢️ Persian Gulf Conflict Could Send Oil Beyond $325
Post by: RE on July 08, 2019, 10:27:06 AM
Let's see...

$325/bl is roughly 6X the current price of oil.  So what does that bring the price of gas up to?  Well, part of the cost of gas is in the refining and the transportation, so gas wouldn't go up by 6X.  I think you could safely say though it would triple cost at the pump.  Currently here on the Last Great Frontier, we're paying $3/gal.  So you come up witha ballpark figure of $9/gal.

Now, what typical commuter could afford his transportation fuel cost going up by 300%?  What trucking company could handle the cost of Diesel tripling?

Answer:  About none of them.

If the Iranians do in fact shut down the Straights of Hormuz, rationing will have to begin virtually immediately.  Even with rationing though, there would be definite shortages.

RE

https://oilprice.com/Energy/Energy-General/Persian-Gulf-Conflict-Could-Send-Oil-Beyond-325.html

Persian Gulf Conflict Could Send Oil Beyond $325
By Vincent Lauerman - Jul 07, 2019, 6:00 PM CDT

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The possibility of Iran attempting to close the Strait of Hormuz to tanker traffic has increased significantly in recent weeks, as has the possibility of a Persian Gulf War, especially with the Islamic Republics’ intentional destruction of a U.S. surveillance drone on June 20.

This act provides weight to Tehran’s threat that it will inflict a heavy toll on U.S. allies in the region if attacked by American forces and will not allow these same countries to export their oil if it can’t export its own.

The memory remains remarkably fresh in Iran of the 1951-53 oil embargo that toppled the democratically-elected government of Prime Minister Mohammed Mossadegh – and the CIA installing the despot Mohammad Reza Pahlavi, the so-called Shah of Iran, in his place.

The impact on oil markets of an Iranian closure of the Strait of Hormuz would be enormous.

Strait of Hormuz Closure

The leadership of the Iranian Navy and the Revolutionary Guard Navy, knowing they could never challenge the U.S. in a conventional naval contest, have been accumulating considerable asymmetric and other capabilities to enable the Islamic Republic to close the Strait of Hormuz since the “tanker war” in the Persian Gulf during the 1980-88 Iran-Iraq War.

These capabilities include thousands of sea mines, torpedoes, advanced cruise missiles, regular-sized and mini-submarines, and a flotilla of small fast-attack boats, most of which are concentrated in the strait region.
Related: Oil Prices Set For Worst Weekly Drop In Five Weeks

Pentagon planners believe Iran would use all of these capabilities in an integrated fashion to both disrupt maritime traffic in the Strait of Hormuz and attempt to deny American and allied forces access to the region. Iranian naval forces are viewed as a “credible threat” to international shipping in the strait.

When commanding CENTCOM between 2010 and 2013, former Secretary of Defense Jim Mattis developed a multinational plan to minimize disruptions to maritime traffic in the Strait of Hormuz by preventing Iranian efforts to lay mines and systematically clear mines that have been deployed. The focus on mines was due to the assumption that they were the major means to hinder traffic as it is difficult to sink a modern double-hull oil tanker by torpedo or missile attack. A primary goal of the plan is to create ever-larger safe passages through minefields to allow movement of oil tankers to return to pre-crisis levels as quickly as possible.

There is a consensus among U.S. military planners that American and allied forces would ultimately prevail over Iran if it attempted to close the Strait of Hormuz. The most optimistic planners believe U.S.-led forces could reopen the straight within a few days, whereas the least optimistic ones believe it could take up to three months to restore maritime traffic to normal levels.

Of course, hostilities could spread from the Strait of Hormuz to elsewhere in the Persian Gulf region – and a regional war could break out even without Iran first closing the strait – in which case oil and gas production and export infrastructure would suffer significant damage.

If attacked by U.S. and allied forces, or if it believes an attack is imminent, Tehran may choose to launch airstrikes and missiles on American military forces and regional allies such as Saudi Arabia and the UAE while it still has the capability to do so. This ‘use them before you lose them’ strategy would largely be based on Saddam Hussein’s experience in Iraq.

Three Scenarios

The impact of a closure of the Strait of Hormuz on global crude prices obviously depends on the amount of oil kept off the world market on a daily basis and the duration of the disruption. Based on the discussion in the previous section, we explore two scenarios that relate directly to the Strait of Hormuz, and a third one that includes a Persian Gulf War.

In the Optimistic Scenario, where the Strait of Hormuz is only closed to commercial traffic for a few days, the impact on global oil supplies would be relatively minimal, but we would still see a brief spike above $100 per barrel due to the initial uncertainty surrounding its outcome. Crude prices would then quickly fall back to pre-crisis levels.

The flow of 20.7 million b/d of crude and petroleum product would be curtailed if the Strait of Hormuz is fully closed, but this would be mitigated by almost 4 million b/d of crude being shipped on currently spare pipeline capacity across Saudi Arabia to Red Sea export facilities and the Abu Dhabi Crude Oil Pipeline bypassing the Strait of Hormuz.

In addition, Saudi Arabia has stored an undisclosed, albeit relatively small amount of crude oil in a number of storage facilities around the world, including Rotterdam in Europe, Okinawa and China in Asia, and the U.S. Gulf Coast.

Under the Pessimistic Scenario, the world’s oil emergency response system would be taxed to its maximum in the first two months of the crisis – assuming the Strait of Hormuz is fully closed for the first 45 days, and a straight line resumption in oil tanker traffic over the next 45 days – leading to historically high crude oil prices on an inflation-adjusted basis for an extended period.

Global strategic oil reserves would be more than enough to cover the shortfall in an overall sense, with 40 percent of the 1.9-billion-barrel total remaining post-crisis, but the rate of daily withdrawal from strategic reserves would pose a challenge.

Previous studies suggest that a maximum of 14.4 million b/d of crude and product could be released from the International Energy Agency (IEA) member country reserves in the first month and roughly 12.5 million b/d in the second month, compared to disruptions of 16.9 million b/d and 15.5 million b/d, respectively, based on our assumptions.
Related: The Real Reason Why ExxonMobil Won’t Go Ahead With $53 Billion Iraqi Megaproject

China and India now account for about a fifth of global strategic reserves, and releases from their reserves would contribute to the IEA efforts – whereas commercial inventories around the world now tend to run on a just-in-time basis.

Based on an April 2018 study by the Riyadh-based King Abdullah Petroleum Studies and Research Center (KAPSARC), in a world without spare crude capacity – which in effect would be the case with the Strait of Hormuz closed – oil prices would have spiked above $325 per barrel at the height of the Libyan Crisis in June 2011. For the sake of scale, a mere 60 million barrels were released from IEA country stockpiles during that crisis.

Finally, in a Doomsday Scenario, where there is significant damage to Persian Gulf oil-producing and export infrastructure as well as a three-month closure of the Strait of Hormuz, crude oil prices would rocket into the stratosphere. They would not begin to fall back until the global economy collapses into deep recession. A direct hit on Saudi Aramco’s Abqaiq oil processing facility alone could deprive the world market of 7 million b/d for a year or more as the plant is repaired.

The impact of this and other Persian Gulf production losses could be mitigated somewhat by the remaining 40 percent of the world’s strategic reserves, as well as 200 million b/d of crude that Saudi Arabia holds in reserve at home assuming Saudi export facilities remain relatively intact.

By Vincent Lauerman for Oilprice.com
Title: 🛢️ Iran warning: Oil price fears as tension mounts - ‘There could be consequenc
Post by: RE on July 31, 2019, 01:20:04 PM
https://www.express.co.uk/news/world/1159796/iran-news-oil-prices-gulf-strait-of-hormuz-gulf (https://www.express.co.uk/news/world/1159796/iran-news-oil-prices-gulf-strait-of-hormuz-gulf)

Iran warning: Oil price fears as tension mounts - ‘There could be consequences

Iran warning: Oil price fears as tension mounts - ‘There could be consequences’

RISING tensions in the Gulf could push oil prices up, with last month’s incidents in which Iran was blamed for attacks on Saudi oil tankers triggering an instant ten percent jump in insurance premiums for vessels passing through the hazardous Strait of Hormuz, a new analysis has warned.

PUBLISHED: 20:46, Tue, Jul 30, 2019 | UPDATED: 21:27, Tue, Jul 30, 2019

The potentially explosive situation in the region has been in the spotlight in recent days, especially since the seized the UK-flagged Stena Imperio last Saturday (July 19) and took it to the port of after claiming it had been involved in a collision with a fishing vessel - a move then-Foreign Secretary described as “unacceptable”. Prior to this, the attacks on the two Saudi tankers were damaged by explosions in the Gulf of Oman, with Iran widely suspected of being behind the incidents despite Tehran’s emphatic denials.

The report, entitled Strait of Hormuz and published by data specialists , underlines the potential knock-on effect which a sustained period of instability could have on world markets.

Prepared by Giorgios Beliers, Refinitiv’s Oil Research Manager for the Middle East and North Africa, and Ranjith Raja, it stated: “After the incidents in June, insurance premiums for ships passing the Strait of Hormuz jumped 10 percent overnight.

“The additional war risk premiums for ships calling the gulf have been quoted to be in the range of $100,000 for a VLCC on a seven-day passage in the region.”

If maritime operators became more cautious about placing their ships in the region, there “could be consequences” for fuel oil markets such as the Fujairah bunker, referring to the huge port in the United Arab Emirates where huge oil reserves are stored.

Stena Impero

The Stena Impero - and an Iranian Revolutionary Guard gunboat - at Bandar Abbas (Image: GETTY)

The report added: “The spread between the Fujairah and Singapore bunkers had widened to a near $45 US dollar discount compared with Singapore following the incident.”

Weekly bunker loadings from Fujairah storage since the June attacks on the tankers had dropped significantly to an average of 108,950 metric tonnes (MT), compared to the year-to-date (YTD) weekly average prior to June, which stood at 150,125 MT.

The report said: “Refinitiv Oil research also monitors the bunker barge activities in Fujairah, which have dropped to about 17 barge loadings/week since June compared to 23 barge loadings/week for the year prior to June.

“Aside from short-term volatility, there’s been a muted response in terms of the movement of crude oil prices.

JUST IN:

Iranian Revolutionary Guards

A video still shows Iranian Revolutionary Guards preparing to board the Stena Impero (Image: GETTY)

“Although crude supplies from the Gulf have declined sharply from a year ago, the impact on oil market fundamentals is already priced in, especially as OPEC is in a mode of maintaining its supplies in check, following the roll-over of the production cut agreement.”

The ongoing deadlock was clearly having an impact on Iran itself, the report’s authors stressed, explaining: “Iran has already lost significant volumes of exports due to the imposition of US sanctions reducing trade from almost 2.5 million barrels a day last spring to fewer than 500,000 barrels a day in recent months.

“Additionally, oil market participants are primarily focused on the demand-side impact of a slowing global economy and the US-China trade war.”

Nevertheless, the report concluded: “The possibility that security measures result in bottlenecks of vessels crossing the could also slow down the flow of oil towards final buyers, creating an artificial supply shock.

Title: 🛢️ Iran seizes oil tanker near Farsi Island in the Persian Gulf
Post by: RE on August 06, 2019, 01:24:33 AM
http://www.youtube.com/v/woJ8z16h9L4
Title: 🛢️ China’s Iranian Oil Weapon
Post by: RE on August 10, 2019, 03:21:17 PM
https://oilprice.com/Energy/Energy-General/Chinas-Iranian-Oil-Weapon.html


China’s Iranian Oil Weapon

By ZeroHedge - Aug 10, 2019, 12:00 PM CDT

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Two reports out this week worth paying attention to which could greatly impact oil prices at a crucial moment in which leaders in Tehran are desperately urging China to purchase more Iranian crude:

First, Reuters notes China continued importing Iranian oil in July for the second month since a US sanctions waiver ended, though at greatly diminished levels compared to the year prior, citing numbers from three data firms:

According to the firms, which track tanker movements, between 4.4 million and 11 million barrels of Iranian crude were discharged into China last month, or 142,000 to 360,000 barrels per day (bpd). The upper end of that range would mean July imports still added up to close to half of their year-earlier level despite sanctions.

And second, this via CNBC early this week, Brent and WTI price could crash if China buys Iranian oil. Bank of America is warning oil prices could potentially crash by $30 a barrel if China ramps up Iranian crude purchases. Reverses Loss After China’s Stronger Yuan Fix

The report summarized:

Bank of America Merrill Lynch warns the oil price could slip sharply if China buys Iranian oil.

Beijing could undermine Washington’s foreign policy stance by ignoring U.S. sanctions placed on Iran.

BofA is keeping its $60 per barrel price estimate in place for 2020.

Currently the Trump administration puts Iran's oil exports at a range of 50-70 percent going to China, and with around 30 percent going to Syria.
Related: Energy Storage Boom Goes Into Overdrive

With the US and UK now aggressively choking the Tehran to Damascus trade, given last month's UK Royal Marine intercept of the Grace 1 tanker off Gibraltar, Tehran's economic survival is ever more dependent on selling to China - a country powerful enough to bust US sanctions.

Last week Iran's Vice President Jahangiri made a direct appeal to Beijing and "friendly" countries to up their Iranian crude purchases in statements made during a Chinese diplomatic delegation visit.

“Even though we are aware that friendly countries such as China are facing some restrictions, we expect them to be more active in buying Iranian oil,” Jahangiri reportedly told visiting senior Chinese diplomat Song Tao.

Meanwhile, figures just prior to ending the waiver program:

You will find more infographics at Statista

China's crude imports from Iran have been plunging this summer, sinking almost 60 percent in June compared to a year earlier. But Beijing could unleash severe oil volatility on global markets if it decides to reverse course; the General Administration of Chinese Customs is set to publish exact details of July imports by origin in the last week of August.

This also as the Chinese Ministry of Commerce threatened countermeasures in response to Trump's fresh threats of a 10 percent tariff on $300 billion dollars of Chinese goods made a week ago.

By Zerohedge.com
Title: 🛢️ China Prepares Its “Nuclear Option” In Trade War
Post by: RE on August 14, 2019, 05:44:24 AM
https://oilprice.com/Energy/Energy-General/China-Prepares-Its-Nuclear-Option-In-Trade-War.html

China Prepares Its “Nuclear Option” In Trade War
By Simon Watkins - Aug 13, 2019, 6:00 PM CDT

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As the trade war with the U.S. continues to escalate, China has re-engaged with Iran on three key projects and is weighing the use of what both Washington and Beijing term the ‘nuclear option’, a senior oil and gas industry source who works closely with Iran’s Petroleum Ministry told OilPrice.com last week.

For the first of these projects - Phase 11 of the supergiant South Pars non-associated gas field (SP11) - last week saw a statement from the chief executive officer of the Pars Oil and Gas Company (POGC) that talks had resumed with Chinese developers to advance the project. Originally the subject of an extensive contract signed by France’s Total before it pulled out due to re-imposed U.S. sanctions on Iran, talks had been well-advanced with the China National Petroleum Corporation (CNPC) to take up the slack on development. As per the original contract, CNPC had been assigned Total’s 50.1 percent stake in the field when the French firm withdrew, giving it a total of 80.1 percent in the site, with Iran’s own Petropars Company holding the remainder. At the same time, Iran was desperate to increase the pace of development of the fields in its oil-rich West Karoun area, including North Azadegan, South Azadegan, North Yaran, South Yaran, and Yadavaran, in order to optimise oil flows ahead of further clampdowns on exports by the U.S.

China, though, which at that time was engaged in just the opening shots of the trade war with the U.S. was loathe to completely disregard all U.S. sensibilities when it came to Iran but equally saw itself as a longstanding partner of the Islamic Republic, not to mention always being cognisant of its need to ensure diversity of energy supply. At that point, China agreed a trade-off with the U.S. that in exchange for it halting active development of SP11 it would be allowed to continue its activities in North Azadegan and would be able to go ahead with its development of Yadavaran – the second of China’s major Iran projects. China told the U.S. that its continued involvement in North Azadegan could easily be justified to anyone else who might be interested – such as the mainstream media – on the basis that it had already spent billions of dollars developing the second phase of the 460 square kilometre field. Similarly, China said at the time, its ongoing activities on Yadavaran could be justified by dint of the fact that the original contract had been signed in good faith in 2007, way before the U.S. withdrawal from the nuclear deal in May 2018 and thus, legally speaking, it had every right to go ahead.
Related: Will Shale Rise From The Dead?

The third of China’s major as yet unfinished projects in Iran was the build-out of the Jask oil export terminal, which – crucially, particularly in the current security situation – does not lie within the Strait of Hormuz or even in the Persian Gulf, but rather in the Gulf Of Oman. Even before the new U.S. sanctions, the Kharg export terminal was not ideal for use by tankers as the narrowness of the Strait of Hormuz means that they have to go very slowly through it. With the new sanctions in place and tit-for-tat tanker seizures regularly occurring, China would have little choice but to put at least a couple of its own warships into the Gulf to safeguard their passage or stop buying Iranian oil entirely, neither of which Beijing particularly wants to do.

So, according to the plans, a US$2 billion or so 1,000 kilometre oil pipeline will connect Guriyeh in the Shoaybiyeh-ye Gharbi Rural District, in Khuzestan Province (south-west Iran), to Jask County, in Hormozgan Province (south Iran), with any financing required over and above that provided for Iran to be made readily available  from China. Also to be constructed in Jask is an initial 20 storage tanks each capable of storing 500,000 barrels of oil, and related shipping facilities, at a cost of around US$200 million. Overall, the intention is for Jask to have the capacity to store up to 30 million barrels and export one million barrels per day of crude oil. There are adjunct plans to build a large petrochemicals and refining complex in Jask as well, with the prime market for produced petchems – including gasoline, gas oil, jet fuel, sulphur, butadiene, ethylene and propylene, and mono-ethylene glycol - again being China. According to a recent comment by the director of projects at Iran’s National Petrochemical Company, Ali Mohammad Bossaqzadeh, the project would be built and run by Bakhtar Petrochemicals Holding, although ‘other foreign companies’ may take part. In fact, according to the Iran source, China has also offered to send as many engineers and other professionals required in such a project to Iran for as long as necessary.

Having said that, and aware of the leverage that it had with Iran as one of the very few countries still willing to engage in developing its fields in the midst of increasingly vigorously-imposed sanctions, China has sought deal sweeteners from Iran, and has been given them. In order for it to reactivate its development of SP11, China will get a 17.25 percent discount for nine years on the value of all gas it recovers. “This is the value of the gas as applied to CNPC’s cost-return formula against the open market valuation, and currently the net present value of the site is US$116 billion,” the Iran source told OilPrice.com. For its part, China has agreed to increase the production from its oil fields in the West Karoun area – including North Azadegan and Yadavaran - by an additional 500,000 bpd by the end of 2020. This dovetails with Iran’s plan to increase the recovery rate from these West Karoun fields that it shares with Iraq from the current 5 percent (compared to Saudi Arabia’s 50 percent). “For every one percent increase, the recoverable reserves figure would increase by 670 million barrels, or around US$34 billion in revenues with oil even at US$50 a barrel,” the Iran source said.

If there is any further pushback from the U.S. on any of these Chinese projects in Iran, then Beijing will invoke in full force the ‘nuclear option’ of selling all or a significant part of its US$1.4 trillion holding of U.S. Treasury Bills, with a major chunk of the paper due to be sold in September on this basis. This massive holding of these bonds - through which the U.S. finances its economy and is an important factor both in the value of the dollar and therefore in the health of U.S. international companies especially – has been used as a bargaining chip before by China, especially when it feels threatened. Back in 2007, just before the great financial crisis, a number of senior Chinese figures at various state-run think tanks – through which China often signals its big geopolitical threats – stated that the large-scale selling of this massive Treasury Bill holding would trigger a dollar crash, a huge spike in bond yields, the collapse of the housing market and stock market chaos.
Related: The Revival Of A $53 Billion Megaproject

Such a tactic would neatly fit into China’s overall strategy to have the renminbi challenge the U.S. dollar’s status as the key global reserve currency and the prime currency for global energy transactions. “The long-planned sequencing for this was inclusion in the SDR {Special Drawing Rights] mix, which happened in 2016, increasing use as a trading currency, which followed that, use as the key currency of an international energy trading exchange, which has occurred with the creation of the renminbi-denominated Shanghai International Energy Exchange in last year, and the calls from big oil producers and other major trading nations to use the renminbi, which has been happening over the past few years,” the head of a New York-based commodities hedge fund told OilPrice.com. Only recently, Leonid Mikhelson, chief executive officer of Russian oil major, Novatek, said that future sales to China denominated in renminbi is under consideration and that U.S. sanctions accelerate the process of Russia trying to switch away from U.S. dollar-centric oil and gas trading and the damage from potential sanctions that go with it. “This has been discussed for a while with Russia’s largest trading partners such as India and China, and even Arab countries are starting to think about it... If they do create difficulties for our Russian banks then all we have to do is replace dollars,” he said. “The trade war between the U.S. and China will only accelerate the process,” he added.

The trade war with the U.S., though, may be the very reason why this policy is not being pushed right now by China, Rory Green, Asia economist for TS Lombard told OilPrice.com last week. “With the renminbi weakening, and set to reach 7.50 to the [U.S.] dollar level if the U.S. imposes 25 percent tariffs on all Chinese exports, it is more difficult for China to persuade the big oil producers like Russia, Iran, Iraq, Venezuela, to make the switch away from the dollar,” he said. “For China as well, the timing is not quite right, as its use of Eurodollar financing is currently significant, it has a lot of dollar-denominated bonds rolling over shortly, and its balance of payments needs a relatively healthy U.S. demand profile, but China wants to get away from the dollar system and that is the overall direction of travel,” he concluded.

By Simon Watkins for Oilprice.com
Title: 🛢️ U.S. warrant issued for seizure of Iranian oil tanker in Gibraltar
Post by: RE on August 17, 2019, 12:02:55 AM
https://www.reuters.com/article/us-mideast-iran-tanker-usa/u-s-warrant-issued-for-seizure-of-iranian-oil-tanker-in-gibraltar-idUSKCN1V6237 (https://www.reuters.com/article/us-mideast-iran-tanker-usa/u-s-warrant-issued-for-seizure-of-iranian-oil-tanker-in-gibraltar-idUSKCN1V6237)

August 16, 2019 / 2:47 PM / Updated 3 hours ago
U.S. warrant issued for seizure of Iranian oil tanker in Gibraltar

(https://cdni0.trtworld.com/w960/h540/q75/58707_20190704T000000Z_229155932_RC1765214DE0_RTRMADP_3_MIDEASTIRANTANKER_1562343113123.JPG)

Iranian oil tanker Grace 1 sits anchored awaiting a court ruling on whether it can be freed after it was seized in July by British Royal Marines off the coast of the British Mediterranean territory, in the Strait of Gibraltar, southern Spain, August 15, 2019. REUTERS/Jon Nazca

WASHINGTON (Reuters) - A U.S. court has issued a warrant for the seizure of an Iranian tanker that British Royal Marines had seized last month in Gibraltar, a court document showed on Friday.

The oil tanker Grace 1, the more than 2 million barrels of oil it carries and $995,000 are subject to forfeiture based on a complaint by the U.S. government, U.S. Attorney for the District of Columbia Jessie Liu said in a news release.

The tanker was seized by British Royal Marines at the western mouth of the Mediterranean on July 4 on suspicion of violating European Union sanctions by taking oil to Syria, a close ally of Iran.

Washington had attempted to detain the Grace 1 on the grounds that it had links to Iran’s Islamic Revolutionary Guard Corps (IRGC), which it has designated a terrorist organization.

“The scheme involves multiple parties affiliated with the IRGC and furthered by the deceptive voyages of the Grace 1,” Liu said. “A network of front companies allegedly laundered millions of dollars in support of such shipments.”

“A seizure warrant and a forfeiture complaint are merely allegations. The burden to prove forfeitability in a civil forfeiture proceeding is upon the government,” the news release said.

Advertisement

Gibraltar lifted the tanker’s detention order on Thursday but the vessel’s fate was further complicated by a last-ditch U.S. legal appeal to hold it.

The tanker shifted its position on Friday, but its anchor was still down off Gibraltar and it was unclear if it was ready to set sail soon.

The warrant for the seizure of the tanker, which carries 2.1 million barrels of oil, was issued by the U.S. District Court for the District of Columbia and addressed to “the United States Marshal’s Service and/or any other duly authorized law enforcement officer.”

Reporting by Mohammad Zargham; Editing by Leslie Adler
Title: 🛢️ Iranian supertanker US tried to seize moves toward unknown destination
Post by: RE on August 19, 2019, 01:21:22 AM
https://www.foxnews.com/world/iran-supertanker-seize-unknown-destination (https://www.foxnews.com/world/iran-supertanker-seize-unknown-destination)

Iranian supertanker US tried to seize moves toward unknown destination

By Frank Miles | Fox News

http://www.youtube.com/v/ppzszQpGS48

Iran warns presence of US, allies could spark war in Persian Gulf

Iran officials are pointing the finger at the U.S. and its allies for creating a 'matchbox' in the Persian Gulf.

Amid a growing confrontation between Iran and the West a year after President Trump pulled Washington out of Tehran’s nuclear deal with world powers, an Iranian supertanker the U.S. has suspected to be tied to a sanctioned organization has lifted its anchor and started moving away from Gibraltar, marine traffic monitoring data showed late Sunday.

The trail left by GPS data on Marinetraffic.com, a vessel-tracking service, showed the Iran-flagged Adrian Darya 1, previously known as Grace 1, moving shortly before midnight. The tanker slowly moved southeast toward a narrow stretch of international waters separating Morocco and the southern tip of the Iberian Peninsula.

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The vessel hauling $130 million worth of light crude oil had been detained for a month in the British overseas territory for allegedly attempting to breach European Union sanctions on Syria. Gibraltar rejected an eleventh-hour attempt by the United States to reseize the oil tanker on Sunday, arguing that EU regulations were less strict than U.S. sanctions on Iran.

The vessel’s next destination was not immediately known.

An on-duty officer at the Port Authority of Gibraltar declined to comment to The Associated Press on the ship’s moves and deferred questions to the government. The Gibraltar government press office did not immediately respond to AP messages seeking comment.

Iran’s ambassador to Britain, Hamid Baeidinejad, had announced earlier on Twitter that the ship was expected to leave Sunday night.

Shortly after the tanker’s detention in early July near Gibraltar, Iran seized the British-flagged oil tanker Stena Impero, which the Islamic Republic has continued to hold.

Gibraltar’s government said Sunday it was allowing the Iranian tanker’s release because “the EU sanctions regime against Iran - which is applicable in Gibraltar - is much narrower than that applicable in the US.”

In a last-ditch effort to stop the release, the U.S. unsealed a warrant Friday to seize the vessel and its cargo of 2.1 million barrels of light crude oil, citing violations of U.S. sanctions as well as money laundering and terrorism statutes.
New warnings Iran may be interfering with GPS on commercial ships in Strait of Hormuz, Gulf watersVideo

U.S. officials told reporters that the oil aboard the ship was worth some $130 million and that it was destined for a designated terror organization.

The unsealed court documents argued that Iran’s Islamic Revolutionary Guard Corps was the ship’s true owner through a network of front companies.

Authorities in Gibraltar said Sunday that, unlike in the U.S., Iran’s Revolutionary Guard was not designated a terrorist organization under EU, U.K. or Gibraltar law.

Iran has not disclosed the Adrian Darya 1′s intended destination and has denied it was ever headed for Syria.

The chief minister of Gibraltar, Fabian Picardo, said he had been assured in writing by the Iranian government that the tanker wouldn’t unload its cargo in Syria.
Iran seizes oil tanker near Farsi Island in the Persian GulfVideo

The Astralship shipping agency in Gibraltar, which has been hired to handle paperwork and arrange logistics for the Adrian Darya 1, had told The Associated Press that a new crew of Indian and Ukrainian nationals had been expected to replace the sailors on board.

Messages seeking comment from the Iranian Embassy in London were not immediately returned.

The Associated Press contributed to this report.
Frank Miles is a reporter and editor covering geopolitics, military, crime, technology and sports for FoxNews.com. His email is Frank.Miles@foxnews.com.
Title: 🛢️ Greece says has had no request from Iranian oil tanker to dock
Post by: RE on August 20, 2019, 06:47:49 AM
https://www.reuters.com/article/us-mideast-iran-tanker-greece/greece-says-it-has-had-no-request-from-iranian-oil-tanker-to-dock-idUSKCN1VA104 (https://www.reuters.com/article/us-mideast-iran-tanker-greece/greece-says-it-has-had-no-request-from-iranian-oil-tanker-to-dock-idUSKCN1VA104)

World News
August 20, 2019 / 2:48 AM / Updated 3 hours ago
Greece says has had no request from Iranian oil tanker to dock


ATHENS (Reuters) - Greece said on Tuesday it had not had a request for an oil tanker at the center of a row between Iran and the U.S. to dock at one of its ports, as Washington warned Greece against helping the vessel.

(https://cna-sg-res.cloudinary.com/image/upload/q_auto,f_auto/image/11819330/16x9/991/557/7673d36d6986c8e102dcaa4dd21b2e77/Kd/a-crew-member-raises-the-iranian-flag-at-iranian-oil-tanker-adrian-darya-1--before-being-named-as-grace-1--as-it-sits-anchored-after-the-supreme-court-of-the-british-territory-lifted-its-detention-ord-1.jpg)
A crew member raises the Iranian flag on Iranian oil tanker Adrian Darya 1, previously named Grace 1, as it sits anchored after the Supreme Court of the British territory lifted its detention order, in the Strait of Gibraltar, Spain, August 18, 2019. REUTERS/Jon Nazca

The Adrian Darya 1 — formerly the Grace 1 — left Gibraltar on Aug 18. Ship-tracking data on Tuesday showed the vessel was heading towards the Greek port of Kalamata on the southern coast of the Peloponnese and was scheduled to arrive on Aug. 26.

“The vessel is cruising at low speed and there is still no formal announcement that it will arrive at Kalamata. The Merchant Marine Ministry is monitoring the matter along with Greece’s Foreign Ministry,” a shipping ministry spokesman said.

The ship was released from detention off Gibraltar after a five-week standoff over whether it was carrying Iranian oil to Syria in violation of European Union sanctions.

Soon after the detention order was lifted, a U.S. federal court ordered the seizure of the vessel on different grounds, but that petition was rejected by Gibraltar.

Tehran said any U.S. move to seize the vessel again would have “heavy consequences”.

Earlier, the United States said it had conveyed its “strong position” to the Greek government over the tanker, which is carrying about 2 million barrels of oil.

The issue will be a major foreign policy test for Greek Prime Minister Kyriakos Mitsotakis, a pro-western conservative elected in July.

Any efforts to assist the tanker could be construed as providing material support to a U.S.-designated foreign terrorist organization, which has immigration and potential criminal consequences, a U.S. State Department official said.

A Greek diplomatic source cited by the state Athens News Agency said the country was in communication with the United States on the matter, but did not say what Greece would do.

“(The U.S.) position on the specific issue is known and has been communicated not only to Greece but other states and ports in the Mediterranean.”

It is standard practice for a vessel to give notice 48 hours before docking at a port, Greek officials said.

It was unclear where the ship might head if Greece refused it permission to dock. Cyprus, further east, has bitter experience from seizing Iranian products destined for Syria; munitions it confiscated exploded in 2011, causing the island’s worst peace-time disaster.

Washington wants the tanker detained on the grounds that it had links to Iran’s Islamic Revolutionary Guard Corps, which it has designated a terrorist organization.

European Union nations ban oil sales to Syria and the United States has sanctions on Iranian oil sales.

Reporting by Michele Kambas and George Georgiopoulos; editing by John Stonestreet
Title: 🛢️ World watching the fate of Iranian tanker
Post by: RE on August 23, 2019, 03:09:03 AM
https://www.asiatimes.com/2019/08/opinion/world-watching-the-fate-of-iranian-tanker/ (https://www.asiatimes.com/2019/08/opinion/world-watching-the-fate-of-iranian-tanker/)

Tanker wars Adrian Darya-1|Opinion
August 19, 2019
World watching the fate of Iranian tanker

By Vijay Prashad

(https://www.thenational.ae/image/policy:1.901083:1566399076/image/2019-08-19T004133Z_1406686821_RC1E98EBBA60_RTRMADP_3_MIDEAST-IRAN-TANKER-GIBRALTAR.JPG?f=16x9&w=1200&$p$f$w=bbb2423)

At 11:30pm on Sunday, August 18, the Iranian tanker Adrian Darya-1 left the shores of Gibraltar at the mouth of the Mediterranean Sea. This ship had been detained about six weeks previous by British Royal Marines and Gibraltar officials. The British claimed that the ship, then named Grace 1, was taking its cargo of 2.1 million barrels of oil to Syria. There are European Union sanctions against trade with the Syrian government. It is based on these sanctions that the British seized the Iranian vessel.

Last Thursday, Gibraltar Chief Minister Fabian Picardo ordered the release of the ship after Iranian authorities said it would not be going to Syria. The immediate destination for Adrian Darya-1 is the Greek port of Kalamata.
Sanctions on Iran

The British, it is clear, seized the Iranian tanker at the urging of the United States. There was no previous British warning that it might venture in such a muscular way into the US attempt to suffocate Iran. Even the location of the seizure unnecessarily raised tensions for the United Kingdom. The waters around Gibraltar are contested between Britain and Spain, with the latter making noises about a formal complaint about the British action.

Gibraltar’s government has been trying to find a middle course between the claims of Britain and Spain. It seeks some form of independence, although with close ties with both its large neighbor and its formal occupant. When the UK asked Gibraltar’s authorities to get involved in the seizure of the Iranian tanker, Gibraltar’s government complied because the request was in line with European Union sanctions against trade with the Syrian government.

In Gibraltar’s courts, the British were largely silent. The case against the Iranian vessel was made by the United States, which changed the basis for the seizure. The US argued that the vessel had to remain impounded as part of its new and harsh sanctions regime against Iran. When Gibraltar was preparing to release the ship, the US District Court in Washington, DC, issued a warrant for the ship. This emergency warrant alleged that the ship was owned by the Iranian Revolutionary Guards and therefore must not be allowed to sail.

Gibraltar did not agree. The US tried to use its 1977 International Emergency Economic Powers Act, and the new sanctions regime by the Donald Trump administration. None of this appealed to the judiciary in Gibraltar. The government of Gibraltar said it did not accept the new US sanctions regime on Iran. It had held the vessel based on the European Union sanctions on Syria, not on any EU sanctions on Iran. Therefore, it has allowed Adrian Darya-1 to sail.
Iran’s reaction

New statistics show that Iran’s economy has been decelerating at a rapid pace. The numbers from the Statistical Center of Iran show that gross domestic product shrank by 4.9% in 2018-19. Economic growth is slipping backwards, as the oil, industry and agriculture sectors post negative numbers. The inflation rate now is at the highest it has been in a quarter of a century. Iranian traders have been moving their goods to Iraq, which results in the rise of prices within Iran.

Most stunningly, the prices of non-trade goods and services, such as health and housing, are rising. All this has put enormous pressure on the government of President Hassan Rouhani, although his spokesman Ali Rabiei said on Monday that Iran’s economy was experiencing “positive signs.”

Confidence from the Iranian government is remarkable. Officials in Tehran refuse to be cowed by the pressure from Washington. When the Adrian Darya-1 left Gibraltar, senior Iranian parliamentarian Alaeddin Boroujerdi said that its release was a result of “the revolutionary diplomacy of resistance.” He pointed to the seizure by Iran of the British ship Stena Impero, which continues to be detained in Iran. The British ship, Boroujerdi said, was being held for its violation of basic maritime rules in the Strait of Hormuz, while the seizure of the Iranian ship “was an act of piracy by England.”

Based on this assessment that the UK had indulged in piracy at the urging of the United States, Iran’s chief judge Ebrahim Raeisi said the release of Adrian Darya-1 was not sufficient. Compensation must be paid to Iran. What compensation will be demanded from the UK is not clear, and it is further unclear where Iran will formally raise the issue of compensation. Iranian diplomats say they might approach the United Nations based on the 1982 UN Convention on the Law of the Sea.
Will Greece hold the tanker?

Within the Trump administration there is appetite to block the passage of Adrian Darya-1 further, and make it a flashpoint toward war. That is what Trump’s adviser John Bolton indicated when Gibraltar held the ship. Make your move, he seemed to suggest to Tehran. Iran told the US through Swiss authorities that it must allow the ship free passage. If the Adrian Darya-1 is blocked, it would set a terrible precedent for international shipping.

When the tanker enters Kalamata, it will likely take on a new crew and then set its next destination. There is no indication as to what the ship will do with its 2.1 million barrels of crude oil. It is likely that it will unload its cargo on to another ship in international waters.

Last week, the US government asked Greece to contribute to its naval force in the Persian Gulf. Greece, with its new conservative prime minister, declined – as did France and Germany – to this new US initiative. The Greek government, led by Kyriakos Mitsotakis, is eager for a close relationship with Washington, but it is not willing to enter a frontal clash with Iran. Greece is already in a heated situation with Turkey. To rattle Iran would only further complicate Greece’s fragile dance in the Eastern Mediterranean.

Greece, unlike the US, has taken the position that Iran has “the right to develop nuclear technology for peaceful purposes alone.” This is Iran’s position. The United States, as Professor Seyed Mohammad Marandi told Tricontinental: Institute for Social Research, opposes even a peaceful nuclear project for Iran. This is why Trump walked out of the 2015 nuclear deal. This is precisely why the US has been putting immense pressure on Iranian shipping. And this is what led us to the story of the Adrian Darya-1.

This article was produced by Globetrotter, a project of the Independent Media Institute, which provided it to Asia Times.
Asia Times is not responsible for the opinions, facts or any media content presented by contributors. In case of abuse, click here to report.
IranUS sanctionsIndependent Media InstituteEU SanctionsStena ImperoGibraltar

Vijay Prashad

Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter, a project of the Independent Media Institute. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He has written more than 20 books, including The Darker Nations: A People’s History of the Third World, The Poorer Nations: A Possible History of the Global South, The Death of the Nation and the Future of the Arab Revolution, and Red Star Over the Third World. He writes regularly for Frontline, The Hindu, Newsclick, AlterNet and BirGün.
Title: Re: 🛢️ Oil Resource Wars
Post by: azozeo on September 13, 2019, 07:56:05 AM

US Surpassed Saudi Arabia, Russia To Become World's Top Oil Exporter


https://www.zerohedge.com/energy/us-surpasses-saudi-arabia-russia-become-worlds-top-oil-exporter (https://www.zerohedge.com/energy/us-surpasses-saudi-arabia-russia-become-worlds-top-oil-exporter)
Title: 🛢️ Saudi Arabia oil facilities ablaze after drone strikes
Post by: RE on September 14, 2019, 07:33:39 AM
I was wondering when they would get around to this...

RE

https://www.bbc.com/news/world-middle-east-49699429 (https://www.bbc.com/news/world-middle-east-49699429)

Saudi Arabia oil facilities ablaze after drone strikes

    2 minutes ago


Abqaiq is the site of Aramco's largest oil processing plant

Drone attacks have set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia, state media say.

Footage showed a huge blaze at Abqaiq, site of Aramco's largest oil processing plant, while a second drone attack started fires in the Khurais oilfield.

The fires are now under control at both facilities, state media said.

A spokesman for the Iran-aligned Houthi group in Yemen said it had deployed 10 drones in the attacks.

The military spokesman, Yahya Sarea, told al-Masirah TV, which is owned by the Houthi movement and is based in Beirut, that further attacks could be expected in the future.

He said Saturday's attack was one of the biggest operations the Houthi forces had undertaken inside Saudi Arabia and was carried out in "co-operation with the honourable people inside the kingdom".

Saudi officials have not yet commented on who they think is behind the attacks.

"At 04:00 (01:00 GMT), the industrial security teams of Aramco started dealing with fires at two of its facilities in Abqaiq and Khurais as a result of... drones," the official Saudi Press Agency reported.

"The two fires have been controlled."

There have been no details on the damage but Agence France-Presse quoted interior ministry spokesman Mansour al-Turki as saying there were no casualties.

Abqaiq is about 60km (37 miles) south-west of Dhahran in Saudi Arabia's Eastern Province, while Khurais, some 200km further south-west, has the country's second largest oilfield.

Saudi security forces foiled an attempt by al-Qaeda to attack the Abqaiq facility with suicide bombers in 2006.
An attack method open to all

Jonathan Marcus, BBC defence and diplomatic correspondent

This latest attack underlines the strategic threat posed by the Houthis to Saudi Arabia's oil installations.

The growing sophistication of the Houthis' drone operations is bound to renew the debate as to where this capability comes from. Have the Houthis simply weaponised commercial civilian drones or have they had significant assistance from Iran?

The Trump administration is likely to point the finger squarely at Tehran, but experts vary in the extent to which they think Iran is facilitating the drone campaign.

The Saudi Air Force has been pummelling targets in Yemen for years. Now the Houthis have a capable, if much more limited, ability to strike back. It shows that the era of armed drone operations being restricted to a handful of major nations is now over.

Drone technology - albeit of varying degrees of sophistication - is available to all; from the US to China, Israel and Iran... and from the Houthis to Hezbolllah.
Markets await news from key facilities

Analysis by BBC business correspondent Katie Prescott

Aramco ranks as the world's largest oil business and these facilities are significant.

The Khurais oilfield produces about 1% of the world's oil and Abqaiq is the company's largest facility - with the capacity to process 7% of the global supply. Even a brief or partial disruption could affect the company, and the oil supply, given their size.

But whether this will have an impact on the oil price come Monday will depend on just how extensive the damage is. Markets now have the weekend to digest information from Aramco and assess the long-term impact.

According to Richard Mallinson, geopolitical analyst at Energy Aspects, any reaction on Monday morning is likely to be muted, as markets are less worried about supply than demand at the moment, due to slower global economic growth and the ongoing trade war between the US and China.

However, there are concerns that escalating tensions in the region could pose a broader risk, potentially threatening the fifth of the world's oil supply that goes through the critical Strait of Hormuz.
Who are the Houthis?

The Iran-aligned Houthi rebel movement has been fighting the Yemeni government and a Saudi-led coalition.

Yemen has been at war since 2015, when President Abdrabbuh Mansour Hadi was forced to flee the capital Sanaa by the Houthis. Saudi Arabia backs President Hadi, and has led a coalition of regional countries against the rebels.

    Yemen conflict explained in 400 words
    Why is there a war in Yemen?
    Yemen war: Has anything been achieved?

The coalition launches air strikes almost every day, while the Houthis often fire missiles into Saudi Arabia.

Mr Sarea, the Houthi group's military spokesman, told al-Masirah that operations against Saudi targets would "only grow wider and will be more painful than before, so long as their aggression and blockade continues".
Image copyright EPA
Image caption Saudi-led coalition air strikes regularly target Houthis in Yemen

Houthi fighters were blamed for drone attacks on the Shaybah natural gas liquefaction facility last month and on other oil facilities in May.

There have been other sources of tension in the region, often stemming from the rivalry between Saudi Arabia and Iran.

Saudi Arabia and the US both blamed Iran for attacks in the Gulf on two oil tankers in June and July, allegations Tehran denied.

    Gulf of Oman tanker attacks: What we know
    Iran-US tensions: What's going on?

In May, four tankers, two of them Saudi-flagged, were damaged by explosions within the UAE's territorial waters in the Gulf of Oman.

Saudi Arabia and then US National Security Adviser John Bolton blamed Iran. Tehran said the accusations were "ridiculous".

Tension in the vital shipping lanes worsened when Iran shot down a US surveillance drone over the Strait of Hormuz in June, leading a month later to the Pentagon announcing the deployment of US troops to Saudi Arabia.
Title: 🛢️ Saudi Arabia reportedly shuts down half its oil production after drone attac
Post by: RE on September 14, 2019, 10:19:09 AM
That should bump up the oil prices.

RE

https://www.cnbc.com/2019/09/14/saudi-arabia-is-shutting-down-half-of-its-oil-production-after-drone-attack-wsj-says.html (https://www.cnbc.com/2019/09/14/saudi-arabia-is-shutting-down-half-of-its-oil-production-after-drone-attack-wsj-says.html)

Saudi Arabia reportedly shuts down half its oil production after drone attack
Published 3 hours agoUpdated an hour ago
Yun Li   @YunLi626

(https://image.cnbcfm.com/api/v1/image/106129851-1568471897030rtx72w4p.jpg?v=1568471992&w=740&h=416)
Fires burn in the distance after a drone strike by Yemen’s Iran-aligned Houthi group on Saudi company Aramco’s oil processing facilities, in Buqayq, Saudi Arabia September 14, 2019 in this still image taken from a social media video obtained by REUTERS
   
   
Key Points

    The closure will impact almost five million barrels of crude production a day, about 5% of the world’s daily oil production, the WSJ reported.
    Early Saturday, an oilfield operated by Saudi Aramco, the state-owned oil giant, was attacked by a number of drones.
    Yemen’s Houthi rebels have claimed responsibility for the attack, saying it was one of their largest attacks ever inside the kingdom, the WSJ reported.

Saudi Arabia is shutting down half of its oil production after drones attacked the world’s largest oil processing facility in the kingdom, The Wall Street Journal reported.

The closure will impact almost five million barrels of crude production a day, about 5% of the world’s daily oil production, the WSJ reported, citing sources familiar with the matter.

Early Saturday, an oilfield operated by Saudi Aramco, the state-owned oil giant, was attacked by a number of drones, which sparked a huge fire at a processor crucial to global energy supplies.

Yemen’s Houthi rebels have claimed responsibility for the attack, saying it was one of their largest attacks ever inside the kingdom, the WSJ reported.

“We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue,” a Houthi spokesman said. The attack involved 10 drones, the Houthis said.

The Saudi interior ministry said the fires were under control.

Saudi officials are considering drawing down their oil stocks to sell to foreign buyers to make sure world oil supplies won’t be disrupted by the attack and shutdown, the WSJ reported.

The Iran-backed Houthis had been behind a series of attacks on Saudi pipelines, tankers and other infrastructure in the past few years as tensions rise among Iran and the U.S. and partners like Saudi Arabia.

The Islamic Republic, a target of U.S. sanctions for decades, has recently attacked oil tankers in the Strait of Hormuz, shot down a U.S. military drone and announced plans to execute 17 suspected U.S. spies.

Saudi Arabia is moving forward to take Saudi Aramco public in a major shakeup of the kingdom’s energy sector. The world’s most profitable oil company is expected to be valued at more than $1.5 trillion, CNBC previously reported.  Crown Prince Mohammed bin Salman has pushed for a valuation of as much as $2 trillion.
Title: Re: 🛢️ Saudi Arabia reportedly shuts down half its oil production after drone attac
Post by: Surly1 on September 14, 2019, 10:54:30 AM
That should bump up the oil prices.

RE


Saudi Arabia reportedly shuts down half its oil production after drone attack

The Iran-backed Houthis had been behind a series of attacks on Saudi pipelines, tankers and other infrastructure in the past few years as tensions rise among Iran and the U.S. and partners like Saudi Arabia.


OK. What you wanna bet this was an Israeli drone attack, launched with(or without) Saudi connivance, so Saudi can blame the Houthis (and their Iranian backers) and make a firmer case for Uncle Sugar's materiel (or better yet, direct military) aid?

The acrid smell of bullshit is in the air.
Title: Re: 🛢️ Saudi Arabia reportedly shuts down half its oil production after drone attac
Post by: Surly1 on September 14, 2019, 11:01:02 AM
That should bump up the oil prices.

RE

It could also be just that fucking simple. I may be overthinking it, especially in light of the article you posted earlier.
Title: Re: 🛢️ Saudi Arabia reportedly shuts down half its oil production after drone attac
Post by: RE on September 14, 2019, 11:06:09 AM
That should bump up the oil prices.

RE


Saudi Arabia reportedly shuts down half its oil production after drone attack

The Iran-backed Houthis had been behind a series of attacks on Saudi pipelines, tankers and other infrastructure in the past few years as tensions rise among Iran and the U.S. and partners like Saudi Arabia.


OK. What you wanna bet this was an Israeli drone attack, launched with(or without) Saudi connivance, so Saudi can blame the Houthis (and their Iranian backers) and make a firmer case for Uncle Sugar's materiel (or better yet, direct military) aid?

The acrid smell of bullshit is in the air.

False Flag is definitely a possibility.  A full scale WAR is of course the best way to get the oil price up, which the whole industry is in desperate need of.  The problem with this idea of course is that it doesn't put more money in consumer wallets to BUY more oil, in fact they will buy less.  So on the revenue end, it's a wash at best.

This is how the End of the Age of Oil arrives.

RE
Title: Re: 🛢️ Saudi Arabia reportedly shuts down half its oil production after drone attac
Post by: RE on September 14, 2019, 11:13:38 AM
That should bump up the oil prices.

RE

It could also be just that fucking simple. I may be overthinking it, especially in light of the article you posted earlier.

Against the False Flag-Israeli Hypothesis is that according to the MSM, the Houthis HAVE taken credit for this attack and promised further escalation.  One has to remember Iran will benefit from higher oil prices too.

One would expect a Saudi retaliation attacking Iranian oil production facilities.

RE
Title: 🛢️ Saudi Arabia: major fire at world's largest oil refinery after drone attack
Post by: RE on September 14, 2019, 11:46:01 AM
http://www.youtube.com/v/sz58GyPoY3o
Title: 🛢️ Brent crude oil jumps 13% after drone strikes disrupt Saudi crude production
Post by: RE on September 16, 2019, 12:00:11 AM
https://www.cnbc.com/2019/09/15/us-crude-oil-jumps-15percent-after-drone-strikes-disrupt-saudi-crude-production.html (https://www.cnbc.com/2019/09/15/us-crude-oil-jumps-15percent-after-drone-strikes-disrupt-saudi-crude-production.html)

Brent crude oil jumps 13% after drone strikes disrupt Saudi crude production
Published 2 hours agoUpdated 34 min ago
Yun Li   @YunLi626
   
(https://image.cnbcfm.com/api/v1/image/106130711-1568582677546rtx72w0d.jpg?v=1568582803&w=740&h=416)
Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.
Stringer | Reuters
   
   
Key Points

    Saudi Aramco, the national oil company, reportedly aims to restore about a third of its crude output, or 2 million barrels by Monday.
    Sunday evening, President Donald Trump said he was authorizing the release of oil from the Strategic Petroleum Reserve to keep the markets “well-supplied.”


Oil prices jumped more than 10% after a coordinated drone attack hit the heart of Saudi Arabia’s oil industry on Saturday, forcing the kingdom to cut its oil output in half.

U.S. West Texas Intermediate crude futures popped $6.4, or 11.67%, to $61.23 per barrel. Brent crude futures soared $7.89, or 13.3% to $68.07.

Drone strikes attacked an oil processing facility at Abqaiq and the nearby Khurais oil field on Saturday, knocking out 5.7 million barrels of daily crude production or 50% of the kingdom’s oil output. Saudi Aramco, the national oil company, reportedly aims to restore about a third of its crude output, or 2 million barrels by Monday.

“While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions,” said Chris Midgley, global head of analytics, S&P Global Platts.

Sunday evening, President Donald Trump said he was authorizing the release of oil from the Strategic Petroleum Reserve to keep the markets “well-supplied.”

Abqaiq is the world’s largest oil processing facility and crude oil stabilization plant with a processing capacity of more than 7 million barrels per day. Khurais is the second largest oil field in the country with a capacity to pump around 1.5 million barrels per day. In August, Saudi Arabia produced 9.85 million barrels per day.

Yemen’s Houthi rebels claimed responsibility for the attack, saying it was one of their largest attacks ever inside the kingdom. The Houthis have been behind a series of attacks on Saudi pipelines, tankers and other infrastructure in the past few years.

Trump also said there is reason to believe the U.S. knows the culprit and is “locked and loaded,” while waiting to get the verification from the kingdom to proceed.

The U.S. has blamed Iran for the drone strikes on those important facilities. Secretary of State Mike Pompeo said in a tweet Saturday Iran has launched an “unprecedented attack on the world’s energy supply.”

“If the Iranians have been driven to desperate measures from the loss of crude export revenues, an attack on Saudi capacity seems a likely response,” Jason Gammel, energy analyst at Jefferies, said in a note on Sunday. “The risk of wider conflict in the regions, including a Saudi or US response, will likely raise the political risk premium on crude prices by $5-10/bbl.”

The latest attack came as Saudi Arabia moves forward to take Saudi Aramco public in a major shakeup of the kingdom’s energy sector. Saudi Aramco President and CEO Amin Nasser said Saturday nobody was hurt in the attacks and work is underway to restore production. Aramco did not immediately respond to CNBC’s request for comment on Sunday.
Title: Re: 🛢️ Oil Resource Wars
Post by: BuddyJ on September 16, 2019, 07:10:22 AM
This could really be an interesting and potentially profitable event for American producers, right?

First, we have OPEC cutting back production because the US has plugged in a new 5+ million barrels a day over the last half decade or so, and without the ability to control free market oil supply, OPEC can only cut back their own to maintain prices.

So they do this...keeping the market near a $50-$60 window...and suddenly now we've got an attack on production that will decrease it, causing the expected price increase, and presto! Suddenly, the companies in the US that have been hanging on by their fingernails get a windfall, allowing them to stave off possible bankruptcy in the near term, maybe even continuing to grow production, and when the Saudi's get ready to come back online at full production? It isn't needed! Between decreasing demand, the US doing its best to span the gap, and presto! Now we've got the Saudi's production constrained because they aren't willing to crash the price.

It is like the dynamics of 1986, except the Saudi's this time have to try and stomp out American industry and the shale revolution.
Title: 🛢️ Iran seizes vessel in Gulf for allegedly smuggling diesel – reports
Post by: RE on September 16, 2019, 07:26:09 AM
https://www.theguardian.com/world/2019/sep/16/iran-seizes-vessel-in-gulf-for-allegedly-smuggling-diesel-fuel-reports (https://www.theguardian.com/world/2019/sep/16/iran-seizes-vessel-in-gulf-for-allegedly-smuggling-diesel-fuel-reports)

Iran seizes vessel in Gulf for allegedly smuggling diesel – reports

Reports come amid raised tensions after weekend attack on major Saudi oil installation

Reuters in Dubai

Mon 16 Sep 2019 08.17 EDT
Last modified on Mon 16 Sep 2019 08.34 EDT

(https://www.thenational.ae/image/policy:1.887007:1563447447/07709521.jpg?f=16x9&w=1200&$p$f$w=b0c6671)

Iran’s Revolutionary Guards have seized a vessel in the Gulf for allegedly smuggling 250,000 litres of diesel fuel to the United Arab Emirates, Iran’s semi-official news agency ISNA has reported.

“It was detained near Iran’s Greater Tunb island in the Persian Gulf … the crew have been handed over to legal authorities in the southern Hormozgan province,” ISNA said on Monday, without elaborating on the nationalities of the crewmen.

The reported seizure coincided with raised international tensions following a weekend attack on a major oil installation in Saudi Arabia, Tehran’s longtime regional foe. Yemen’s Iran-aligned Houthi movement claimed responsibility, while the US has blamed Iran outright for the strike. Tehran has denied the accusation.

Iran, which has some of the world’s cheapest fuel prices owing to heavy subsidies and the fall of its national currency, has been fighting rampant fuel smuggling by land to neighbouring countries and by sea to Gulf Arab states.

Iran stepped up its fight against smuggling fuel this month when its coast guard seized a vessel for allegedly smuggling fuel in the Gulf and detained its 12 Filipino crew members.

In July, Iran seized a British oil tanker near the strait of Hormuz for alleged marine violations, two weeks after British forces detained an Iranian tanker near Gibraltar, accusing it of taking oil to Syria in violation of EU sanctions.

Iran’s Adrian Darya 1, formerly Grace 1, was released last month. Abbas Mousavi, Iran’s foreign ministry spokesman, said on Monday that the British-flagged Stena Impero tanker would be released soon.

The latest reported ship seizure by Iran follows a series of incidents involving shipping in and around the Gulf after US sanctions on Iranian oil exports took full effect in May. The incidents coincided with Houthi rebels stepping up attacks on targets in Saudi Arabia.
Title: Re: 🛢️ Oil Resource Wars
Post by: RE on September 16, 2019, 07:35:41 AM
This could really be an interesting and potentially profitable event for American producers, right?

First, we have OPEC cutting back production because the US has plugged in a new 5+ million barrels a day over the last half decade or so, and without the ability to control free market oil supply, OPEC can only cut back there own to maintain prices.

So they do this...keeping the market near a $50-$60 window...and suddenly now we've got an attack on production that will decrease it, causing the expected price increase, and presto! Suddenly, the companies in the US that have been hanging on by their fingernails get a windfall, allowing them to stave off possible bankruptcy in the near term, maybe even continuing to grow production, and when the Saudi's get ready to come back online at full production? It isn't needed! Between decreasing demand, the US doing its best to span the gap, and presto! Now we've got the Saudi's production constrained because they aren't willing to crash the price.

It is like the dynamics of 1986, except the Saudi's this time have to try and stomp out American industry and the shale revolution.

Definitely the shot in the arm that the high EROEI producers needed.  However, it still only impacts around 5% of the current global supply.  The glut remains due to falling demand, or rather "less than expected" growth.

RE
Title: Re: 🛢️ Oil Resource Wars
Post by: BuddyJ on September 16, 2019, 08:13:58 AM
This could really be an interesting and potentially profitable event for American producers, right?

First, we have OPEC cutting back production because the US has plugged in a new 5+ million barrels a day over the last half decade or so, and without the ability to control free market oil supply, OPEC can only cut back there own to maintain prices.

So they do this...keeping the market near a $50-$60 window...and suddenly now we've got an attack on production that will decrease it, causing the expected price increase, and presto! Suddenly, the companies in the US that have been hanging on by their fingernails get a windfall, allowing them to stave off possible bankruptcy in the near term, maybe even continuing to grow production, and when the Saudi's get ready to come back online at full production? It isn't needed! Between decreasing demand, the US doing its best to span the gap, and presto! Now we've got the Saudi's production constrained because they aren't willing to crash the price.

It is like the dynamics of 1986, except the Saudi's this time have to try and stomp out American industry and the shale revolution.

Definitely the shot in the arm that the high EROEI producers needed.

And even better than that, a direct cash infusion to the corporate bank accounts!

I'm betting it won't go on all that long though, unless the attacks can continue and combo of Saudi Arabia and America don't join forces to pound on the Iranians. THAT could be a long term screwed up mess. But if attacks stop, and no one bombs Iranians, I don't believe it will be much of a long term thing.

Quote from: RE

 However, it still only impacts around 5% of the current global supply.  The glut remains due to falling demand, or rather "less than expected" growth.

RE

Peak demand is expected to be within the decade, but I've got no objection to it arriving sooner rather than later.
Title: Re: 🛢️ Oil Resource Wars
Post by: RE on September 16, 2019, 08:46:16 AM
I'm betting it won't go on all that long though, unless the attacks can continue and combo of Saudi Arabia and America don't join forces to pound on the Iranians. THAT could be a long term screwed up mess. But if attacks stop, and no one bombs Iranians, I don't believe it will be much of a long term thing.

You forgot a couple of Major Players at the poker table.

If indeed the FSoA teamed up with the Saudis to bomb Iran back to the Stone Age, you won't see the Ruskies or Chinese sitting on the sidelines for that one.

There is your scenario for WWIII and Global Thermonuclear War.

RE
Title: 🛢️ The president’s inconsistency on Iran and his ties to the Saudis don’t bode
Post by: RE on September 16, 2019, 10:40:49 AM
https://www.bloomberg.com/opinion/articles/2019-09-16/donald-trump-is-boxed-in-by-saudi-drone-attacks (https://www.bloomberg.com/opinion/articles/2019-09-16/donald-trump-is-boxed-in-by-saudi-drone-attacks)

The president’s inconsistency on Iran and his ties to the Saudis don’t bode well for how he will handle a monumental foreign policy challenge. 
By Timothy L. O'Brien
September 16, 2019, 3:00 AM AKDT

(https://assets.bwbx.io/images/users/iqjWHBFdfxIU/irq3am_t822c/v1/1000x-1.jpg)
Family ties.  Photographer: Mandel Ngan/AFP

Timothy L. O’Brien is the executive editor of Bloomberg Opinion. He has been an editor and writer for the New York Times, the Wall Street Journal, HuffPost and Talk magazine. His books include “TrumpNation: The Art of Being The Donald.”

A small squadron of drones — and possibly cruise missiles — penetrated Saudi Arabia’s air defenses on Saturday, laying waste to a significant, valuable portion of two of the world’s most essential oil processing facilities. Amid worries about the impact of the strikes on global oil markets (half the kingdom’s oil output was affected) and fears about broader military confrontations upending a region perennially vexed by crossed swords, ancient religious rifts, geopolitical maneuvering and greed, facts and conjecture began jockeying for attention.

Houthi rebels fighting the Saudis in a brutal civil war in Yemen took credit for the strikes. Iran backs the Houthis, and U.S. Secretary of State Mike Pompeo took to Twitter on Saturday afternoon to blame Iran for “an unprecedented attack on the world’s energy supply” and to assert that there “is no evidence the attacks came from Yemen.” Pompeo didn’t specify where the strikes actually originated. The Saudis, backed by the U.S. in Yemen, have yet to pin the strikes on Iran, while the Iranians themselves deny any involvement. On Sunday, the U.S government produced photos that officials said indicated that the drones had to have flown into Saudi Arabia from Iraq or Iran. Iraq denies being involved.

Not everyone is telling the truth here (although everyone might think they are) and any prudent response to the attacks hinges on more factual certainty. Patience and foresight are diplomatic virtues in moments like this, even if the correct response ultimately involves more severe economic sanctions on Iran or military actions designed to rein in its rulers.

Like any U.S. president, Donald Trump could play a clarifying role and use the power and prestige of his office to bring a sense of order to what is a dangerous dynamic in the Arab world right now. It’s possible that the next few days will build toward the most momentous foreign policy challenge Trump will experience. But we’ve also arrived here precisely because of Trump’s own haphazard and conflicted approach to regimes he claims he wants to upend. Someone who has presided over the most chaotic White House of modern times is unlikely to navigate this complicated crisis with the necessary deftness.

The White House issued a statement Saturday confirming that Trump had phoned Saudi Crown Prince Mohammed bin Salman to offer support for the country and oil markets. The president then filled his communication platform of choice, Twitter, with an array of attacks on the media, praise for Supreme Court Justice Brett Kavanaugh, promos for events meant to support black colleges, and a reminder that the “USA is Winning Again!”

At about 6 p.m. Sunday, Trump tweeted that he planned to release inventories from the U.S. Strategic Petroleum Reserve to help stabilize oil markets. About an hour later, he weighed in again on behalf of the Saudis.

“Saudi Arabia oil supply was attacked,” he tweeted. “There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”

In a flash, and most likely without consulting anyone else on his White House team, Trump indicated he was willing to put the U.S. military at the disposal of the Saudis and that he’d come out, guns blazing, whenever the Saudis thought the time was right.

Shortly after that, he noted that there was “PLENTY OF OIL!” and that no one should think that he stumbled in his own dealings with the Iranians — that perhaps the Iranians saw him softening and took advantage of him.

“The Fake News is saying that I am willing to meet with Iran, ‘No Conditions.’ That is an incorrect statement (as usual!),” he tweeted just after 7 p.m.

The problem with that one is that Trump did, in fact, say in June that he’d be willing to take a meeting with Iran with “no preconditions.” And several days ago Trump said he’d be willing to meet with Iranian President Hassan Rouhani at the upcoming United Nations General Assembly meeting in New York.

Did any of that diplomatic signaling ( including the departure of Trump’s hawkish national security adviser John Bolton) coax the Iranians into a more aggressive stance, convincing them to try to disable a crucial oil field controlled by its most powerful foe in the Arab world at a time when that foe was moving toward a public offering of shares in its national oil company, Saudi Aramco? Who knows.

What probably hasn’t been lost on Iran is that Trump has postured and blustered about his willingness to use military force to corral countries he considers hostile to the U.S., but then fails to follow through. In June, Trump ordered a military strike on Iran, only to call it off at the last minute.

This isn’t new behavior from the president. He spent parts of his business life threatening to vanquish competitors or run circles around them when he was “artofthedealmaking,” only to find himself outmaneuvered or unable to deliver on his warnings (often to his own financial and reputational detriment).

The president has likewise boxed himself in with the Saudis. In addition to turning a blind eye to the kingdom’s own military atrocities in Yemen, and to countenancing the murder of the Saudi journalist and dissident Jamal Khashoggi, Trump and his family have myriad financial conflicts of interest involving Saudi money. Trump has left himself little room to find diplomatic solutions that don’t meet the Saudis’ needs first, while he continues to blur the line between serving the U.S. national interest and his own self-interest.

And one of the most harrowing aspects of Trump’s presidency — that an inexperienced self-promoter utterly ignorant about much of the world and lacking any real interest in international affairs had assumed power over the mightiest military force on the planet — is now in full relief in the wake of the drone strikes in Saudi Arabia.

Character is at play here, too. There’s a presidential election coming and with it the danger that Trump will find military confrontations overseas useful avenues for a political boost. That would suggest he may not be making completely sober-minded decisions.

Perhaps the president will rise to the occasion this week, despite the forces he helped set in motion and which are now pulling him in multiple directions. But don’t hold your breath.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Timothy L. O'Brien at tobrien46@bloomberg.net


The chances of the U.S. easing sanctions fell to zero after the secretary of state blamed Tehran for the attack on Saudi Arabia’s Abqaiq facility.
By Julian Lee
September 15, 2019, 4:45 AM AKDT
Who’s to blame?


The chances of President Donald Trump easing sanctions on Iran’s oil exports have dropped to zero after an attack on Saudi Arabia’s oil industry that his Secretary of State Mike Pompeo has pinned on Tehran. The bigger challenge now will be reining in the U.S. hawks calling for retaliatory strikes on Iran’s energy industry facilities.

Before this weekend the big political news dominating the oil market was the sudden departure of John Bolton as Trump’s hardline national security adviser. His leaving raised hopes (or fears, depending on your point of view) that waivers from sanctions might be reinstated for some buyers of Iranian crude; there was talk even of Trump meeting with Iran’s President Hassan Rouhani later this month.

I’m deeply skeptical about whether such a diplomatic breakthrough would have taken place without Trump reopening Barack Obama’s nuclear deal with Iran, which the current president scrapped last year. I can’t believe Trump would have been willing to do that. The drone strike on Saudi Arabia’s Abqaiq oil processing facility in the early hours of Saturday morning makes such speculation irrelevant anyway.

Pompeo appears to have taken on Bolton’s mantle of White House ultra-hawk. He blamed Iran for the attack in a Saturday tweet, even though responsibility has been claimed by the Houthi rebels being bombed savagely by a Saudi-led coalition in neighboring Yemen. They have plenty of incentive to retaliate.

The secretary of state went further than linking Tehran to the attack through its training and support of the Houthis, who are part of a network of militant groups in the Middle East allied with Iran. “There is no evidence the attacks came from Yemen,” Pompeo said in his tweet. He’s yet to share any evidence that it came from Iran either.

It would be better if he did. Memories of the “evidence” of Saddam Hussein’s non-existent weapons of mass destruction that precipitated the 2003 invasion of Iraq still linger. It’s a big step to say the attacks came from Iran. An earlier strike against Saudi Arabia’s East-West pipeline was deemed eventually to have been launched by Houthis operating from the sparsely-populated territory of south-western Iraq, although Iraq has denied that its territory was used for the new attack.

Saudi Arabia started its devastating bombing campaign in Yemen in 2015 – with some U.S. backing and weaponry – after the Houthis took control of the capital and other parts of the country. Despite thousands of civilian deaths, terrible human rights abuses on both sides and a humanitarian catastrophe, the war has settled into an ugly stalemate. Saturday’s attack, along with previous drone strikes, shows the Houthis’ effectiveness in inflicting damage well beyond Yemen (if indeed it was them).

Not surprisingly, Iran’s foreign ministry has denied responsibility. It now needs to go further and try to rein in its clients in Yemen. For its part, the U.S. should do the same in Saudi Arabia. Failure to do so will only lead to more attacks on the region’s oil infrastructure and more costly disruptions to supply.

The Saudis will need weeks to restore full production capacity, according to my Bloomberg News colleagues Anthony DiPaola and Javier Blas. Other members of the OPEC+ group, who have been restricting output to boost oil prices since the start of 2017, will open their taps. But more than 85% of the OPEC production cut since January has come from Saudi Arabia itself. The available spare capacity is a lot less than it might appear at first sight.

Riyadh was no doubt fearful that any rapprochement between Trump and Rouhani would have led to millions of barrels of Iranian oil gushing back onto the market, thereby scuppering the Saudi effort to support the crude price. The Abqaiq attack, and Pompeo’s response, shows there is no chance of that now. But the vulnerability of Aramco’s own installation to such strikes has created an infinitely worse problem.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Julian Lee at jlee1627@bloomberg.net
Title: Re: 🛢️ Oil Resource Wars
Post by: BuddyJ on September 16, 2019, 01:20:47 PM
I'm betting it won't go on all that long though, unless the attacks can continue and combo of Saudi Arabia and America don't join forces to pound on the Iranians. THAT could be a long term screwed up mess. But if attacks stop, and no one bombs Iranians, I don't believe it will be much of a long term thing.

You forgot a couple of Major Players at the poker table.

If indeed the FSoA teamed up with the Saudis to bomb Iran back to the Stone Age, you won't see the Ruskies or Chinese sitting on the sidelines for that one.

Maybe. Then again, both of them combined are not capable of power projection at the scale that the US alone can manage in that area. Let alone mount enough of a defense of Iran fast enough to stop any American attack.

Sure, both can nuke things, but they won't. And we are only talking about Iran, Russia certainly has no oil import worries (unlike China), and China can afford to buy what they need on the open market. Other than the global cred they get joining sides against the big, bad US, there isn't much upside for them at all. Plenty of downside as well, remember those poor Russia mercs who went against some US spec ops in the Syria desert? That went so badly that Russia refuses to even admit they were theirs.

Quote from: RE
There is your scenario for WWIII and Global Thermonuclear War.

RE

A high impact event for sure. But extremely low probability.
Title: Re: 🛢️ Oil Resource Wars
Post by: Surly1 on September 16, 2019, 03:32:02 PM
I'm betting it won't go on all that long though, unless the attacks can continue and combo of Saudi Arabia and America don't join forces to pound on the Iranians. THAT could be a long term screwed up mess. But if attacks stop, and no one bombs Iranians, I don't believe it will be much of a long term thing.

You forgot a couple of Major Players at the poker table.

If indeed the FSoA teamed up with the Saudis to bomb Iran back to the Stone Age, you won't see the Ruskies or Chinese sitting on the sidelines for that one.
RE

To fully understand, you have to consult the MSM, then move off the MSM crackpipe to get a fuller perspective for what is going on.
To your point, the Saker moved this recently:

Russia prevents Israeli airstrikes in Syria (http://thesaker.is/russia-prevents-israeli-airstrikes-in-syria/)
3144 ViewsSeptember 14, 2019 4 Comments
The Jerusalem Post reports:

The controversy between Israel and Russia regarding airstrikes of Iranian targets in Syria and Iraq continues, despite the meeting Between Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin. This was reported on Friday by Independent Arabia.

According to the report, Moscow has prevented three Israeli air strikes on three Syrian outposts recently, and even threatened that any jets attempting such a thing would be shot down, either by Russian jets or by the S-400 anti-aircraft missiles. The source cited in the report claims a similar situation has happened twice – and that during August, Moscow stopped an air strike on a Syrian outpost in Qasioun, where a S-300 missile battery is placed.

Moreover, it was claimed that another air strike was planned for a week later on a Syrian outpost in the Qunaitra area and a third one on a sensitive area in Latakia. This development is what pushed Netanyahu to have his quick visit in Russia to try and convince Putin to ignore Israel’s attacks in Syria. According to the Russian source, Putin let Netanyahu know that his country will not allow any damage to be done to the Syrian regime’s army, or any of the weapons being given to it, because giving such a permission would be seen as giving Israel leniency – something that contradicts Russia’s goal of assisting the Syrian regime.

The British-Arabic news outlet reported that Netanyahu tried to present a positive message of the cooperation between the two countries and even tried to use it for his election campaign, but it didn’t work. Israeli sources who have spoken with the newspaper called the meeting “a failure.” They claimed that everything regarding the air strikes in Iraq and Syria, since they were in the public eye, embarrassed the Russians terribly in the eyes of their allies in the area – Syria, Iran and the militias that support them.

The Russian source said: “Putin has expressed his dissatisfaction from Israel’s latest actions in Lebanon,” and even emphasized to Netanyahu that he “rejects the aggression towards Lebanon’s sovereignty,” something which had never been heard from him. Putin further stated that someone is cheating him in regards to Syria and Lebanon, and that he will not let it go without a response. According to him, Netanyahu was warned not to strike such targets in the future.

The news website added that more Israeli sources have said similar things on the subject and that the visit was meant to reduce the severity of the controversy between the countries into a tactical one, rather than an ideological one.
Title: 🛢️ Impact of Yemeni Attack on Saudi ARAMCO Oil Facilities
Post by: RE on September 17, 2019, 09:27:45 AM
https://www.globalresearch.ca/impact-yemeni-attack-saudi-aramco-oil-facilities/5689430 (https://www.globalresearch.ca/impact-yemeni-attack-saudi-aramco-oil-facilities/5689430)

Impact of Yemeni Attack on Saudi ARAMCO Oil Facilities
An interview with PressTV
By Peter Koenig and Press TV
Global Research, September 17, 2019
Region: Middle East & North Africa
Theme: Oil and Energy, US NATO War Agenda

(https://www.globalresearch.ca/wp-content/uploads/2018/09/saudi-aramco-768x461.jpg)
Background

Saudi Arabia says the recent drone attacks on the state-run oil company Aramco, led to a temporary closure of its facilities and disrupted the kingdom’s oil production and exports.

“[Saudi] Energy Minister, Abdulaziz bin Salman said the attacks led to the interruption in production of an estimated five-point-seven million barrels of crude per day. The amount is equivalent to five percent of the daily global supply of crude oil. Meanwhile, Crown Prince, Mohammad bin Salman, said his country is willing and able to deal with Saturday’s drone strikes. Also, the U-S secretary of state has accused Iran of being behind the recent attacks. Mike Pompeo claimed there is no evidence to prove that the attacks were launched from Yemen. He was actually adamant about blaming Iran for the attack, without any shred of proof. This is while Yemen’s Ansarullah movement [the Houthis] has claimed responsibility for the drone strikes.”

Saudi stocks dropped dramatically following drone strikes on two Aramco facilities by Yemeni forces; an attack that halved the kingdom’s crude production.

Saudi shares have dropped three percent after Yemeni drone attacks on two major state-run Aramco oil facilities knocked out more than half the kingdom’s production.

Saudi Energy Minister, Abdulaziz bin Salman said the attacks led to the interruption in production of an estimated five-point-seven million barrels of crude per day. The amount is equivalent to five percent of the daily global supply of crude oil. Yemeni forces launched the massive drone attack in response to the Saudi-led coalition war that has lasted for more than 4 years on the impoverished nation on Saturday.

***

PressTV: Could you please comment on the consequence of this reduction in the oil supply by Saudi Arabia?

Peter Koenig: First, lets make one thing crystal clear – Mr. Pompeo is a flagrant liar, has been in the past with everything he says against his own fabricated enemies, and he will very unlikely change, as the type of his hawkish aggressive warrior character will not change. Therefore, everything Pompeo says and pretends which such assurance that most people realize it’s a fabricated lie as he did not – and never does – provide any evidence. Therefore, whatever he says and pretends to be the truth without evidence, has to be taken with more than a grain of salt.
Trump Exploits Drone Attacks on Saudi Oil Facilities to Threaten War Against Iran

In fact, immediately blaming Iran for the drone attack on ARAMCO, is without any foundation; it is an outright lie, just to put more dirt on Iran, to further denigrate Iran. It is very clear to me – who have worked for 7 years in Yemen – that the Houthis have the capacity to develop their own drones – they have a flying range potential of at least 1,000 km.

It is very simple and very logical, the Houthis are gradually getting their strength back and are revenging themselves for the horrendous aggression launched for more than 4 year by the Saudis against their country – of course, with staunch support from the US, UK and the French.

Let’s just remind ourselves, that inhuman abhorrent aggression has cost tens of thousands of Yemeni lives – most of them children, women and the elderly and weak – from direct bomb attacks, from famine, and from cholera and other sanitation related diseases. Today still a million people are at risk of a cholera epidemic.

Having said this – the consequences or impact of a 5% oil output reduction due to the burning ARAMCO wells is insignificant. Of course, speculators – the Godman Sachs type, who are the chief manipulators behind oil prices – would like you to believe that this is ample ground for hefty fuel price increases – in reality not at all.

Of course, in our predatory capitalist world, the stock market wheelers and dealers, may try to cash-in on this event – which in reality has – or should have – zero impact on the world oil supply.

This shortfall could easily be made up by lifting sanctions o Iranian and Venezuelan oil sales… so it’s just a question of logics – and foremost – of justice, international law and Human Rights.

PressTV: What about the fragility of the Saudis military power?

PK: Of course, the Saudi military power is nothing without the full support and guidance, by weapons and technical and strategic advice directly from the Pentagon, CIA – and the European vassals, and – of course – from weapon manufacturers and weapon sales sharks, in the UK and in France.

The Saudis from day one – in October 2015 – were just launching a proxy war for the US against Yemen – Yemen has a key strategic location in the Gulf and Middle East, and also off-shore deep hydrocarbon deposits – and god forbid, may not be ruled by a people-friendly – a socialist leaning government. For the last 50-some years Yemen was ruled by a US puppet, or puppets – which was OK for the US, but once people get tired of injustice and corruption, they decided to dispose their nefarious regime and replace it with the popular Houthi movement.

When the Saudis agreed in the early 1970’s as head of OPEC and on behalf of OPEC, to sell crude only in US-dollars, the US Administration offered them in turn – “forever” military protection, in the form of multiple military bases in the Saudi territories. Without this protection, the Saudis would not have survived as long as they did with their horrendous discriminatory and corrupt government and, of course, without that protection, OPEC may not have stuck to the “dollar-only” rule to trade hydrocarbons. – We might be in another world today – but, we really don’t know how dynamics might have worked out.

*

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Peter Koenig is an economist and geopolitical analyst. He is also a water resources and environmental specialist. He worked for over 30 years with the World Bank and the World Health Organization around the world in the fields of environment and water. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research; ICH; RT; Sputnik; PressTV; The 21st Century; Greanville Post; TeleSUR; The Saker Blog, the New Eastern Outlook (NEO); and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance. He is a Research Associate of the Centre for Research on Globalization.
Title: Re: 🛢️ Oil Resource Wars
Post by: BuddyJ on September 21, 2019, 05:29:26 PM
My vote is for Don The DimWitted to keep kwetching and trumpeting how tough sanctions are because he doesn't want to get involved in more Middle East shenanigans.
Title: 🛢️ Why The Saudis Are Lying About Their Oil Production
Post by: RE on September 25, 2019, 01:30:51 AM
https://oilprice.com/Energy/Crude-Oil/Why-The-Saudis-Are-Lying-About-Their-Oil-Production.html

Why The Saudis Are Lying About Their Oil Production
By Simon Watkins - Sep 23, 2019, 6:00 PM CDT

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Saudi Arabia’s comments about its hydrocarbons industry have long been regarded by industry experts as being as believable as China’s comments about its economic growth: that is, not at all. Saudi Arabia’s skill in lying is definitely improving, though, from the outright transparent lies about its level of oil reserves, spare capacity, and why the omni-toxic Aramco should nonetheless be valued at US$2 trillion.

Its latest lies - along the lines of ‘everything is fine after the attacks and we will be back to full production really quickly’ – are relatively nuanced. “The Saudi statements may not contain any direct falsehoods as such but nor are they entirely being fulsome with the truth,” Richard Mallinson, senior energy analyst for Energy Aspects, in London, told OilPrice.com last week.

The stage was set for the Saudis’ latest lying extravaganza with the aerial attacks on its massive Abqaiq oil processing facility and Khurais oil field launched, according to various sources, by Houthi ‘rebels’ in Yemen or by Iranian operatives in Yemen or in Iran. The effect of the combined attack on Abqaiq and Khurais caused the temporary suspension of 5.7 million barrels per day (bpd). This equates to well over half of Saudi Arabia’s actual crude oil production capacity, not the capacity figure that Saudi has plucked out of nowhere for geopolitical power purposes in recent years, and resulted in the biggest rise in oil prices in a single day ever.

Once the hedge funds, who had handily positioned themselves long some days before the attacks, had taken their profits, and younger traders remembered that the U.S. can release vast amounts of oil at the drop of a hat from its Strategic Petroleum Reserve to keep the price of oil – and, crucially ahead of an election year, the highly correlated and politically enormously sensitive gasoline pump price in the U.S. down – oil prices came down again, obviously.

A number of interesting things happened from the Saudi Arabian side as the prices went up and then went back down again. The first of these, as OilPrice.com was informed repeatedly by senior oil traders throughout the day, was the lack of real understanding that senior Saudi officials seem to have on how the oil market works or any details of Saudi’s own oil industry.

“I used to think the Saudis thought all of us [oil traders] were idiots, with all the rubbish they used to come out with and thought we’d believe, but recently it’s occurred to me that they genuinely don’t know anything about the oil industry, so they don’t understand that other people actually do know what they’re talking about and this has also been one of the reasons for the constant delaying of the Aramco sale, by the way,” one senior oil trader based in Asia told OilPrice.com.
Related: Millennials Really Do Ruin Everything, And Big Oil Is Next

The Aramco sale to one side for another time (although OilPrice.com has exclusively previously highlighted all of the lies pertaining to it), one particularly striking comment came from Saudi Arabia’s new oil minister, Prince Abdulaziz bin Salman, just after the attacks. He stated that the Kingdom plans to restore its production capacity to 11 million bpd by the end of September and recover its full capacity of 12 million bpd two months later.

“It was extremely telling that he spoke of ‘capacity’ and later of ‘supply to the market’, as these are terms that Saudi tends to use in order to avoid talking about actual production, as capacity and supply are not the same thing at all as actual production at the wellheads,” said Energy Aspects’ Mallinson. “What Saudi is trying to do by not revealing the true picture is to protect its reputation as a reliable oil supplier, especially to its target clientele in Asia, so we have to take all of these comments with a hefty pinch of salt,” he added.

So hefty a pinch of salt as to be mountainous in the case of its capacity and corollary spare capacity figures. The country has stated for decades that it has a spare capacity of between 2.0-2.5 million bpd, implying – given actual production during virtually all of this time averaging less than 10 million bpd - total production capacity of 12.0-12.5 million bpd. This level, though, or anywhere near it, has never been even remotely tested, with the highest production ever recorded being just over 11 million bpd in November last year.

This is despite the all-out oil price war that Saudi started in 2014 against U.S. shale producers to try to destroy the industry through low prices caused by flooding the markets with oil. “If the Saudis had anything near 12 million barrels per day capacity, that would have been the time to pump it but all it managed was just under 10 [million bpd] with 10.5 [million bpd] managed for just one month over that two-year period [2014-2016 before Saudi reversed it strategy],”

Additionally, the EIA defines spare capacity specifically as production that can be brought online within 30 days and sustained for at least 90 days, whilst even Saudi Arabia has said that it would need at least 90 days to move rigs to drill new wells and raise production to the mythical 12 million bpd or 12.5 million bpd level. Many serious oil market players now do not believe that the Saudis have anywhere near 2 million bpd of spare capacity, as it would imply production of 12 million bpd plus. Instead, many now believe that the Saudis have sustainable spare capacity of no more than around 0.5-1.0 million bpd.

Whatever Saudi’s actual capacity, there is absolutely no way that it can have made any accurate assessment of how long it would take to get back to any particular capacity level either – another lie. “Engineers we have spoken to have said that following an incident like this it would take several weeks just to assess the damage, never mind to begin doing anything about it, rather than the few days that the Saudis have taken and then announced the actual timeline – and a very short timeline at that – to bring back various stages of capacity,” said Energy Aspects’ Mallinson.

“Instead, what the Saudis will do to keep exports up is draw down supplies to its domestic industry and reduce the amounts it is sending to domestic refineries – one big refinery, SASREF, is conveniently bringing forward its planned maintenance for later in the year to now - and we hear very mixed reports which of the other refineries are operating at regular rates,” he added. “But some buyers are already being warned of delays, some are being offered swaps with other grades and so on,” he underlined.
Related: US Shale Kept Oil Prices From Surging After Attacks On Saudi Oil

Specifically, a number of customers of Saudi’s Arab Light and Arab Extra Light grades – the grades most affected by the recent attacks – have been offered Saudi’s Arab Medium or Arab Heavy as substitute grades.OilPrice.com understands from oil trading sources. This even applies to Saudi’s number one target country, China. A number of refineries have been told by Aramco that their rolling orders for Arab Extra Light crude cannot be supplied for the time being but can be switched for either Arab Medium or Arab Heavy, depending on the set-up of the refinery. Others, looking for their usual monthly supply of Arab Light have been told that this will be switched to Arab Heavy as a substitute for September loading at least.

The other measure that Saudi is taking - which it has vehemently denied but OilPrice.com can confirm from various oil trading sources and from sources in the Iraq Oil Ministry – is looking to buy Iraq oil grades, which are close to the key export grades that Saudi ships to various destinations, including Asia. “Aramco Trading Company has been aggressively checking prices and lot sizes for Iraqi crude with various [oil] trading houses since the attacks and are looking are shorter-term potentially rolling contracts,” one trading source told OilPrice.com last week.

“A number of the Iraqi grades are close in specifications to their Saudi counterparts, and part of this activity by Saudi to fill customer supply quotas for these grades is to make sure that the demand we are still seeing for such Iranian grades from Asia, but mainly China, is not boosted to make up for the shortfall from Saudi.,” a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com.

The supreme irony, of course - as OilPrice.com has repeatedly underlined, and as many in the oil markets now know, although apparently not the Saudis - is that a cornerstone strategy used by Iran to circumvent current U.S. sanctions against it (as was also the case in the previous period of sanctions) is to rebrand its oil into Iraqi oil, which is extremely easily done, both at the massive and porous border between the two or via various pipeline and shipping routes.

It may well be, then, that Saudi Arabia ends up boosting the bank accounts of the very people that it thinks was behind the attacks on its own oil infrastructure, the Islamic Revolutionary Guards Corps – a staunch and active supporter of Yemen’s Houthis - through its various oil-industry associated businesses by buying Iranian oil, albeit with the stickers changed on the barrels.

By Simon Watkins for Oilprice.com
Title: Re: 🛢️ Oil Resource Wars
Post by: BuddyJ on September 25, 2019, 04:02:49 AM
Lying? Or just covering their bases to make sure that faith in the House of Sauds' ability to keep the black gold continues unshaken? The latter seems like a better characterization, and there are more than a few reasons why this can be happening that fall under CYA. By definition a cartel is all about market manipulation, and Saudi is about the only swing producer left within the cartel, so at this point they are the cartel.

My guess at this point is that stopping the next attack is more important than whatever they need to squeeze through the consequences of the last one.
Title: 🛢️ $300 Oil: What If The Attacks In Saudi Arabia Had Destroyed Production?
Post by: RE on October 01, 2019, 12:28:53 AM
https://oilprice.com/Energy/Oil-Prices/300-Oil-What-If-the-Attacks-In-Saudi-Arabia-Had-Destroyed-Production.html

$300 Oil: What If The Attacks In Saudi Arabia Had Destroyed Production?
By Irina Slav - Sep 30, 2019, 6:00 PM CDT

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Saudi Arabia’s Crown Prince Mohammed bin Salman (MBC) has told CBS that oil could reach “unimaginably high numbers” if a war with Iran were to erupt, which he suggested could happen if “the world does not take a strong and firm action to deter Iran.”

And while MBS is known to engage in hyperbole when it comes to the threat Iran poses, recent events suggest he may have a point here. But what are these unimaginably high numbers he is suggesting? $100 per barrel? $300 per barrel? And what would the world look like if prices really went that high?

The recent drone attacks on Saudi Aramco’s oil facilities, which took 5.7 million bpd offline, have been largely attributed to Iran – even if the Houthis have claimed responsibility for them. This attack was evidence that Iran does have the means to strike at the heart of Saudi oil structure and, in an all-out war, it is reasonable to suggest a strike on those facilities could be far more devastating. In that scenario, those 5.7 million bpd could be taken offline permanently – leaving the global oil industry in a very precarious position.

While this may be a hypothetical scenario, it is one that the September 14th attacks proved were possible, and it is in the light of those attacks that MBS’ words can be fully understood. A destructive attack taking almost 6 million bpd in oil production offline – permanently - would certainly have a much deeper impact on oil prices than the actual attack on Saudi facilities did. Following that attack, Brent briefly topped $70 a barrel and then retreated quickly on assurances from Riyadh. Then the international benchmark rose sharply once again - albeit not as high - when reports emerged that repairs might actually take months rather than weeks. But in the end, the panic was short-lived, and as newer information came in regarding Saudi Arabia’s ability to quickly bring production back online, oil prices eased back down, almost like it didn’t happen at all.

Days after the attacks, some analysts were forecasting $100 Brent prices, but there were also more sober minds that said there was no reason for oil to rise so high given that some OPEC+ members could increase production and that U.S. shale would do the rest. But this reliance on U.S. shale and other OPEC members are perhaps a little optimistic in such a scenario.
Related: Don’t Expect Oil Prices To Go Much Higher This Year

Iran and the UAE are the two OPEC members with the highest potential spare capacity, but if Iran and the UAE were at war they would likely see their production drop even further. That means that nearly all of the 5.7 million bpd would have to be replaced by the US, something that even the most ardent shale supporter would struggle to believe.

The United States has increased production substantially in the last year, but that upwards momentum may not be sustainable. In its latest Short-Term Energy Outlook, the EIA has estimated that production has risen by 1.2 million bpd from 2018. But that growth has been tempered by recent poor results from some of the U.S. most promising shale basins.

The reality is, there is no single oil producer that could increase production by 6 million barrels per day, and that 6 million bpd is realistically a conservative estimate if a full-blown war were to occur.

If 6 million bpd or more were taken offline for any significant timeframe, which could be caused by anything from the very real possibility of a closing of the Strait of Hormuz to another attack on Saudi Aramco oil infrastructure, oil prices would indeed spike to ‘unimaginable levels’.

If it were unclear when production could resume, a mad scramble would ensue to see who could pick up the slack - not to keep prices down, but to see who could steal the market share. Countries would undoubtably do their best to ramp up production, but it would be insufficient. The global Strategic Petroleum Reserves would all be tapped to keep the market supplied, but that is very much a short term solution.

Major oil consumers such as China and India would be desperately searching for alternate suppliers. But more importantly, these major consuming countries would be crushed if oil prices soar beyond $100. It’s hard to tell how much oil China has in storage, and if they could cushion the blow, but they would use up whatever they did have rather quick.

India is already trying to beef up its oil in storage to brace for trouble in the Middle East, and it is working on building additional storage sites that will be ready next year. India’s goal is to eventually have 90-100 days of oil in storage, to sustain its 80% import rate.

Chinese data is more murky, but it is widely accepted that China has been beefing up its oil in storage, taking advantage of moderate oil prices.
Related: Big Oil Fights For Its Life

Japan and South Korea are also large importers, with Japan having sizable reserves somewhere near 300 million barrels.

Despite the release from various SPR’s, the long-term reality of oil markets would keep prices extremely elevated until new production came online, or until demand destruction took place.

But how high could oil prices really go? In the event of 6-month long disruption of 6 million bpd, $100 oil certainly seems possible, but what if the 20 million bpd Strait of Hormuz gets cut off for a number of days or even weeks? Or what if production capacity in several other Gulf nations gets disrupted? A supply crunch the size of 20 million bpd could potentially send oil to $300. But oil prices don’t have to go that high to seriously upend high consumption economies.

India has been quick to sound the alarm every time Brent has climbed higher than their pain threshold, which is lower than $80. This would inevitably lead to demand problems. We have seen this several times already: oil prices jump, demand slackens, oil prices fall, demand improves, and then the global economy keeps growing.

The largest buyers of crude oil in the world would have a hard time sustaining growth if oil is trading close to $100, let alone if oil trades at $200 or even $300 per barrel. And the time it would take for oil prices to come back down again would be painful.

In the light of this historical evidence, MBS’ thinly veiled warning about oil prices can largely be seen as sabre-rattling, but the prospect of ‘unimaginably” high prices is perhaps not as farfetched as some analysts would have you believe.

By Irina Slav for Oilprice.com
Title: 🛢️ Iran oil tanker: Explosion on ship near Saudi's Jeddah port city
Post by: RE on October 11, 2019, 03:08:47 AM
http://www.youtube.com/v/431GpGq4tvc
Title: 🛢️ Troops, armored vehicles enter Syria to protect oil fields from ISIS
Post by: RE on November 01, 2019, 01:57:46 AM
"We mke money the old fashioned way. we STEAL it,"

(https://i.pinimg.com/originals/e1/d0/cb/e1d0cb017807dff5b5cab946fc2ffa85.jpg)

RE

https://www.usatoday.com/story/news/politics/2019/10/31/isis-u-s-troops-armor-enter-syria-protect-oil-fields/4109889002/ (https://www.usatoday.com/story/news/politics/2019/10/31/isis-u-s-troops-armor-enter-syria-protect-oil-fields/4109889002/)

Troops, armored vehicles enter Syria to protect oil fields from ISIS
Tom Vanden Brook
USA TODAY

(https://a57.foxnews.com/media2.foxnews.com/BrightCove/694940094001/2019/10/28/931/524/694940094001_6098425073001_6098400279001-vs.jpg?ve=1&tl=1)

WASHINGTON – U.S. troops and armored vehicles entered Syria Thursday on a mission to protect oil fields from falling into the hands of Islamic State terrorists, according to a U.S. official.

Dozens of soldiers and fewer than 10 Bradley armored vehicles moved into the northeastern part of Syria, said the official, who was not authorized to speak publicly. It's not clear how many troops or vehicles ultimately will be deployed, the official said.

The deployment comes less than a week after President Trump ordered the raid that killed Abu Bakr al-Baghdadi, the founder of the Islamic State, also known as ISIS. U.S. commandos used a base in Syria to mount the attack by helicopter.

On Thursday, the spokesman for the U.S.-led coalition fighting ISIS tweeted photos of troops loading Bradley vehicles aboard aircraft for the mission in Syria. It is the first time in the five-year war on ISIS that American armor has been used to fight the extremists. The U.S.-led coalition has relied mainly on airstrikes to support local forces on the ground.

The region in northeastern Syria is home to oil wealth that Pentagon officials and Trump have vowed to keep from falling into the hands of ISIS. The movement of troops and armor is the latest in Trump's whip-sawing strategy for Syria. In December 2018, he ordered a full withdrawal of the 2,000 troops who had been in Syria advising and fighting alongside mostly Kurdish forces who had routed ISIS.

More:Pentagon reveals details, video of fast, violent raid that killed ISIS leader Baghdadi

More:Islamic State group names new leader, confirms Abu Bakr al-Baghdadi's death

That announcement prompted the resignation of then-Defense Secretary Jim Mattis, and Trump relented to pressure from Congress to maintain a force of about 1,000 troops in the country. On Oct. 6, Trump ordered a withdrawal of virtually all U.S. troops from Syria, paving the way for Turkey to press an assault against Kurds whom the Turks consider terrorists.

Congress again raised alarms, calling it a betrayal of the Kurds that risked unleashing chaos in the region, to the benefit of Russia and Iran.

Marine Gen. Kenneth McKenzie, who leads U.S. Central Command, told reporters Wednesday that keeping oil fields from ISIS chokes off revenue the group needs to mount a comeback.

"What we want to do is ensure that ISIS is not able to regain possession of any of the oil fields that would allow them to gain income going forward," McKenzie said. "So that's – we've got forces at Deir ez-Zor, that is – we have brought in some reinforcements there.  We'll await further decisions of the U.S. government about how that plan is going to look in the long term."

ISIS after al-Baghdadi:What happens to now, and other things to know

More:Hero military dog injured in al-Baghdadi raid returns to duty after treatment.