This should do wonders for the European Depression. Keep waiting for lower gas prices. Obama’s next public relations ploy will be to withdrawl more oil from the Strategic Reserve. We know how well that worked last time. Oil was $80 a barrel and now it is $102 a barrel. The best part of this farce will be the revelation that Saudi Arabia is full of shit and has absolutely NO SPARE CAPACITY. They were unable to ramp up production for the Libyan oil shortfall and they will be unable to make up for the Iranian oil in Europe. Higher prices bitchez!!!!
Iran Stops Oil Sales To British, French Companies
The geopolitical game theory escalates once again, as Iran, which four days ago halted exports to peripheral European countries took it up a notch, and has as of this morning halted sales to British and French companies. Reuters reports: “Iran has stopped selling crude to British and French companies, the oil ministry said on Sunday, in a retaliatory measure against fresh EU sanctions on the Islamic state’s lifeblood, oil. “Exporting crude to British and French companies has been stopped … we will sell our oil to new customers,” spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website.” Here is the actual statement from MOP.ir. As a reminder, on January 27 we said how Iran was about to “Turn Embargo Tables: To Pass Law Halting All Crude Exports To Europe.” And so it has – now, the relentless media campaign about China isolating Iran in response to American demands has to be respun: recall that in early February Reuters told us that “China will halve its crude oil imports from Iran in March compared to average monthly purchases a year ago, as a dispute over payments and prices stretches into a third month, oil industry sources involved in the deals said on Monday.” Apparently that may not have been the case, as there is no way Iran would have escalated as far as it has unless it had replacement buyers of one third of its crude. Incidentally, this is just as we predicted in “A Very Different Take On The “Iran Barters Gold For Food” Story.” The end result of this senseless gambit by the west: Europe has less oil, the Saudi fable that it has endless excess suplies is about the be seriously tested, China has just expanded a key crude supply route, and Russia is grinning through it all as Brent prices are about to spike. Iran didn’t invent chess for nothing.
This is what we cautioned in early February:
we humbly submit that instead of taking the Reuters article at face value, and one may certainly do that, what may instead be happening as Iran migrates to a non-dollar based international trade system is the testing of the waters of a non-USD regime, more importantly, one quietly encourage by China, who is a very complicit participant in the transition to a world in which the US Dollar suddenly finds itself irrelevant. Whether replaced by gold, or a currency backed by a basket of hard assets (the CNY?) we don’t know. However, we know one thing: China needs Iran’s crude, which at last check was among the world’s top 5 oil producers, and had the world’s third largest proven oil reserves after Saudi Arabia and Canada, and despite media reports that it is actively looking for crude import alternatives, we would allege that this is nothing but purposeful disinformation. After all why would China comply with US demands for an enhanced Iranian embargo? The whole point of China’s foreign policy to date has been to counteract US pushes and provocations abroad without fail. Why should it make an exception now. Frankly, we don’t buy it.
Sure enough, ten days later neither does the world.
More from Reuters:
Industry sources told Reuters on Feb. 16 that Iran’s top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent in March by more than a third – or over 300,000 barrels daily.
France’s Total has already stopped buying Iran’s crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell has scaled back sharply.
Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption.
Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum along with Spain’s Cepsa and Repsol were curbing imports from Iran.
As we tweeted a few days ago, “Greece may be broke buit at least it has no oil.”Win-win. Er… wait.
Needless to say, it is now time for Saudi Arabia to step up or shut up. And if many are correct, stripping away all the posturing about Saudi’s near infinite excess supplies, may reveal a very ugly picture. And a $10 spike in brent in short order.
Saudi Arabia says it is prepared to supply extra oil either by topping up existing term contracts or by making rare spot market sales. Iran has criticised Riyadh for the offer.
Finally, here is why it is quite obvious that China has stepped up:
Iran said the cut will have no impact on its crude sales, warning that any sanctions on its oil will raise international crude prices.
Brent crude oil prices were up $1 a barrel to $118.35 shortly after Iran’s state media announced last week that Tehran had cut oil exports to six European states. The report was denied shortly afterwards by Iranian officials.
“We have our own customers … The replacements for these companies have been considered by Iran,” Nikzad said.
Surely, when it comes to shooting itself in the foot, Europe truly has no equal.
Muck About says:
When Europe shoots itself in the foot, the next move is for the idiots inside the beltway to shoot the USA in the knee.
MA
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19th February 2012 at 12:26 pm
Hope@ZeroKelvin says:
For the record, 55% of the Strategic OIl Reserve is in Texas. The other 45% is right across the border in LA.
Just one more reason for Texas to seceed and take our LA cousins with us. I’d be proud to have the Swamp People watching my back personally.
Desperate countries do desperate things.
The economy of Iran (a name they took when they were buddy buddies with Hitler, BTW), is hanging by a thread. So is ours.
The people of Iran have experienced a declining standard of living over the past 10 years. So have ours
The government of Iran is led by a wretched crowd of by incompetent narcissistic psychopaths. So is ours.
So there you are, we and Iran are practically family!!! And we all know that domestic disputes are the most deadly, unpredictable and unhappy situations faced by LEOs – and they rarely have a happy ending.
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19th February 2012 at 12:51 pm
TeresaE says:
Funny Muck, my thought was “…except when the USA has beaten them to it…”
We act like China is our friend, even in evidence of their behavior. They happily open “joint ventures,” are gifted the technology, patents and know how, then slapped on the wrist when found to have walked the plans out the door and into competing companies that sell products that the majority of society can afford.
Shocking they would “betray” us so.
Now we are playing real war games. China has surrounded us with allies, cut off millions of tons of natural resources, played our lobbying game better than we, and is, once again, actively flouting “internationally agreed upon” sanctions, rules and the like.
What part of the offshoring of America – and Europe – has our elected officials miss? Apparently the part where our enemies own vast swathes of the very things we would need to go into a war.
We are playing an uber dangerous game with our currency, our future and war. This time really is different and I fear the outcome. We are not the same country as we were in 1941. Not by a long shot.
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19th February 2012 at 12:57 pm
bman says:
Good Will Hunting excerpt>>>
http://www.youtube.com/watch?v=l8rQNdBmPek&feature=related
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19th February 2012 at 1:13 pm
ASIG says:
The people asked for change.
Well they’re going to get it!!
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19th February 2012 at 3:41 pm
Mr. Happy says:
Does anyone in Congress ever ask this simple question: how does our insane policy in the ME and Iran represent the interest of the citizens of the U.S.? Apparently that question has never been asked in Europe either…and look what happened. God it’s hopeless.
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19th February 2012 at 5:11 pm
Wyoming Mike says:
DHS alert. Does anyone else find themselves rooting for Iran?
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19th February 2012 at 7:28 pm
Administrator says:
As WTI Passes $105, Guardian Says Iran “Military Action Likely”, Would Send Crude Soaring
Submitted by Tyler Durden on 02/19/2012 19:06 -0500
Between the Chinese ‘surprise’ RRR and the Iran export halt to UK and France (and escalating tensions), Oil prices are off to the races this evening. WTI front-month futures have just broken $105 (now up more than 10% in the last two weeks), the highest levels in over nine months and just 8% shy of the 5/2/11 post-recession peak just under $115. Brent (priced in EUR) remains off last week’s intraday highs (as EUR strengthens) but still above the pre-recession peak but in USD it traded just shy of $121 – well above last week’s peak. Of course, this will be heralded as a sign of demand pressure from a ‘growing’ global economy rather than the margin-compressing, implicit-taxation, consumer-spending-crushing supply constraint for Europe and the US that it will become in the not too distant future. As we post, The Guardian is noting that US officials are commenting that “Sanctions are all we’ve got to throw at the problem. If they fail then it’s hard to see how we don’t move to the ‘in extremis’ option.” The impact of any escalation from here is gravely concerning with PIMCO’s $140 minimum and SocGen’s $150-and-beyond Brent prices rapidly coming into focus – and for those pinning their hopes on the Saudis coming to the rescue (and fill the Iranian output gap), perhaps the news that our Middle-East ‘allies’ cut both production and exports in December will stymie any euphoria.
From The Guardian: US officials believe Iran sanctions will fail, making military action likely
• Growing view that strike, by Israel or US, will happen
• ‘Sweet spot’ for Israeli action identified as September-October
• White House remains determined to give sanctions time
“It’s not that the Israelis believe the Iranians are on the brink of a bomb. It’s that the Israelis may fear that the Iranian programme is on the brink of becoming out of reach of an Israeli military strike, which means it creates a ‘now-or-never’ moment,” he said.
“That’s what’s actually driving the timeline by the middle of this year. But there’s a countervailing factor that [Ehud] Barak has mentioned – that they’re not very close to making a decision and that they’re also trying to ramp up concerns of an Israeli strike to drive the international community towards putting more pressure on the Iranians.”
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19th February 2012 at 7:35 pm
Mary Malone says:
Gee, ya think major spike in gas prices will impact the fake recovery?
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19th February 2012 at 8:28 pm
Persnickety says:
@MM: No, because the consumers have magically become so productive they no longer need to drive, and those who do drive magically are getting 30% better mpg.
HAPPY DAYS ARE HERE AGAIN!
Oh, by the way, I heard the chocolate ration was increased to 5 grams.
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19th February 2012 at 8:51 pm
flash says:
once again…. the cry went out…..no one could’a seen this coming……
http://www.youtube.com/watch?v=3hNjxJCXfis
Saudi Arabia Cuts Oil Output, Export: Industry Report
Published: Sunday, 19 Feb 2012 | 7:32 AM ET
By: Yousef Gamal El-Din
CNBC Anchor
The world’s top oil exporter, Saudi Arabia, appears to have cut both its oil production and export in December, according to the latest update by the Joint Organizations Data Initiative (JODI), an official source of oil production, consumption and export data.
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19th February 2012 at 8:05 am
Administrator says:
.S. Naval Commander Warns Against Iran’s ‘Suicide Ships’
Vice Admiral Mark I. Fox warns Iran may plant “suicide ships” along the Straits of Hormuz to use against U.S. forces.
By Elad Benari
Vice Admiral Mark I. Fox, Commander of the U.S. 5th Fleet, warned on Sunday against “suicide ships” Iran may plant along the Straits of Hormuz in order to use against U.S. forces that try to break the blockade in the area.
Israel’s Channel 2 News quoted Fox as having told reporters that Iran has “increased the number of submarines at their disposal and also acquired a number of ships that can be used for suicide missions when necessary.”
Fox also warned of Iran’s capabilities of firing long-range missiles and said, “We are following with interest the development of missiles and rockets that can hit ships in our fleet. The Iranians can make things difficult for us during an operation and we are taking their threats seriously.”
Last week, Iranian officials said that the Islamic Republic is conducting yet more military exercises in the Straits of Hormuz and that the exercises were in response to a European boycott of Iranian oil.”
Iranian television said that the exercises would continue for a month. The report added that Iran had no plans to interfere with sea traffic through the Straits.
The Straits of Hormuz are considered an important strategic asset; 20% of the world’s production of oil passes through it on oil tankers bound for the West, and Iran has threatened to close the Straits if its nuclear facilities are attacked.
In addition to the exercises, Iranian officials said last week that they had developed a new short-range missile designed to shoot down missiles fired at Iran from warships. The Zafar is a short-range anti-vessel radar-guided cruise missile, which can target small and medium-sized targets with high precision, officials said. The missile “loses altitude after being launched, and then cruises at low altitude in order to be hidden from sight of the enemy, and in the final stage identifies the target at a low altitude and destroys the target,” the official added.
On Saturday, Iranian President Mahmoud Ahmadinejad said that Tehran will soon unveil “big new” nuclear achievements.
Speaking at a rally in Tehran marking the 33rd anniversary of the Islamic Revolution that toppled the pro-Western monarchy and brought Islamic clerics to power, Ahmadinejad said, “Within the next few days the world will witness the inauguration of several big new achievements in the nuclear field.”
He did not specify what those big new achievements are.
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19th February 2012 at 9:22 am
Ron says:
Russian nukes? yep oil might go up. Obamas plan is working,less people working means cleaner air and helps the fight against global warming.Higher fuel cost well mean less driveing.
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19th February 2012 at 10:12 am
Mary Malone says:
Persnickety: “Oh, by the way, I heard the chocolate ration was increased to 5 grams.
Finally, some good news. Heh.
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19th February 2012 at 12:13 pm
platoplubius says:
The increase in gas prices will trigger a grinding halt to the phony recovery and will be the explanation for the next recession….(cough) continuation of this monumental depression!
Get out your gas ration cards by the end of this year or buy a bicycle….All part of the plan to engineer American society’s energy consumption and subsequently their standard of living downward…to “level” the global standard of living so that all people “are equal”…LOL! Gotta love the globalization movement!
Energy consumption is directly correlated with standard of living…lower consumption of energy = lower standard of living…GEt used to it!! For many 2012 will seem like the end of their world!
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19th February 2012 at 1:12 pm