On Iran, oil prices and how the Hajj f$#/ed Iran

Cheeky Bastard's picture

After Iran had broken off the negotiations over its nuclear program and refused to ship some of its uranium supply to France, and other western countries, talk about the imminent attack have, once again, started to make the rounds. In his recent interview with the British Daily Telegraph , French foreign minister, Bernard Kouchner, expressed his deep concern ( as if ) over Israel. As you might know, Israeli prime minister Benjamin Netanyahu visited his Russian colleague Vladimir " I can kill you with my bare hands, and I will if you don't STFU and do as I say " Putin to discuss the potential backing of Israeli war efforts against Iran. The Jerusalem Post reported that the conversation between the two tsars .... uh, i mean, prime minister was focused on the potential Russian arms backing of Iranian military. This is the short excerpt from the article in The Jerusalem Post:


Israel Radio reported that Netanyahu leased a private jet since he knew using an Israel Air Force jet would raise the suspicions of the Israeli media.

For the purpose, his office used a plane of the company Merhav, a company owned by Israeli mogul Yossi Miman, one of the shareholders of Channel 10 and EMG, an Egyptian company supplying gas to the Israel Electric Company. Miman was not directly involved in leasing the jet, as this was done through a company he owns.

The PMO and Merhav refused to divulge the cost of the flight. Israel Radio further reported that the plane took off from a terminal in Ben Gurion International Airport which is mostly out of use.


Israeli media outlets speculated on the secretive nature of Netanyahu's Russian visit.  One reasoning was that Netanyahu tried to persuade Putin about not backing the Iranian military efforts with shipments of Russian weaponry to Iranian military.  Some journalist even reported that Netanyahu had promised Putin, that the dispute over a defense shield in Eastern Europe will be resolved shortly, if Putin stays clear from providing any help to Iranian government. After the talks were over, president Barack Obama publicly announced that the project of an Eastern European defense shield will soon come to an end.

There was some speculation brewing over the potential pan-Arabist unification if Israel attacks Iran, and that the potential Arab block could easily halt any global recovery via implementation of oil exporting embargo, as was done in the 1970s by King Faisal ibn-Saud during the Arab-Israeli conflict. But there is no support for such a claim, quite the opposite is true. Today the Saudi Hajj minister Fouad al-Farsi told Iranian officials not to politicise, or in any other way, disrupt the Hajj. Here is the article in which this is mentioned

JEDDAH - Saudi Hajj Minister Fouad al-Farsi told Iran not to politicise the hajj after Tehran leaders said Iranians could experience mistreatment during the annual pilgrimage, a report said Wednesday.

Iran "should not take advantage of the pilgrimage for political purposes and its own agenda," Farsi was quoted as saying in the Al-Watan newspaper report.

Iranian President Mahmud Ahmadinejad and Supreme Leader Ayatollah Ali Khamenei recently warned that Saudi Arabia, a predominantly Sunni Muslim country, might abuse the mainly Shiite Muslim pilgrims from Iran during the hajj, which begins in November.

"If they impose restrictions on Iranian pilgrims... the Islamic Republic will take the appropriate measures," Ahmadinejad said Monday in a meeting with hajj officials, according to the official website for the Iranian presidency.

On Monday Khameini also raised the issue of alleged "insults and mistreatment against some Shiite Muslims," saying "the Saudi government must take action against such acts."


As a gravitational center of Islam, Kingdom of Saudi Arabia is an important international player. As the largest oil producer on Earth, it also has a strong voice when it comes to global geo-political affairs. That said, it is impossible to consider that the Saudis and their allies will take sides with Iran. I would, if the circumstances were normal, never write about this, since we have seen similar situations, regarding Iran, in the past.

But given that the last peaceful solution has been rejected by Iranian officials, and that the sanctions which the international community is trying to put on Iran are not a pragmatic way to diminish the potential threat which would emerge with Irans development of a nuclear weapon, this circumstances, can in no way, be considered as normal. Hence the potential for, yet another, conflict in the Middle East is real. With the global economy on the path of recovery ( yes, yes, i also think that is BS, but the powers to be think otherwise ) the neighbouring Muslim nations will not take any part in this conflict if one emerges.

So, it is my belief that the serious disruption, in the global oil prices, will occur for several reasons. The current dollar policy conducted by the FED chairman Ben Bernanke has already influenced the rise in oil prices. Whether those price increases were due to the sectoral inflation, or because the traders were just hoarding into that specific commodity due to the belief that the recovery is on the way, is unimportant. What is important to know is that the stronger demand for oil will surely emerge IF the conflict arises, if for nothing else than for the demand which will be generated by both sides of that potential conflict. Also, if the FEDs dollar policy continues, and the dollar becomes weaker, a sudden surge of liquidity in oil will happen given that it is almost a standard  belief that commodities are a good inflation hedge.

The situation in equities is, also, not bright and shiny, and many analyst, among them David Rosenberg, predict that the US indexes reached a top when the DOW passed the 10 k barrier. I do not recommend you any trade based on this, this is simply an outline of what might potentially happen if yet another conflict in the Middle East arises. But if history is any kind of a teacher  ( and is usually the best one ), the best thing is to study the oil prices after the war in Afghanistan started, and ater Iraq was attacked.

Now, most of you know what happened to the oil prices, and where that lead us. Now multiply that by 10, and you will have a pretty good picture of the economy we will have IF, yet another time, a dark side of that what constitutes Humanity wins.

Thank you for reading.


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Fish Gone Bad's picture

Cheeky rocks.  Nice job.

Anonymous's picture

While I think of this issue all the time, I keep getiing back to one conclusion. Iran with or without nuclear is no threat to Israel. I ma sure people have heared a lot of Ahmadinajad reoteric,and it is kinda like make you think that he is going to wipe Israel off the map. But for anybody who digs deeper into Shi'at and Sunni(the two main branches of Islam),eventually realizes that enemy number one for Shiate(Iran's sect) are the Sunnis. So in fact if Iran is going to drop a nuke on somebody,it is going to be Saudi Arabia and not Israel. And yes,I am sure the Saudis will love it if Israel bombed the hell out of Iran(they were behind Saddam invading Iran),but I don't think Israel is so stupid to fall into the same trap that Saddam fell in. At any case,if things get to the point of attacking Iran militarily,then of course we could look at a prolonged and widened conflict in the area,high oil prices and no recoveries in the west. Instead,look for the exact opposite. Iran is only dragging to get the maximum bargain(they are traders after all). So look for the following:eventual agreement on the nuclear issue. In return,the west will give Iran1- its previous status as the Persian gulf policeman.2-The eventual establishments of the kingdom of Bahrain which will include the Eastern part of Saudi Arabia(populated by a majority of Shia)and might even extend into Kuwait and the Southern part of Iraq(all the oil rich areas).And u guys might ask,and how is that possible?my answer is look at Iraq. Wasn't Iran at odds with the US back in the nineties?yet all the negotiations and plans about Iraq that took place between Chalabi(where is he now) and Wolfowiz in the US,were transmitted to the Higer Council for the Islamic Revoution(an Iraqi exile group)based in Iran by Chalabi himself. And for anybody to think that they the US didn't have the Iranian implicit agreement on those negotition,dosn't know the structure of Shie'sm.Well,eventually that plan was put into action after a couple of years and under a different administration.

Anonymous's picture

In my experience there is a pretty strong rally in anticipation of the advertised conflict to come (sort of like now); July 1990 $15.00 crude to $41 in Oct. 1990. The actual bombing started Jan 17 1991, and the high that night was around $ 35, every cargo was for sale. By the next morning the price was around 25 and it hit $17 over the next few days. For Iraq War, right after the Dec 2001 wrap up of the initial invasion of Afghanistan, Jan 2002 saw $15 crude. It rallied in anticipation to a high of $40, Feb 28 2003, with the war talk and was still around $35 on the Mar 20th invasion, before falling to $26 rapidly.
So to point out the obvious, crude is NOT at $15. Additionally this strike , IF carried out, would likely be without warning and complete very quickly.
Stockpiles of crude and products domestically are WAY over the 5 yr. avg at 1,822.7 million bbl.s., not to mention cargoes on the water and China SPR stockpiles this year.
By the time you woke up, the price of crude would be cratering.

bullchit's picture

Excellent site for all things Asia, Mid. East, etc.


Keep up the good work Cheeky.


putbuyer's picture

Cheeky Bastard- just give me the truth brother. It is all I ask

Careless Whisper's picture

If the military action is short and effective and also takes A-Jad out in the process, I think we would see oil drop back to the levels prior to any spike. You might be underestimating Israel's capabilities. Isn't everyone getting tired of A-Jad's crap? Won't he be isolated? Seems that he's the problem, not the Iranian people.

Anonymous's picture

I don't think being "tired of A-Jad's crap" is a suitable justification for yet another "preventative" war of aggression.

As a signer to the NPT, Iran has a right to develop nuclear energy.

According to US intelligence agencies and the IAEA, there is no evidence that Iran has a nuclear weapons program.
Not to mention that the last time Iran started a war with another country was in 1826, at the behest of British agents.

What "everyone" is tired of are the bloodthirsty, deranged fanatics in Washington, London and Tel Aviv and their morally bankrupt foreign policy of perpetual war. Orwell is rolling in his grave.

You and your fellow travelers--a veritable locust swarm of useful idiots, keyboard warriors and media bobble-heads-- are human excrement.

Anonymous's picture

So long ZH.

steve from virginia's picture


Excellent article, Cheeky! There are a lot of angles and nobody can figure them all out, which makes the whole situation fun!

I'll drop your article in full over at The Oil Drum.

As for the floating storage, there is about one week's US consumption afloat. Not enough to swing a market.


Forget the bombers; the Israelis would put commandos on the ground.



The real battle is in DC w/ Obama- McChrystal vs. the 'liberals' who want out of Afghanistan/Iraq. The US/Nato has a large buildup in the region adding all the 'assets' in both countries and offshore .. plus Israeli forces. Probably close to 250,000 US/Nato regular combat troops plus aircraft and vehicles. Don't forget the 'private armies' of contractors. Maybe 250,000 ... of which a large proportion are high- quality combat soldiers.

Ending 3rd quarter FY 2009, USCENTCOM reported approximately 243,735 contractor personnel working for the DoD in the USCENTCOM AOR.




This is enough for an invasion of Iran and occupation. Forget Goldman- Sachs, this would be the biggest theft in history. Iraq/Iran and ??? Would an invasion 'wash'?

Whaddyu think? I suspect there are more US/Allied troops in theater than during the height of the Vietnam war in 1969. It's the 'secret buildup' that doesn't hit the media. 'Taking' Iran and Iraq's oil would both stifle the Chinese ambitions in the area, guarantee some 'notion' of fuel security and shift the 'white shoe' balance of power from the Shiites- driven militant factions toward the Sunnis and Saudi Arabia. The US and Europe would deplete the two countries in ten years or less and that would leave Saudia as the world's swing producer.

The 'attack' or raid or whatever it's called would require gas rationing in the US, but the curve of depletion will require rationing in a few years, anyway.


tallystick's picture

And then there is this development:


Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange.



How does this fit into the discussion?

heatbarrier's picture

Interesting timing. US market is about 20% of Saudi exports, if the basis WTI-Saudi crude can get out of line by so much, it makes sense to de-link it from WTI. Their main markets are in the Far East, about 50%.


BTW, the East-West pipelines have good capacity in case the Persian Gulf is blocked by Iran. Price increase will compensate the fall in volume.

Major Ports

Saudi Arabia has three primary oil export terminals:

1)The Ras Tanura complex has approximately 6 million bbl/d capacity; and the world's largest offshore oil loading facility. It includes the 2.5-million bbl/d port at Ras Tanura. More than 75 percent of exports are loaded at Ras Tanura Facility.

2)The 3 to 3.6-million bbl/d Ras al-Ju'aymah facility on the Persian Gulf.

3)The Yanbu’ terminal on the Red Sea, from which most of the remaining quarter is exported, has loading capacity of approximately 4.5 million bbl/d crude and 2 million bbl/d for NGL and products. The facility is reportedly not used to full capacity.

Anonymous's picture

I would expect the fact that no one can afford a war to be the real restraining factor in this. It's possible to what are called 'surgical strikes' might take place, but I'm not sure if any sane analyst could ignore the potential for escalation. Still, being very bearish and highly unlikely to be involved this, I'd welcome the development.

Also I'll agree that Iran is unlikely to get support from arabs, I assume you know but educating your average reader about the make up in area might not be a bad thing:
- Iran is not an arab nation, if you want to give those mixed groups a race, it's 'persian'
- Nor do they speak arabic (any dialect really) it's Farsi (assuming that's right spelling for it in english)
- And indeed, they are mostly Shiite, while pretty much everyone east or south of Iraq(yes, Iraq) is Sunni unless I rememeber absolutely wrong.

Anonymous's picture

Of course, how much of this could be mitigated if we just drilled and developed our own resources? Why is the idea of energy independence such an anathama?

Bubby BankenStein's picture


Your contribution to ZH is great!

Your perspective on issues I follow is informative.

I look forward for your updates.

Miles Kendig's picture

CB - Ya having fun yet?

Comrade de Chaos's picture

I doubt there will be bombing with the OIL @ above 50. We (Americans) are unwilling and are busy somewhere else. Israelis, well assuming they are freaked out about Iran and trigger happy, they are mostly good with their timing. Now what better timing for such an action than the double dip in the world wide economy or the recovery of the US economy? Israelis were delaying the Iranian bombing action at least since 2003. There is little reason for them to rush. Iranians won't be putting extra defense or nuclear effort anytime soon, because they are way too busy in containing the last summer riots.

When Israelis will go silent about the Iranian subject, then and only then I would expect some action.


Netanyahu is much more capable in strategy and government than "Omlet." , I doubt he will let the emotion to get better of him and repeat the recent Lebanon fiasco. (In the majority of Israeli public, everything but fast decisive victory is fiasco.) He also credited with restoring Israeli high tech economy after the 01 bust, and I doubt local economic considerations won't play a role  in timing, given they are serious.

Anonymous's picture

Iran can take a first strike. Then what will the West do?
This is something that must concern the Western powers.
Israel will then be dangling from it's own noose and they will have to eat the consequences of an angry Islam. Obviously the Zionist ambition of running every risk to become the regional gendarme can meet with failure-and it may be that the Zionist leaders are unable to flee to the land they bought overseas.

Then there is China. China would not be happy with a strike
on Iran. How can the Americans sideline China?

Lastly, it is very possible this is all a staged managed game for public consumption. One would be rather surprised if Iran had not purchased their atomic arsenal already.

Gimp's picture

Great article Cheeky Bastard. Only on ZH can you read an article that is not a load of controlled media bollocks!

I second the "I love ZH and its commentators.

Stay thirsty my friends.

Anonymous's picture

This situation is unfortunately more of the same. Back in the 70's (and earlier) the US and USSR were supplying BOTH Iran and Iraq with various weapons. Even got them to fight each other from 1980-1988. Two Shia countries at each other's throats, a great balance as far as the Saudis (Sunni) were concerned.

Saddam tries to build a nuclear power plant in Osirak, it gets bombed flat in '81 or '82 as I recall. No getting onto alternate forms of power, no breaking the oil stranglehold of 90% of your economy.

Later good ol' Saddam Hussein sez he wants to get off of the dollar for oil pricing. Wrong answer! War ensues, and two Bushes try their best John Wayne impressions. The oil interests later figure they can suck out the oil directly and screw paying the Iraqi govt (and people). A great idea until chaos reigns when the flowers and candy were really IEDs and suicide bombers. Now the stability of Iraq vs Iran keeping each other in check (suppressed) goes out the window.

In March 2008 Iran announced it was going to start an oil bourse in order to trade oil in Euros and Roubles. Rhetoric starts getting ratcheted up, etc etc. Iran is developing on nuclear power, knowing that oil/NG supplies are not going to last forever and that they must sell as much oil/NG as possible and try to get their own disastrously bad economy moving. Iran also makes friends with China and wants to make pipelines to the East. More problems for the US: one country not living on its knees in a dying energy/economic paradigm; the other, considered a rival, making friends and gaining independence from western interests. All of these things must be stopped.

As for the Hajj, I don't doubt that a Shia would experience discrimination in Saudi Arabia. They've been arguing this for 1300 years. But it is minor noise, attempting to distract from the main issues.



RichardP's picture

I don't know what to make of this article, but it adds some interesting perspective to this discussion.


Supposedly, the British Sunday Times "leaked" the fact that "the purpose of Israeli Prime Minister Benjamin Netanyahu's highly publicized secret visit to Moscow on Sept. 7 was to provide the Russians with a list of Russian scientists and engineers working on Iran's nuclear weapons program."

Based on this "outing" of their intelligence program, the article concludes/speculates the following:

"... And that means the Israelis no longer consider the preservation of their intelligence operation in Iran (or wherever it was carried out) as of the essence.

Two conclusions can be drawn. First, the Israelis no longer need to add to their knowledge of Russian involvement; they know what they need to know. And second, the Israelis do not expect Iranian development to continue much longer; otherwise, maintaining the intelligence capability would take precedence over anything else.

It follows from this that ... the Israelis expect a resolution in the very near future -- the only reason they would have blown their penetration of the Russian-Iranian system."

Interesting implications, if this article is more right than wrong.

RichardP's picture

I was posting while Anonymous directly above me was posting - so I didn't see his link until now. Two strangers, posting from the same source, but different articles, at the same time. What hath Cheeky wrot!! I got from my article this thought: if Israel can discover the names of the Russian scientists helping Iran (assuming they actually did), perhaps it is not far-fetched to think that Israel can disable Iran's nuclear program in ways other than fly-over bombing.

Anonymous's picture

Good post Cheeky. You might also want to consider George Friedman's take. I find him to be a very strong analyst and he's been posting regularly on this affair. Here's the latest, but folks can go through a string of his free analysis on the site: http://www.stratfor.com/weekly/20091026_russia_iran_and_biden_speech .

The work is good enough to have me considering paying for a full subscription.

In any event, there are a couple of things that strike me as interesting with the Iran situation:

1. It's a great catalyst for a massive dollar rally. Obviously, we've printed tons of money (and also destroyed quite a bit on paper while basically grinding velocity to a halt, but that's a different argument). This has gotten everyone in the world short dollars. Other countries are issuing debt in dollars, because they are sure it'll be paid back in worthless nothings. I don't think it's ever that simple, and I doin't think we go off the dollar without a fight FWIW. Drop some bombs and the world WILL run to the dollar and it will catch everyone scrambling for the exits and make at least a case for the dollar and the US still having some relevance.

2. Someone just mentioned the tankers filled with oil from the contango trade. My understanding is this has been going on enough that there is about as much product being stored as there has been in a long long time. This never made sense to me on a fundamental basis. I mean, I understand the arbitrage, but there is counterparty risk, so if you're a trader and you're filling up tankers because your customer is guessing oil should be $80/bbl, but the fundies suggest a much lower demand, you have to hope they're there with the checkbook wehn you deliver, right? This isn't my area of expertise, so I'm willing to entertain any education here. But, nonetheless, I think we're about as prepared as possible for somehting nasty in the gulf. Not saying it's a non-event, but we have about as much floating around as possible and that WILL come in handy if there's an issue. Cost will be much higher, but there will be supply, at least until the mines are cleared out.

FWIW, I'd love to see anyone bomb the living hell out of all the mullahs and oligarchs. But, that's just a personal matter on my part. I'm not going to say the US is any angel, but this is a medieval society with modern trappings. And even if it's for all the wrong reasons, they surely deserve to make their trip to 'paradise' sooner rather than later.

AN0NYM0US's picture

not sure that a major conflict involving Iran is consistent with a weak USD, just the opposite I suspect

as for the impact on oil - 10x is reasonable if Iran starts the festivities however should they wait for Ben N. and Barack to fire first then Iran's ability to disrupt the Strait will be all but eliminated - yes oil will rise in that scenario but quickly settle back to a 2x premium.

for the House of Saud, a conflict between Iran and Israel may serve to embolden the Shia minority and if that were to take hold then all bets would be off (but not likely)

You neglected to mention that during all of this the PTB in DC would be sitting on their hands waiting for their McKinsey account rep to get back to them on the best course of action

edit: outstanding that you are now a full fledged contributor your comments are always a highlight - Zero has attracted quite a stable of talent +1

Cheeky Bastard's picture

Anon, scroll up, and click on the haretz link, interesting stuff going on with the Israelis and the Saudis.

AN0NYM0US's picture

makes sense, the Shia are their biggest internal threat and in the longer term, a nuclear Iran would shift the power from Riyadh  to Tehran so it's pretty clear that Saudi would love to see them taken out

so  questions arise:

does  Ahmadinejad shoot first? IMO he has to otherwise he will have limited recourse and  no matter what happens he'll be accused of shooting first anyway

does he target in addition to Israel parts of Saudi (easily blamed on Israel) for the reasons mentioned in the haretz link?

what is Ahmadinejad's/the clerics'  end game? because doing nothing is not an option and we all know what "cooperation" vis a vis inspectors  got Saddam 


heatbarrier's picture

"so questions arise: does Ahmadinejad shoot first?"

No, Iran in not that crazy. My guess is that Israel would want to take the initiative, at a time of their own choosing. Black ops. A false flag operation can "justify" the attack.

AN0NYM0US's picture

If there is a high level of certainty that Iran will be attacked by Israel/US would it not be logical for Iran to pre-empt such an attack and create the maximum disruption possible for Israel's allies by blocking the Strait. If they wait they lose that option.

heatbarrier's picture

I don't think Iran wants a fight, not right now, and they probably can control the strait at will. Nor the current US administration, Brzezinski (the key geopolitician in charge) has already suggested denying Israel access to Iraqi airspace, the old man has balls. IMO Iran is several years away from nuclear capabilities, so I was hopping all the sable rattling by Israel was just for show, until I saw the MI6-Mossad leak and concluded that a Saudi deal is a very plausible scenario. I'm still trying to figure out why now since it would be a kill blow to Western economies.

Herd Redirection Committee's picture

Afghanistan: the source of the world's painkillers

America better start selling some of its technological advantages, because right now they are just being stolen!

Cheeky Bastard's picture

Herd, i actually planned on writing about the central role Afghanistan represents in the future of oil trading and transportation of oil, but given today events with the Saudis i changed the main point of my post. But i will get to the issue of Afghanistan in one of my future post. Its something that needs to be put into perspective and be shown as not only a futile war, but in its true nature; as a central strategic point in the future of oil business.

Leo Kolivakis's picture


Geopolitics is what drives oil prices. That and the USD. Dollar rallied sharply today, oil fell further, and solar stocks got slaughtered (love them even more at these prices). Will Israel attack Iran? Nobody really knows but if they do, oil prices will soar past $200 a barrel in a matter of weeks, not months.

earnyermoney's picture

$200 / bbl.


Goldman's target price.

Busy-Body's picture

Looked at First Solar after hours today?

Leo Kolivakis's picture

OUCH, but I am not suprised given SunPower's release last week. I am more focused on Chinese solar players who I think will take market share from First Solar. The companies on my radar are Canadian Solar (CSIQ), Suntech (STP), Trina Solar (TSL), LDK Solar (LDK), Renesolar (SOL) and Yingli Green (YGE). But First Solar's results will hurt the sector tomorrow, no doubt about it. Having said this, looking at FSLR's chart, I would be buying it at $120 and especially at $100, if it goes that low. It is still the leader in the sector.

Cheeky Bastard's picture

thank you Leo, my point exactly. While the technical aspect of analysis is always a handy tool to seek the future movements in oil, and other commodities, i prefer the fundamental view which is dictated by geopolitical developments, as well as currency policies ( basically the $ policy ). I respect the view of those who put their money in oil based on TA, but, me personally,advocate the use of fundamental analysis and the studying of historical fundamental trends, and how they correlate with current events. Thanks for your comment Leo, its always nice to hear from you.

DaveyJones's picture

geologicalpolitical developments

Lionhead's picture

Cheeky, excellent post. I'm really looking forward to your int'l missives. You're opening ZH readers eyes to to a wider world & provoking thoughtful comments.

As for TA, I use it all the time. That said, one's best trade is the combination of fundamentals & technicals. It gives one great conviction on a buy or sell. What's missing in our MSM is unbiased fundamental reporting & critical analysis. That's where you come in to help folks understand. Keep 'em comin'...    Please!

Anonymous's picture

Iran and Russia have never agreed on a number of issues. This is the main reason Russia has not fully backed them in the UN, finished the reactor, sourced a credible anti-air missle systems...etc. Russia wants Iran accept Russia as the Kingpin in determining the path of future oil and gas pipelines in and out of both countries. Iran is betting it will be able to use China's need for energy to allow it ignore Russia's demands. Unfortunately for Iran, at this point in time it does not have a source of modern technology (weapons/exploration) it can depend on.

The US and Israel are both delusional if they believe they will be able to force Iran back into the 50's so it can be looted once more.

Anonymous's picture

hmmm. didnt like article too scare mungering - "what if"
Threats to close oil supply routes have been with us for decades,along with conflicts in the Middle East.Yes if it happened oil would spike -however it wouldnt last long .Oil demand is down and will remain down for some time . Stocks are at all time highs , oil is on tankers because storage is full.Recent price strength in oil is due to the weakness of the dollar and the commodity bubble created by the bankers/hedge funds, oil is in steep contango-no one wants the physical stuff. With recent dollar rebound watch sell off of oil/commodities which have been hijacked by traders .A mild winter should see great pain for oil horders.


deadhead's picture

Bravo Cheeky!

Keep it coming, please.

And, thank YOU for taking the time to share these fantastic insights.

Gunther's picture

Shutting off the gas in the winter is short-term a threat to the East European countries. Germany has storage for natural gas for a a month or so. Longer term the gas has to flow and the dollars in the opposite way.

While looking for natgas on the oildrum.com I found this:
  VIENNA, Oct. 24 (Xinhua) -- The United States, Russia and France Saturday endorsed a proposal by the International Atomic Energy Agency (IAEA) Director General Mohamed ElBaradei on Iran's nuclear development, but Iran said it needed until next week to respond.
Is that outdated or the opposite view??

Moreover Iran does not accept US$ for oil anymore.
Any relationship to the tensions?

Cheeky Bastard's picture

basically thats old news. Iran said, thanks, but fuck you very much, and refused to take any further participation in the negotiations. 

Busy-Body's picture

So what's the best long oil play for the retail investor?  I have not been impressed with the correlation between px/barrel and the "supposed" oil ETFs.  Anything out there on a leveraged non-ETF play (i.e. - calls)?  Thanks in advance.

Cheeky Bastard's picture

you should ask an oil trader or your financial advisor .... i cant give any comments or recommendation on investments ... i can just offer you my point of view, and the logic i use to link them all together. I can not, or what is more important, will not recommend or comment on any investment, nor give anyone an investment advice. That is up to you, and what you think, and how you employ the data which you collected.

Busy-Body's picture

Thanks, Cheeky.  I understand and agree with your position on the matter.  That said, I'm not looking for "stock tips" (we all know what those can be worth).  I'm looking for suggestions as to the right vehicle (preferably with leverage) to do my own dd on.  As I said, I haven't been pleased with the correlation/value proposition between the oil ETFs and the movement in px/barrel of crude.  Thanks again for your intel.

Anonymous's picture

I've often wondered if Ahmadinejad is just plain loony or crazy like a fox. I suspect it is the later. The regime knows full well if they get their hands on the bomb, they will be untouchable. I personally don't think they have an intention of using the bomb for terrorists acts. Even the Iranians aren't that stupid. I'm just glad that W is no longer in the White House to handle this. The real wild card in the mix is the Israelis. Will they or won't they (i.e. attack Iran)? No offense, even if the Iranians get the bomb, this would be an extremely stupid act on their part.

Iran ultimately represents the southwest flank of the Russo-Chinese hegemony. Although the U.S. is in Afghanistan, our presence is temporary at best and is very dependent on the continued good will of the neighboring powers. I'm sure everyone is just happy we're keeping the Taliban occupied while they are off doing more important things like figuring out how dump the dollar and finally kick us out of central Asia when time is right.

Anonymous's picture

Iran and Russia have never agreed on a number of issues. This is the main reason Russia has not fully backed them in the UN, finished the reactor, sourced a credible anti-air missle systems...etc. Russia wants Iran accept Russia as the Kingpin in determining the path of future oil and gas pipelines in and out of both countries. Iran is betting it will be able to use China's need for energy to allow it ignore Russia's demands. Unfortunately for Iran, at this point in time it does not have a source of modern technology (weapons/exploration) it can depend on.

The US and Israel are both delusional if they believe they will be able to force Iran back into the 50's so it can be looted once more.

RagnarDanneskjold's picture

Imagine the economic kill shot of a dual rally in USD and oil.