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Crude Spikes On News Iran Lawmakers Propose Straits Of Hormuz Blockade For Sanctions Countries

Tyler Durden's picture


What goes down, must come up. In this case crude, which is soaring on news out of FARS that Iranian lawmakers have drafted a bill proposing a blockade of the Straits of Hormuz for oil tankers heading to sanctions supporters, i.e., embargo countries. Naturally, if implemented, this would mean an almost inevitable military retaliation on behalf of the "western world." Then again, this is not the first time Iran has postured with a blockade.


A member of the Iranian parliament (Majlis) said that Iran will close the Hormuz Strait if the economic sanctions against the Islamic Republic take effect.


Arsalan Fathipour in an interview with Alalam News Network said that the recent oil price fall will not last for long.


"We take the control of the Hormuz Strait. If we are supposed to be sanctioned, we will not allow a drop of oil to pass through the strait," he said, Fars News Agency reported.


"In such a situation, oil price will surge and we will see that those who have imposed sanctions will not be able to be accountable for their people," he noted.


He noted that Iran can find new customers for oil.


Iran has stored up imports and hard currency for a "battle" against EU sanctions, officials said on Sunday, the day that the measures aimed at pressuring the Islamic Republic over its nuclear program take effect.


Vice President Mohammad Reza Rahimi said the country has stockpiled the population's daily needs to reduce the impact of the embargo hitting the oil and banking sectors.


"Today, we are facing the heaviest of sanctions and we ask people to help officials in this battle," Rahimi was quoted by the IRIB News.


He said the "dastardly sanctions" might cause "occasional confusion" in the market, but that the Iranian nation would not be stopped.


Central bank governor Mahmoud Bahmani also told the Mehr News Agency that Iran has "plans" to deal with the embargo and enough hard currency to meet its import needs.

And from Reuters:

Iran's National Security and Foreign Policy Committee has drafted a bill calling for Iran to try to stop oil tankers from shipping crude through the Strait of Hormuz to countries that support sanctions against it, a committee member said on Monday.


"There is a bill prepared in the National Security and Foreign Policy committee of Parliament that stresses the blocking of oil tanker traffic carrying oil to countries that have sanctioned Iran," Iranian MP Ibrahim Agha-Mohammadi was quoted by Iran's parliamentary news agency as saying.


"This bill has been developed as an answer to the European Union's oil sanctions against the Islamic Republic of Iran."


Agha-Mohammadi said that 100 of Tehran's 290 members of parliament had signed the bill as of Sunday.

If indeed willing to follow through, it surely mean Iran has at least implicit whisper support of Russian and Chinese support when the situation inevitably escalates.


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Mon, 07/02/2012 - 10:17 | 2580514 Coast Watcher
Coast Watcher's picture

Match, meet gasoline.

Mon, 07/02/2012 - 10:30 | 2580558 SHEEPFUKKER

Operation Iranian Freedom launches in 3, 2, 1. 

Mon, 07/02/2012 - 10:42 | 2580606 MillionDollarBonus_
MillionDollarBonus_'s picture

I worry that our foreign policy is simply too weak given the clear and present danger of terrorism from countries like Iran, Syria, Iraq and Afghanistan. we need to seriously reconsider our commitment to defending Israel and America, and ask ourselves whether we are doing everything we can to fight terrorism domestically AND abroad. Next time you're at work, relaxing on the beach, walking the dog in the park or shopping at the mall, just look around and ask yourself these three important questions:

  1. Do I really know what these people are up to?
  2. How much do I know they are not sympathetic to Islamic extremists or any other right wing interests?
  3. How can I guarantee that these people are not part of some extreme libertarian group like the 'sovereign citizens' or 'Oath Keepers'?
Mon, 07/02/2012 - 10:56 | 2580641 LynRobison
LynRobison's picture

Oh yeah, you've got to watch out for those libertarians. They might assert their rights under the constitution, and then where would our nation be? Those arrogant libertarians seem to come and go as they please, without so much as a "by your leave"!

Mon, 07/02/2012 - 11:06 | 2580675 tocointhephrase
tocointhephrase's picture

Guess you were in the 'Iraq can strike in 45mins' camp? Defend Israel, ever heard of the Israeli Army/Mossad? I think they can look after themselves.



Mon, 07/02/2012 - 11:46 | 2580772 aerojet
aerojet's picture

Pretty sure he was trolling...

Mon, 07/02/2012 - 11:08 | 2580684 WTFx10
WTFx10's picture

I worry that our foreign policy is simply too weak given the clear and present danger of terrorism from Israel. We need to seriously reconsider our commitment to defending America, and ask ourselves whether we are doing everything we can to fight the Rothchilds control domestically AND abroad. Next time you're at work, relaxing on the beach, walking the dog in the park or shopping at the mall, just look around and ask yourself these three important questions:

  1. Do I really know what these people are up to? 
  2. How much do I know they are not sympathetic to Israeli extremists or any other Zionists interests?
  3. How can I guarantee that these people will be hunted down and prosecuted for their crimes against humanity by the 'sovereign citizens' or 'Oath Keepers'?


Reality check.

Fixed it for you Million dollar Blow Job

Mon, 07/02/2012 - 11:11 | 2580692 DaveyJones
DaveyJones's picture

despite the verse

our Persian purse is getting worse

imported american democracy 

smells distinctly like a hearse   

Mon, 07/02/2012 - 11:16 | 2580700 Lucky Guesst
Lucky Guesst's picture

Are you joking? Imagine havine the balls to take your family to the market or God forbid a beach if you lived in half the world and thinking....

1 .How many drones are watching?

2. Does this sandwich look like a bomb?

3. I sure hope that stressed out American soldier doesn't pull the trigger. But if he does please Lord don't let him post the pics of my blown apart wife and kids on the internet!!!!

Mon, 07/02/2012 - 11:48 | 2580778 10mm
10mm's picture


Mon, 07/02/2012 - 11:58 | 2580803 tocointhephrase
tocointhephrase's picture

Yeah a hermaphrodite. GO FUCK YOURSELF Hyper Inflated Bonus!

Mon, 07/02/2012 - 12:02 | 2580812 El Tuco
El Tuco's picture

@MDB....Careful, you're posts drip with such sarcasm that you won't be able to fool anyone anymore.

What you write is exactly what TPTB and the MSM would like us to believe and unfortunately so many Americans have been programed to fear this nonsense. Would be funny if it weren't so sad.

People have to be reminded how absurd it has all become. Keep it up.....


Mon, 07/02/2012 - 11:34 | 2580742 BBullionaire
BBullionaire's picture

Operation Iranian Liberation

Fixed it for you

Mon, 07/02/2012 - 11:54 | 2580791 viahj
viahj's picture

clever, but Fail In Accepting Truth

Mon, 07/02/2012 - 12:20 | 2580871 walcott
walcott's picture

and ends 1, 2, 3.

Mon, 07/02/2012 - 10:32 | 2580566 Cortez the Killer
Cortez the Killer's picture

time to take out those farsi ass clowns.

Drop a single massive ordinance on the evil mullah cocksuckers prayer service and let the fun begin.

Mon, 07/02/2012 - 11:02 | 2580665 WTFx10
WTFx10's picture

Drop Multiple massive ordinance on the evil PRIVATE ROTHCHILDS CRIMINAL BANKING CARTELS cocksuckers and the Terrorist State of Israel and let the fun begin.

Brought you in to reality.

Mon, 07/02/2012 - 11:10 | 2580688 Cortez the Killer
Cortez the Killer's picture

not your reality; bleating, baying muslim donkey


Mon, 07/02/2012 - 11:40 | 2580759 tocointhephrase
tocointhephrase's picture

Your sick. GET HELP!

Mon, 07/02/2012 - 13:43 | 2581111 akak
akak's picture

His sick what?

Mon, 07/02/2012 - 19:46 | 2582173 TheFourthStooge-ing
TheFourthStooge-ing's picture

akak asked:

His sick what?

His sick arrogance. Does he really think that Americans can effect even a single ordinance in Iran? Good luck getting even a bicycle licensing ordinance passed, let alone a massive ordinance.

Even at the level of the Tehran City Council, you must actually be elected before you can propose and/or vote on any ordinance. I'd be surprised if anyone other than an Iranian citizen is eligible to be elected.

Mon, 07/02/2012 - 14:19 | 2581239 Cast Iron Skillet
Cast Iron Skillet's picture

<sarc>that's it! nuke 'em till they glow! Them damn cocksukkers!</sarc>

Mon, 07/02/2012 - 10:35 | 2580572 cossack55
cossack55's picture

Certainly a SWIFT response.

Mon, 07/02/2012 - 11:05 | 2580673 Killtruck
Killtruck's picture

We are gonna free the shit out of you.

Mon, 07/02/2012 - 10:17 | 2580515 RyanW525
RyanW525's picture

Nothing better than a recycled geopolitical story to hide the pending economic collapse...

Mon, 07/02/2012 - 10:38 | 2580588 MachoMan
MachoMan's picture

no telling how much money was made front running the news...  must be nice.  I wonder how long the story will get traction without action?  (they ain't gon do it).

Mon, 07/02/2012 - 10:39 | 2580592 Marginal Call
Marginal Call's picture

Iran still isn't capable to close the straights down.  They can blow a lot of hot air to get the price jacked up.  China's still buying

Mon, 07/02/2012 - 10:45 | 2580618 Element
Element's picture

They didn't say close the strait entirely, they said they'd prevent sanctioning states getting oil via it.

The result will be the greatest battle since WWII (and bigger than most of those too).

Mon, 07/02/2012 - 11:02 | 2580668 Marginal Call
Marginal Call's picture

Acting on that threat just one time will lead to Iran being completely neutralized.  They will not be allowed to shut global commerce down.  And they will not try.  This is about jacking prices around.


The sanctions are hot air too.  They're still going to be shipping all their oil to China, and nobody is going to stop them. 

Mon, 07/02/2012 - 11:52 | 2580784 optimator
optimator's picture

Speaking of WWII, didn't they say Hitler was crazy to start a war on TWO fronts?  I can't count the fronts we're fighting on now.

Mon, 07/02/2012 - 14:17 | 2581231 greensnacks
greensnacks's picture

Iran may have dug themselves into a hole, but they might be able to live in that hole for a while.

Sanctions? We might have made it more difficult for them to do business, but China is exempt and Iran is skirting the sanctions by re-flagging their oil tankers and using pipelines to re-route their crude. Oh and with oil going up due to sanctions, they get paid more for what they can deliver to China and others, offsetting some of the cost of the sanctions.

Mon, 07/02/2012 - 10:17 | 2580516 lizzy36
lizzy36's picture

Romneys wet dream (not sure he is allowed to have those, but i digress) - oil spiking as economy contracts. Unfortunately, market being nothing more than a trained seal, is back Green on probablility of more Fed stimulas.....#wealtheffect. Trickle down economics, not working since 1980, but hey maybe 2013 will be its year.

Mon, 07/02/2012 - 10:41 | 2580605 azzhatter
azzhatter's picture

I don't believe Mittens is allowed impure thoughts unless it involves bankers having sex with the public

Mon, 07/02/2012 - 13:49 | 2581128 akak
akak's picture


I don't believe Mittens is allowed impure thoughts

Actually, he is --- as long as he is wearing his special magical secret underwear, he is shielded from all sin.  Until he dies and becomes a god in his own private universe, that is.

Seriously, I couldn't make up this sort of shit if I tried, and yet millions accept it as God's given truth!  Our species is truly insane --- it's no wonder that no aliens out there in the universe want any fucking thing to do with us.

Mon, 07/02/2012 - 14:23 | 2581260 DaveyJones
DaveyJones's picture

non consensual sex with the public

Mon, 07/02/2012 - 10:18 | 2580517 SilverTree
SilverTree's picture


Mon, 07/02/2012 - 10:24 | 2580540 Oh regional Indian
Oh regional Indian's picture

Are you saying there is going to be a Horrormuse Tea Party, WOT with Barrel's of the light/sweet stuff? Strait up?

Very dangerous game, this selective sanction game the US is playing. Straight up, no holds barred alignment.

India gets a slap on the wrist and threats for it's Iranian/gold/Ruppee tango.

China gets a go-ahead.

Singapore gets the go ahead? WTF? I mean WTI?

Japan, frigging crumbling from power shortages, has to dance on shards of glass to somehow get Iranin Oil?

What a mad, sad world.



Mon, 07/02/2012 - 10:36 | 2580580 cossack55
cossack55's picture

True, but at least it is getting more entertaining

Mon, 07/02/2012 - 10:42 | 2580610 i-dog
i-dog's picture

It's possibly why the Iranians occassionaly poke a stick into the tiger cage ... just to get a laugh from seeing it jump!

Mon, 07/02/2012 - 10:19 | 2580518 bdc63
bdc63's picture

? ... WTI is down 1.61 according to my screens ... Brent down 1.47

Mon, 07/02/2012 - 10:20 | 2580522 tocointhephrase
tocointhephrase's picture

And Gold is not even on the screen according to CNBC. 

Mon, 07/02/2012 - 10:32 | 2580567 Snidley Whipsnae
Snidley Whipsnae's picture

Screw CNBC... here is a screen you can 'believe in'...

Mon, 07/02/2012 - 10:22 | 2580533 Cdad
Cdad's picture

@ bdc63

That is because Iran has as much chance of closing the Straits as I do in a bass boat.  We've done this before.

Mon, 07/02/2012 - 11:53 | 2580787 11b40
11b40's picture

How many mines can you carry in your bass boat.

IED's were the biggest single killer of Americans and the most destabilizing weapon used against us in Iraq.  Cheap, easy to transport, easy to operate, and very deadly. 

Mines are the naval equivelent if IED's.  Iran has 10's of thousands of them with various levels of sophistication.  They don't have to have to do much of anything other than let a few float around in the gulf for the insurance companies to shut down tanker traffic.  They could even deny the mines were theirs....and they could even be right.  After all, false flags have been flown before.

Mon, 07/02/2012 - 12:41 | 2580916 Citxmech
Citxmech's picture

You can't select targets with mines - they are indiscriminant by design - hence they could not be relied upon in a selective blockade.

Mon, 07/02/2012 - 10:28 | 2580554 CvlDobd
CvlDobd's picture


I see you've invested in a Barclays terminal.

Mon, 07/02/2012 - 10:24 | 2580541 zilverreiger
zilverreiger's picture

It's their territorial waters, then can do as they please. Iran only needs to keep the threat going, and occasionally fire at an offending tanker for the desired effect, they dont have to "hold" the position.

Mon, 07/02/2012 - 10:34 | 2580570 Snidley Whipsnae
Snidley Whipsnae's picture

Not only does Iran not have to 'hold the position'; simply making the threat will spike tanker insurance rates, and therefore, crude prices...

Mon, 07/02/2012 - 11:08 | 2580685 Vince Clortho
Vince Clortho's picture

Thank heaven the U.S. has Hilary Clinton to issue a counter-provacation to notch the verbal threats up a notch.

Random thought:  Does Hilary go down with the ship if Obama loses?

Mon, 07/02/2012 - 12:50 | 2580933 Quicksilver
Quicksilver's picture

Did she go down for Bill?

Mon, 07/02/2012 - 10:37 | 2580585 OhOh
OhOh's picture

i am sure the "insurance" rate, from London has already followed the spike up.

Mon, 07/02/2012 - 10:25 | 2580543 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Prices below $100/barrel are not acceptable anyway.

Mon, 07/02/2012 - 10:25 | 2580546 Manthong
Manthong's picture

We will all rally to support our Kenyan.

Mon, 07/02/2012 - 10:26 | 2580547 mrktwtch2
mrktwtch2's picture

crude will be at 60 by the end of august..the world economy is just slowing down to fast..

Mon, 07/02/2012 - 10:38 | 2580587 LawsofPhysics
LawsofPhysics's picture

In the western world maybe.  Demand in the Eastern world looks good.  Wake the fuck up.

Mon, 07/02/2012 - 11:00 | 2580661 CvlDobd
CvlDobd's picture

Usually I agree with your points but, if the West goes tits up, how does the east replace enough of that demand to keep prices up?

Mon, 07/02/2012 - 11:06 | 2580676 Vince Clortho
Vince Clortho's picture

+1  Good point.  And good visual on "tits up".

Mon, 07/02/2012 - 11:38 | 2580752 CvlDobd
CvlDobd's picture

Yeah I'd say nine out of every ten sites should do the trick. Your odds of finding boobs on the net are quite good.

Mon, 07/02/2012 - 15:05 | 2581391 Hohum
Hohum's picture


Maybe so.  Oil production drop to follow price drop.

Mon, 07/02/2012 - 10:28 | 2580551 Ratscam
Ratscam's picture

Tyler, when looking at Iran using the LCO chart, representing brent crude, is more appropriate since WTI is mainly for North American customers and not for the rest of the world.

Mon, 07/02/2012 - 10:30 | 2580556 kito
kito's picture

tyler, where is crude spiking??? i see its down a buck sixty.................

Mon, 07/02/2012 - 12:02 | 2580765 Element
Element's picture

From that ESM's published articles





Legal status, privileges and immunities

1. To enable the ESM to fulfil its purpose, the legal status and the privileges and immunities set out in this Article shall be accorded to the ESM in the territory of each ESM Member. The ESM shall endeavour to obtain recognition of its legal status and of its privileges and immunities in other territories in which it performs functions or holds assets. T/ESM 2012/en 46

2. The ESM shall have full legal personality; it shall have full legal capacity to:

(a) acquire and dispose of movable and immovable property;

(b) contract;

(c) be a party to legal proceedings; and

(d) enter into a headquarter agreement and/or protocols as necessary for ensuring that its legal status and its privileges and immunities are recognised and enforced.

3. The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments.

4. The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.

5. The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable. T/ESM 2012/en 47

6. The premises of the ESM shall be inviolable.

7. The official communications of the ESM shall be accorded by each ESM Member and by each state which has recognised the legal status and the privileges and immunities of the ESM, the same treatment as it accords to the official communications of an ESM Member.

8. To the extent necessary to carry out the activities provided for in this Treaty, all property, funding and assets of the ESM shall be free from restrictions, regulations, controls and moratoria of any nature.

9. The ESM shall be exempted from any requirement to be authorised or licensed as a credit institution, investment services provider or other authorised licensed or regulated entity under the laws of each ESM Member.



Staff of the ESM

The Board of Directors shall lay down the conditions of employment of the Managing Director and other staff of the ESM.



Professional secrecy

The Members or former Members of the Board of Governors and of the Board of Directors and any other persons who work or have worked for or in connection with the ESM shall not disclose information that is subject to professional secrecy. They shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy.



Immunities of persons

1. In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents.

2. The Board of Governors may waive to such extent and upon such conditions as it determines any of the immunities conferred under this Article in respect of the Chairperson of the Board of Governors, a Governor, an alternate Governor, a Director, an alternate Director or the Managing Director.

3. The Managing Director may waive any such immunity in respect of any member of the staff of the ESM other than himself or herself.

4. Each ESM Member shall promptly take the action necessary for the purposes of giving effect to this Article in the terms of its own law and shall inform the ESM accordingly.



Exemption from taxation

1. Within the scope of its official activities, the ESM, its assets, income, property and its operations and transactions authorised by this Treaty shall be exempt from all direct taxes.

2. The ESM Members shall, wherever possible, take the appropriate measures to remit or refund the amount of indirect taxes or sales taxes included in the price of movable or immovable property where the ESM makes, for its official use, substantial purchases, the price of which includes taxes of this kind.

3. No exemption shall be granted in respect of taxes and dues which amount merely to charges for public utility services.

4. Goods imported by the ESM and necessary for the exercise of its official activities shall be exempt from all import duties and taxes and from all import prohibitions and restrictions.

5. Staff of the ESM shall be subject to an internal tax for the benefit of the ESM on salaries and emoluments paid by the ESM, subject to rules to be adopted by the Board of Governors. From the date on which this tax is applied, such salaries and emoluments shall be exempt from national income tax.

6. No taxation of any kind shall be levied on any obligation or security issued by the ESM including any interest or dividend thereon by whomsoever held:

(a) which discriminates against such obligation or security solely because of its origin; or

(b) if the sole jurisdictional basis for such taxation is the place or currency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the ESM.




Nice work, if you can get it.   It sounds like one helluva gig. 

No wonder Timmah's been trying to get in on this shit ... no taxes!

Mon, 07/02/2012 - 10:30 | 2580559 firstdivision
firstdivision's picture

Look at the all the signals the 10Y!  Risk on.....for more easing.

Mon, 07/02/2012 - 10:31 | 2580560 LULZBank
LULZBank's picture

Seems like the Pop Idol Rivals are planning to start singing.

Mon, 07/02/2012 - 10:31 | 2580562 scatterbrains
scatterbrains's picture

I guess the Syrian downing of that Turkish jet didnt have the effect our owners were looking for.  What happens if this latest trick dosn't work either? As the world economy flushes they may have to literally, I mean really fir shir shut the canal down to save the price of oil.


Mon, 07/02/2012 - 10:44 | 2580617 azzhatter
azzhatter's picture

Yep, our owners held an emergency management meeting this weekend to determine the next false flag and how to make it more effective. They may have called in McKinsey for strategic planning advice

Mon, 07/02/2012 - 10:37 | 2580584 GeorgeHayduke
GeorgeHayduke's picture

Get those false flags hoisted! The economy is falling more notches (maybe many notches) soon and we need a good distraction!!!

They'll keep the cattle distracted with another meaningless war so they won't see the next big leg down in their quality of life in any way associated with the greed and avarice of their owners. Instead they can blame it on the sacrifice for war. Same tools from the same tool bag. No need to come up with anything new as the cattle cannot, or do not, want to see or even think about the tools.

The gears in the slaughter house start to turn, the cattle sense the tension, but are not aware of where that feeling comes from so they kick or bite at the cattle closest to them. The butchers look out and do not see cattle, instead they see dollar bills and fodder for fake patriotic fervor to distract the cattle heading toward the chute.

The irony is how upset the cattle get if you refuse to join them in their ignorant patriotic rituals. The brainwashing is total and complete.

Mon, 07/02/2012 - 11:04 | 2580671 Vince Clortho
Vince Clortho's picture

Spread the word to the other cattle.

Mon, 07/02/2012 - 10:43 | 2580613 Flakmeister
Flakmeister's picture

The joys of sabre rattling.....

Been snarfing some PBT and OXY in the recent weakness...

Mon, 07/02/2012 - 10:52 | 2580622 OhOh
OhOh's picture

You may want to investigate when this bill was first written, last december, and the fact that less than 50% of the Iranian MP's have signed it.

Mon, 07/02/2012 - 10:54 | 2580636 Cdad
Cdad's picture

This does not matter, really.  They cannot do what they are threatening.  The price action in oil just now is more about socking it to Average Joe for the 4th of July, as well as it being about useless fucking criminal syndicate Wall Street parasites trying to unload oil contracts they bought up 9.4% on Friday.

Transparent stupidity.  It is amazing how ignorant "market participants" are...and how they assume everyone around them is dumber than they.  

This story shall pass in its significance just as soon as those contracts are 3....2....1....

That bust ISM number is far more significant for the price of crude oil.

Mon, 07/02/2012 - 10:51 | 2580633 Joe A
Joe A's picture

Hmmm. That would not be a smart to do for Iran.

Mon, 07/02/2012 - 10:53 | 2580638 StormShadow
StormShadow's picture

Our empire is on life support and China is holding the electrical cord. Any serious military effort is ultimately subject to their approval. If we lose our funding source we'd have to print like crazy into hyperinflation. The piper is warming up folks.

Mon, 07/02/2012 - 11:02 | 2580667 Vince Clortho
Vince Clortho's picture

Looks like hyperinflation is the chosen path.


Mon, 07/02/2012 - 10:54 | 2580639 Bicycle Repairman
Bicycle Repairman's picture

US: can you cut off oil to Japan, China and Europe?

Iran: will that make the price spike up?

US: sure will.

Iran: you got it, buddy.

Mon, 07/02/2012 - 11:10 | 2580680 CrashisOptimistic
CrashisOptimistic's picture

Well, I've done this before but what the hell.

This is a world of oil scarcity and it's going to get much worse.  You do not drill for oil in miles of water, miles down from the sea floor, in Arctic temperatures, if you could drill in Oklahoma and find what you want. Have a look some time at Oklahoma's historical oil output per day.  Does that look like abundance?

When oil is scarce, its price is controlled by consumption -- and in a world of scarcity consumption is not the same as demand.

The stories you hear of the US becoming an oil exporter are derived from some reporter needing to file a story by deadline, making two phone calls to "experts" in North Dakota, who happen to be in the industry and bought some leases they now want to sell at a profit.  What the hell do you think these experts will tell that reporter?  Of course they will say booming oil potential forever in North Dakota.  They have to hype their leases.

Before celebrating, look at US oil production on a graph that goes back 50 or 100 years, not 10.  This brings the tiny recent uptick into perspective.  There have been other upticks.  They soon fade.

Oil's high price this spring has destroyed economic activity.  Again.  If anyone tries to grow that activity, the oil price will explode again and crush that activity once again. 

This is forever.  Oil will allow no more growth.


Mon, 07/02/2012 - 11:19 | 2580709 DUNTHAT
DUNTHAT's picture

Oil products can be made from coal ...

Oil products can be made from natural gas ...

So all the coal, shale, and hydrates in the seas are sources for fuel.

Bad news?  Not remotely at these prices.

Mon, 07/02/2012 - 11:33 | 2580737 CrashisOptimistic
CrashisOptimistic's picture

Some other reporter reported that on deadline too.

If you have the brainpower to read ZH, you have the brainpower to understand physics.  Oil's physics are simply unmatched.  A 42 gallon barrel of volume holding oil holds 5.6 million BTUs.  The same volume holding natural gas at standard atmosphere pressure holds 1/1000th that energy.

1/1000th.  You can compress it to higher than 1 atmosphere (Compressed Natural Gas CNG) or you can freeze it to LiquidNG.  You still don't equal oil.  The trucks you hear about running on CNG are running mostly back to their refueling station.  Have a look at Honda's Civic.  They have a CNG version.  They sacrificed the trunk for a bigger fuel tank, and if you dig hard you'll find that even with that trunk sized fuel tank, they still only get a fraction of the range per tank of a conventional gasoline Civic.

You can't beat physics.  You can beat engineering problems.  You can't beat physics problems.

Mon, 07/02/2012 - 11:22 | 2580717 westerman
westerman's picture

Does Iran own the straight? Do tankers have to go through Iranian waters?

Mon, 07/02/2012 - 21:40 | 2582375 TheFourthStooge-ing
TheFourthStooge-ing's picture


Does Iran own the straight?

The strait is comprised of the territorial waters of Iran and Oman. Technically, none of it is international waters.

Do tankers have to go through Iranian waters?


Mon, 07/02/2012 - 11:27 | 2580728 slewie the pi-rat
slewie the pi-rat's picture

say it ain't so mahmoud!

Mon, 07/02/2012 - 11:52 | 2580786 trebled99
trebled99's picture

Come on people. Whatever just a game to raise oil prices. Believe nothing you read and only half of what you see pure bull shit.

Mon, 07/02/2012 - 12:06 | 2580834 Fix It Again Timmy
Fix It Again Timmy's picture

Isn't that special?  We've got military crap going in all directions all over the world, in places where there is no winning strategy nor ever the hope of one because there is no point in being in the places we are!  In the meantime, China is amusedly looking on and saying, "Yah, you go yankee boys."; all in the spirit of "when your enemy is doing stupid things, never interfere."  All that we have is a band of bozos otherwise known as the Congress of the United States.  How could it be otherwise?

Mon, 07/02/2012 - 13:31 | 2581072 Small Business Guy
Small Business Guy's picture


Much Ado About Nothing.

The Iranians have a severe case of ADD - when they are not in or near the center of attention, they play the same game as the NORKs.  They jump up & down for a little bit, saying in effect "Look at us - we're important - we're a player".  It's all SOP in the game.

Also, the Russians won't mind in the least - they would be the big winners in this if Iran actually decided to go ahead and try and impact/close the Straits.  The PRC would be losers, as they are currently using Iranian oil as a leverage in their deals with Russia over oil deliveries through the new (2011) pipeline running from Siberia to the northeastern Chinese city of Daqing, about 300k Bbl. per day at max capacity.

The PRC needs options in the marketplace to get good prices from Russia, and the best way is Iranian oil.

It's an interesting game.

Also, forget about the Iranians mining the Gulf.  Iranian road transportation network is shaky, and their real road network is the Persian Gulf.  All those little dhows travel all throughout the Gulf - what you are really looking at is commerce.  Lots and lots & lots of stuff gets moved through the Gulf - it's their cheap version of our Interstate highway system.

You want to talk about nightmares - what's Iran going to do if the US and it's allies placed a whole bunch of MK65 Quickstrike or Stonefish (BAE Systems) mines along all the small ports up and down the Iranian coast.  Pretty soon there's nothing moving.

Facts are there would be a whole lot of Iran's neighbors who would be really happy if something like that occurred.  Because if the Persian Gulf transportation network becomes 'unstable', well, then it's overland transportation through Iraq, Turkey, Russia, Pakistan, or Afghanistan.  Armenia, Azerbaijan, Turkmenistan, and Kazakhstan are less reliable access routes.  And everybody will have their hands out.  Talk about fun!  The rug merchants will really have to up their game.

Figure the Iranians are just trying to 'goose' up the oil markets.  Just part of the game.


Mon, 07/02/2012 - 15:28 | 2581465 Ocean22
Ocean22's picture

>>>>>Figure the Iranians are just trying to 'goose' up the oil markets.  Just part of the game.<<<<<<<

this is exactly whats happening, plain and simple.  higher oil, more money in the bank.  why let the americans have any break in price of oil? Lets blow the horn and bring the price back up.  Anyone want to buy a truck?

Mon, 07/02/2012 - 17:03 | 2581757 HungrySeagull
HungrySeagull's picture

The Iranians have been making so much noise for so long, I say.. let em try. 30 dollar gallon gas is of no consequence to me.

In fact, if that new Navy fuel program works out fleet-wide, we wont need the Gulf Oil now would we?

Go ahead Iran, make our day. The Navy will be sure to kick the locked and barred gate down soon enough.

Mon, 07/02/2012 - 22:20 | 2582475 bankruptcylawyer
bankruptcylawyer's picture

fucking russians chinese and persians are not dumb---they're going to continue rumor=mongering so long as they can make money  off trading these rumors in the international markets. 


there will be no decisions by any country except the U.S. as to when to start a war. 

Wed, 07/04/2012 - 09:02 | 2586395 BlackSwanCrash
BlackSwanCrash's picture

Jeez for such a good site I find it amazing that the ZH comments are never worth reading. How come such a site gets such inane comments and no critical discussion.

And yes I fully expect the stream of BS responses to this post to confirm the observation. Please prove me wrong

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