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Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"

Tyler Durden's picture


Pimco's Greg Sharenow has released a white paper on what the Newport Beach company believes are the 4 possible outcomes should Iranian nuclear facilities be struck as increasingly more believe will happen given enough time. The conclusion is sensible enough "Whenever the global economy is in a fragile state, as it is today, geopolitical concerns such as the possibility of a strike on Iran’s nuclear facilities become much more exaggerated. Although we cannot (and will not) predict whether an attack is imminent, or even likely, our experience and research tells us that any major disruption in the supply of oil from Iran could have either subtle or profound global repercussions – especially as excess capacity is virtually exhausted and we doubt that other OPEC nations would be able to compensate for a reduction in Iranian oil production." As for those looking for numbers associated with the 4 scenarios presented by PIMCO here they are: "i) Scenario 1: Exports minimally effected. Concerns would drive initial price response; Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125; ii) Scenario 2: Iranian exports cut off for one month. In this case, we would expect prices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping; iii) Scenario 3: Iranian exports are lost for half a year. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level; iv) Scenario 4: Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario." Needless to say, even the modest Scenario 1 is enough to collapse global economic growth by several percentage points to the point where not even coordinated global printing will do much.

From Pimco:

Playing ‘What If?’ with Oil Prices and a Potential Strike on Iranian Nuclear Facilities
  • ? The market has less “cushion” than it did earlier this year due to significant production outages and relatively strong non-OECD demand, leading to sharp draws on inventories.
  • Excess capacity is virtually exhausted and we doubt other OPEC nations would be able to compensate for a reduction in Iranian oil production.
  • In light of these possible oil price spikes, investors should evaluate how their portfolios might be affected by a sudden or sharp burst of inflation.

? There has been a lot of market chatter over the past few weeks regarding a potential Israeli strike on Iranian facilities. The market’s focus on the region has been heighted by the latest International Atomic Energy Agency (IAEA) report on Iranian nuclear activities. All of this could have significant and direct implications for the oil market and secondary implications for the global economy, depending on which scenario actually plays out. Further, given the heightened level of geopolitical instability around the globe, the conclusions we can draw by evaluating this particular situation may be useful when assessing the danger of other potential or realized supply disruptions. Although we cannot (and will not) predict whether an attack is imminent, or even likely, it is important to analyze the potential outcomes to prepare portfolios for tail risk events.

Today, markets are much more vulnerable to significant price spikes stemming from a new supply disruption than they were during the 1990/1991 Iraqi Invasion of Kuwait or even 1980 Iran-Iraq War. Due to significant production outages and relatively strong non-OECD demand leading to sharp draws on inventories this past year, the market also has significantly less “cushion” than it did earlier this year when the Libyan conflict began.  Therefore, any event could pose a formidable risk to the global economy (e.g. a real supply disruption scenario would require higher prices to lower demand in order to balance the market). This could come at a time when the global economy, or at least the developed world, is facing fiscal headwinds and limits on monetary policy

Excess Capacity Nearly Exhausted 
The sad fact is that the market is running at extremely high capacity utilization. Core OPEC countries (Saudi Arabia, Kuwait and UAE) are producing at their highest level in decades. Saudi Arabia is the lone producer with any real excess capacity, most of which is untested. Inventories currently are low, falling below the five-year average for the first time since 2008, and have been drawing quickly. Most of the “excess” stocks in the commercial data are in the U.S. mid-continent and are not available for consumption as they went to fill base storage in tanks and to fill pipelines. Commercial inventories would be even lower if not for the OECD’s release of 35 million barrels of strategic reserves this summer. This limited current excess capacity differs greatly from prior supply shocks when a combination of OPEC producers, particularly Saudi Arabia, stepped in to replace most of the lost output.
Iran currently produces 4.0 million barrels per day (b/d) and exports 2.3 million b/d of total hydrocarbons. This is roughly twice the amount Libya exported before it halted production and exports this past spring. Further, the scale of oil demand loss needed to match a loss in exports from Iran is roughly comparable to the peak loss in demand realized during the depths of 2008/2009 recession. Note, peak loss in output in the 1990/1991 Iraqi invasion of Kuwait was roughly 4.5 million b/d and the peak loss of output from the Iran/Iraq War was also roughly 4.5 million b/d. We estimate that the loss of Libyan oil added roughly $20 per barrel to prices over the past six months.
We doubt that other OPEC members will be able to replace lost Iranian exports and we are concerned that they are at risk for lower, not higher, output. While Saudi Arabia will likely respond by boosting output, we estimate excess capacity is unlikely to be much higher than 1.5 million barrels per day. The big problem is that Saudi Arabia has limited export capability to the Red Sea and relies on the perilous Strait of Hormuz for most of its crude oil exports. A total of 16 million barrels of oil exports through the Strait of Hormuz each day, in addition to liquefied natural gas (LNG) exports from Qatar. While the U.S. military presence should keep the Straits open (gulp), the market will initially be very afraid of larger losses. The new Abu Dhabi Crude Oil Pipeline (ADCOP) project to go into service shortly will only relieve a fraction of the bottleneck should one develop.
Further, any threat of problems might lead insurers to remove coverage or greatly increase costs for tankers heading into the Arabian Gulf, which would grind a significant portion of exports to a halt until the risks are truly reduced. Iraqi and Iranian export terminals are also fairly close to one another, creating risk to an additional 1.7 million b/d of exports. Lastly, Iran’s allies pose an additional threat to onshore output throughout the MENA region. The point here is not to project these as likely events, but rather to talk about the calculus the market will go through if they occur. 
Strategic Reserves Could Offer One Major Offset
The International Energy Agency (IEA) has 1.5 billion barrels of oil in strategic reserves, built up following prior supply shocks. Non-OECD consumers (mainly China) have another 150 million barrels. This is a non-trivial amount of oil and we would expect the IEA to immediately spring into action should output actually be lost, and to verbally assure the market that the supplies are available should disruption occur. Any stock release will slow price increases, but will likely also lead to more back-end buying, over time, as stocks will be replenished. Relying on IEA is no panacea; it will simply serve as a buffer.
Duration and Severity of Disruption Matters
Given low spare production capacity and reliance on strategic stocks, the duration and severity of any disruption would be an important determinant to the path of oil prices. It is conceivable that no output would be lost at all because it is in Iran’s interest to still receive oil revenue. The timing of the price hike would also depend on the extent the market was surprised, should an attack occur. For the 2003 U.S. Invasion of Iraq, prices rallied before the invasion and peaked shortly after the war began as the invasion was so well publicized and retreated once the market was assured that Saddam Hussein did not set Iraq’s wells on fire like he did in Kuwait a decade earlier. It was not until a few months later when Chinese oil demand accelerated did oil prices begin a steady upward trend that lasted for over a year. 

Below we outline four hypothetical scenarios for output and prices that could materialize if Israel attacks Iran’s nuclear sites. Again, we emphasize that we are not predicting the likelihood of Israel’s action or inaction in any way. 

  • Scenario 1: Exports minimally effected. Concerns would drive initial price response. IEA would likely make statements about willingness to meet any shortfall in supplies. Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125, in relatively short order as a premium (mostly a risk premium) becomes embedding into the market, at least for a while. The timing of the spike would depend on how much the market is taken by surprise and whether or not the strike is priced in ahead of time.
  • Scenario 2: Iranian exports cut off for one month.  IEA would likely swing into action and Saudi Arabia could begin to offer more oil into market. In this case, we would expect prices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping. The IEA and Saudi Arabia can meet market needs, but the increase in uncertainty and the loss of spare capacity would affect pricing. In this case, after a few months, we would expect prices could fall back to $130 to $135/bbl range.
  • Scenario 3: Iranian exports are lost for half a year. This is where the potential outcomes get quite dicey. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level. The IEA would likely release oil steadily, but consumption will need to take a hit from prices and slower economic activity. Once Iranian crude oil returns to the market and the environment stabilizes, oil would likely return to around $110/bbl or even lower depending on global strength at the time.
  • Scenario 4: Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario.
Takeaway: Be Prepared with Active Portfolio Management
Whenever the global economy is in a fragile state, as it is today, geopolitical concerns such as the possibility of a strike on Iran’s nuclear facilities become much more exaggerated. Although we cannot (and will not) predict whether an attack is imminent, or even likely, our experience and research tells us that any major disruption in the supply of oil from Iran could have either subtle or profound global repercussions – especially as excess capacity is virtually exhausted and we doubt that other OPEC nations would be able to compensate for a reduction in Iranian oil production.
Of course, the severity of any impact on the global economy would depend on several factors, including possible intervention by the IEA, the duration of the supply disruption, and the degree to which any attack takes the market by surprise. Therefore, we continue to monitor the situation closely and look to PIMCO’s worldwide research and intellectual capabilities to help investors better prepare their portfolios to withstand any of the scenarios that may eventually materialize. In light of these possible spikes in oil prices, investors should evaluate how their portfolios might be affected by a sudden or sharp burst of inflation.

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Tue, 11/29/2011 - 13:08 | 1926008 RobotTrader
RobotTrader's picture

Los Angeles gas prices continue to crash to new 9 mo. lows.$/G

No wonder WMT, HD, LOW are outperforming.

Retail spending going wild.

Tue, 11/29/2011 - 13:13 | 1926036 CPL
CPL's picture

Greg...keep working on the site.

Tue, 11/29/2011 - 13:45 | 1926174 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Robo doesn't know what a spread means.

Margin compression, bitchez.  The American consumer can't afford the high price, but supply/demand+"easy" monetary policy is dictating a higher price/barrel.

You want to see a trade unwind?  Watch when the price at the pump catches back up to it p/b.  It will happen so fast people won't won't see it coming.  Most likely, the pump price will jump the week of the 19th, and also likely, the p/b will jump then too.

Basically $5 gas is right around the corner and America is not prepared for it.

Tue, 11/29/2011 - 14:04 | 1926284 Bicycle Repairman
Bicycle Repairman's picture

$5 gas = fatal heart attack for real economy and a change in Presidents.  $5 gas will happen over Barry's dead body.  Should be interesting.

Tue, 11/29/2011 - 14:10 | 1926313 i-dog
i-dog's picture


"$5 gas will happen over Barry's dead body"

So, there is a bright side to it!

Tue, 11/29/2011 - 15:01 | 1926635 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Barry doesn't want another term.  He wants to take naps, golf, and watch ESPN without having to ever put on a suit.

Tue, 11/29/2011 - 15:06 | 1926671 redpill
redpill's picture

That certainly hasn't stopped him up until this point.

Tue, 11/29/2011 - 15:11 | 1926686 DosZap
DosZap's picture

Mr Lennon Hendrix

Great think your dead wrong,(IMHO) but I prefer your take.

HE is never going to give up that office.He's our last duly elected, and our first Dictkaker.

Tue, 11/29/2011 - 15:19 | 1926735 HungrySeagull
HungrySeagull's picture

Nah. Make it 14 or so when Walmart finally halts the trucks.

Tue, 11/29/2011 - 15:20 | 1926740 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

right,this guy will wait till he gets a second term, THEN he will wage war cause he knows he cant get another term. All bets are off if this commie gets another term. It will bring Amerika to its knees.

Tue, 12/27/2011 - 21:40 | 2015144 constitutionalist
constitutionalist's picture

oh good, we're not on our knees yet? i could have sworn we were all laying on the floor with our hands behind our backs already..

Mon, 01/09/2012 - 08:28 | 2046147 DanDaley
DanDaley's picture

Like the song says, You ain't seen nothin' yet!

Tue, 11/29/2011 - 14:14 | 1926338 redpill
redpill's picture

The Iran war drumming is becoming absurd.  I hope all the lefties are paying attention.  "The one they've been waiting for" in the White House is playing the exact same game of militarism that we saw less than a decade ago with Iraq.  There's plenty of parties involved that would like a good war to distract from all this.  The Iranian government would be fine with it, so they lose a couple million people, but the ones that survive will be much more loyal to them with such a formidable external enemy present.  And Saudi Arabia's leadership wouldn't mind, the Wahhabis never mind seeing a few impure Shiites get some bombs dropped on their head, and plus they get to sell their oil at elevated prices and get even richer. Israel obviously would be a cheerleader as well.  Domestically the war would have smirking support from the Krazed Keynesian Krugman left, who see a vast military conflict as a life preserver for their failed economic religion, not to mention President Barack "Kinetic Military Action" Obama who would suddenly pretend to be a reluctant leader of the US War Machine as he tries to unify support ahead of the election whilst ordering countless more Tomahawks and bombs from the giddy "defense" industry.  And he'd probably get a fair amount of support from sheeple Americans who don't like Ahmadinejad or figure we might as well continue our "War on Terrah" in the next "towel head country"

And who would be against it?  Individual Americans who can't do much about it except vote, only to realize it will be far too late.  And if the GOP nominee winds up to be someone like Gingrich, you can expect more healthy doses of militarism to come even if Obama loses next year.

This is the ugly world of death we live in.


Tue, 11/29/2011 - 14:29 | 1926419 High Plains Drifter
High Plains Drifter's picture


and now a word about internal iranian politics and culture.....


it is amazing , how similar, really similar islam is to talmudic judaism, in so many ways...........hmmmm..

Tue, 11/29/2011 - 17:23 | 1927452 Iwanttoknow
Iwanttoknow's picture

Drifter,Sure Islam has it's flaws.But it is very,very different from Talmudic judaism.Read David Duke.

Tue, 11/29/2011 - 14:34 | 1926449 kridkrid
kridkrid's picture

It's all so remarkable.  We can elect the same exact leader... same actions... same policies, foreign and domestic, window dressing aside, yet almost everyone who identifies with one party vs. the other is blinded to the reality.  Even if they don't buy the lie 100%, the "lesser of two evils" lie is just a punch card away.  Amazing the control.

Tue, 11/29/2011 - 14:41 | 1926510 Ying-Yang
Ying-Yang's picture

Ra ra siss boom bah Go Newt... no really go Newt, yeah we really want you to go home or help Robo out at Tiffany's.

"Dr Paul to save us All"

Tue, 11/29/2011 - 14:42 | 1926511 LawsofPhysics
LawsofPhysics's picture

Precisely why you will never see a popular vote allowed.  If voting actually resulted in change, it would be illegal.

Tue, 11/29/2011 - 15:23 | 1926763 Things that go bump
Things that go bump's picture

Really, how can I take someone named for kind of salamander seriously? Just look at the face he is wearing! Besides that, he has already proven he is not to be trusted.  

Tue, 11/29/2011 - 16:37 | 1927231 SteveNYC
SteveNYC's picture

I have this conversation with morons of both stripes all of the time. Sometimes, it is like living in a twilight zone as the depth of the brainwashing on both sides is inherently deep. Every time the "war" comes up I counter with one simple line: if you are so big into bombing said "towel heads", then you should have no qualms either committing yourself or your son/daughter to the war machine that is going to "liberate" or "protect" and so on.

It always ends the same way "my kid is in college" or "I'm too old" or "we can just bomb them, no need to put feet on the ground". If you choose to live by the sword, you will surely perish by it. Individuals, groups, countries. No exceptions.

Tue, 11/29/2011 - 17:16 | 1927415 redpill
redpill's picture

Regardless of how people feel about Ron Paul, the bottom line is that he's the only real peace candidate in this election who wants to stop this suicidal war machine that is bankrupting the country and making us hated across the world.

Tue, 11/29/2011 - 18:18 | 1927702 RMolineaux
RMolineaux's picture


Tue, 11/29/2011 - 14:41 | 1926505 Flakmeister
Flakmeister's picture

This isn't left-right bullshit...

This is Peak Oil playing out and the boys at the table can't admit what the game is about... We therefore get all kinds of misdirection, alterior motives.... What was that song?

"There's battle lines bein' drawn..."


Tue, 11/29/2011 - 15:02 | 1926646 kridkrid
kridkrid's picture

the left-right bullshit is what provides the cover for what really happens.  It's the charade that keeps people in the dark. 

Tue, 11/29/2011 - 15:37 | 1926862 Ratscam
Ratscam's picture

great article on George Orwell,s guide to the news

Tue, 11/29/2011 - 17:12 | 1927401 El Viejo
El Viejo's picture

Wrong !!!

This is Sunni Shiite religious battle lines being drawn. And as usual the Russians are on the wrong side.


Tue, 11/29/2011 - 15:02 | 1926648 IQ 101
IQ 101's picture

Mr Pill, please test drive my conspiracy theory,

Barry was installed by the neo cons in both parties, house of Rothschild, who works for the Jesuits, who work for the Pope , who works for the Queen, who works for the Aliens, (I'm still working on it).

The Venezuela / Iran alliance is threatend by an altercation near the Columbian border that draws the attension of the USA but Hugo Chavez succumbs to cancer and a brief revolution creates a pro US gov in Venezuela, (Who require US refineries to process their oil, anyhoo.)

And Venezuela comes with a fine gold dowry, too.

With Canadian, Mexican and Venezuelan oil, on top of it's own, Muddle East supplies become less threatening or relevant to the Western alliance ?

Just throwing around ideas based on the writing on the wall, hope you don't mind, but it is all that can be done at this point.

Tue, 11/29/2011 - 15:34 | 1926845 SilverBaron
SilverBaron's picture

Not aliens.  Lucifer.

He also goes by the names: Allah, Krishna, Buddah, Baal, Baal-hadad, Osiris, etc.

It matters not if you don't believe in him because they do, and they are in controll.

Tue, 11/29/2011 - 15:47 | 1926914 redpill
redpill's picture

You don't need any conspiracies for this one.  Barry was perfect play-doh for the big money.  He comes from Chicago, so they knew he can be bought.  He's not really interested in policy, but rather just being "the man" who gets to strut around, read his teleprompter, and smile.  This was all supposed to go smoothly, he firmly put all his responsibility in the hands of people that were supposed to be the best at everything, and then he was told he was free to go golf and shoot hoops and it would all get handled.  He never really had a clue about the economy, policy, or anything else.  Which is why he was such a perfect fit.  The sheeple loved him in 2008, so it was an ideal situation.  From his perspective this was going to be a fantastic vacation, he doesn't have to really do anything because he's abdicated all actual policy decisions to others, and legislatively he's been in absentia, even when the Dems had the House.  He figures legislation isn't his problem, and now Congress is deadlocked on everything so there's no legislation to worry about, Hillary tells him who to bomb, the Fed controls fiscal and monetary policy, and the rest is just typical handout BS, more unemployment benefits, payroll tax cuts, easy giveaways.  He was supposed to be FDR helping us through the Bush-recession.  Instead it has gone catastrophically wrong, which is why he looks so confused these days.

Tue, 11/29/2011 - 14:17 | 1926356 ActionFive
ActionFive's picture

Gas price is odd- must want cash in consumer hand for Christmas sales.

Tue, 11/29/2011 - 14:39 | 1926492 Ying-Yang
Ying-Yang's picture

RoboTease.... we'll check back with you in a few weeks on retail stocks

Tue, 11/29/2011 - 13:15 | 1926048 Oh regional Indian
Oh regional Indian's picture

Robot trader going Wilder. Jean Wilder?

Meanwhile the GOD's of war, Gold, Oil and Dollar are all shaping up for a big swoon.

Doomsday is not an event, it's a culmination, a climax.


/the-plan/ Updated

Tue, 11/29/2011 - 13:28 | 1926112 Spastica Rex
Spastica Rex's picture

Young Frankenstein?

edit: If I had a blog, I would troll my own site to generate discussion.

Tue, 11/29/2011 - 13:30 | 1926123 Oh regional Indian
Oh regional Indian's picture

Ahaha! Very nice Spastica Rex. Very nice! :-)

Mutating strain.


Edit: To each his own, eh? And perhaps you should write your own blog. You clearly are a wit.

Tue, 11/29/2011 - 14:37 | 1926479 Spastica Rex
Spastica Rex's picture

The blog comment was not directed at you.

I read your stuff with great interest. Really enjoy your music. I do feel somewhat trapped in a Western brain.

Tue, 11/29/2011 - 14:45 | 1926534 Oh regional Indian
Oh regional Indian's picture

Oh cool! Good to know! :-) The admiration is mutual.

I heard a Dobbs Man talk at Burning Man in 2004. As you can imagine, it was quite a trip.


Tue, 11/29/2011 - 13:27 | 1926119 CPL
CPL's picture

DOGs of War sounds better.

Tue, 11/29/2011 - 13:31 | 1926136 Oh regional Indian
Oh regional Indian's picture

Are you Sirius?


Tue, 11/29/2011 - 13:33 | 1926146 CPL
CPL's picture

Super Cereal.  Totally

Tue, 11/29/2011 - 13:22 | 1926090 SheepDog-One
SheepDog-One's picture

What do you care about gas prices Robotarder did your bus pass expire?

Tue, 11/29/2011 - 13:45 | 1926190 Max Hunter
Max Hunter's picture

There could be numorous "unintended" consequences not listed.. For instance, if Iran is attacked, the Muslim world could say -enough is enough- and do everything they can to cripple the oil production in the entire region (through sabotage).  The only way the ME countries could defend themselves from the obvious western take over of their resources is to put every effort they have into crippling the war machine i.e. reducing petro exports anywhere and everywhere possible..  The only unknown is; when will the region collectively understand the dire situation they are in?

Tue, 11/29/2011 - 14:16 | 1926353 i-dog
i-dog's picture

The "Muslim world" is divided into Sunnis and Shia ... and they hate each other. Only Iran has a Shia majority; Syria has a Shia minority (which TPTB wishes to eliminate). The rest of the oil states are Sunni and will simply watch from the sidelines ... or even assist NATO.

Tue, 11/29/2011 - 14:19 | 1926363 Calmyourself
Calmyourself's picture

Absolutely, the Saudis have given permission for Israeli jets to overfly the kingdom on the way..

Tue, 11/29/2011 - 15:28 | 1926797 earleflorida
earleflorida's picture

yep,... and afghanistan's, kandahar province [air force base] afb to fly the sorties, and drones from jalalabad,afghanistan afb,... not to forget [leave-out] mentioning the shamsi afb [w.pakistan] in baluchistan

good ole israel,... i wonder if they'll do a two-fer and wipe out the 'gaza death camps' while their at it

what has iran done???

ps. they are a better known enemy than those scumbag "ARAB'S"!!!


Tue, 12/27/2011 - 21:46 | 2015159 constitutionalist
constitutionalist's picture

im pretty sure they used to be persians as well. I guess they didn't do what they were told. I guess big gas companies/government can't push around the people who have gas already. i hope someday people will realize that NOT ONE MAN OR GROUP WILL RULE THIS WORLD. Its proven fact throughout history. we all need to look deeply into what the word "freedom" really means, because I dont think it means bullying the world for profit and bragging rights.

Tue, 11/29/2011 - 15:20 | 1926745 Iwanttoknow
Iwanttoknow's picture

True.A lot of it has been fanned by the good old english i.e."divide and rule' and installing NWO puppets throuhout the sunni belt.

Tue, 11/29/2011 - 15:45 | 1926820 earleflorida
earleflorida's picture

the iraqi's are shiites (shiites are too  various religious belief as todays  lutheran's, and sunni's quite similar  catholic's[?])



Wed, 11/30/2011 - 00:44 | 1928681 SystemsGuy
SystemsGuy's picture

Iraq was formed by England from the remains of the Ottoman empire in the 1930s, and is actually made up of three ethnic groups - Shia in the south, Sunni's in the central area around Baghdad, and Kurds to the north along the Turkish border. The division was artificial - the Kurdish clans were deliberately split between Turkey and Iraq in order to reduce their influence in either country.

Most of the Iraqi insurgency was led by Shiites with arms and financial support from Iran (that would LOVE to annex the south of Iraq, since not only is it ethnically similar, but happens to contain much of the oil in the country). The current Iraqi parliament exists primarily because of US support - and is remarkably fractious and unstable. Should Iran get attacked, it is very likely that the Shia minority in Iraq would use it as an excuse to escalate their own attacks in order to retake Baghdad.

Iraq is primarily desert. Iran is desert in parts, but for the most part it's terrain more closely resembles Afghanistan and Pakistan - mountainous, with comparatively few passes for running convoys into. It's an ideal country for guerilla warfare. Unlike the Saudis, the Iranians for the most part could very easily live without oil revenue for months or even years at a time. This makes committing to a ground war in Iran a fool's errand, and you could not defeat Iran from the air.

The same issue with regard to Shiite minorities also holds true in Saudi Arabia. The House of Saud are Sunni. Osama Bin Laden (a Saudi prince) was virulently anti-Shiite, regarding them in nearly as low a regard as he had for the West. However, a near majority of the (largely oppressed) population in Saudi Arabia are Shiites, though there is some ambivalence because the Iranians are Persians rather than Arabs. However, regardless if Iran was attacked, those same SA Shiites may very well take it as an opportunity to topple the House of Saud.

That's one of the reasons why any reasonable analyst is going to get twitchy when war with Iran is in the offing - there are simply too many unintended consequences that emerge out of it. From the West's standpoint, Iran is toppled, a friendly dictator rounds up the Iranian cleric and has them shot, and Iran's oil supplies go towards the West - very best case scenario, and overall a fairly unlikely one. From China's standpoint, an attack on Iran deprives them of one of their most regular suppliers of oil, and they will do anything and everything to retaliate - including finally making a stab at retaking Taiwan or prodding the North Koreans to attack Seoul. The Chinese consider Israel to be the US's proxy in the region, and an attack by Israel will be seen as an attack by the US (with a fair amount of justification). Russia sees Iran as the last major southern buffer to the US being in a position to attack it, and by some indications may in fact be indirectly funding the Pakistani Taliban (most ironically).

No - this isn't going to end well.


Wed, 11/30/2011 - 02:27 | 1928936 i-dog
i-dog's picture

Thanks for setting out that excellent analysis. I totally agree.

Tue, 11/29/2011 - 14:17 | 1926355 Calmyourself
Calmyourself's picture

Lets say the muslims do that, cripple oil production, they will use what to import the food they MUST have?

Tue, 11/29/2011 - 13:48 | 1926203 Robot Trader's ...
Robot Trader's brother's picture

You sell your Netflix long position yet...???

Tue, 11/29/2011 - 13:51 | 1926220 Crab Cake
Crab Cake's picture

Fuck you Robo, you and people like you are what is wrong with this country. Boycott Wall St, and the IRS, till these bastards come to heel; it's the only way. When and if the friendly tax man shows up, shoot'em in the face... What, you want to live forever?

Tue, 11/29/2011 - 14:12 | 1926325 johnu78
Tue, 11/29/2011 - 14:10 | 1926314 johnu78
johnu78's picture

Those retailers have been falsifying their earnings for the last 5 years. They all need to roll over and die!!!



Tue, 11/29/2011 - 14:25 | 1926395 Blano
Blano's picture

Here in Detroit they went up about 8% just yesterday from 3.13 to 3.35 at the station I use.

Tue, 11/29/2011 - 15:14 | 1926702 SteveNYC
SteveNYC's picture

Uuuummm I'm not sure I'd call (7%) a crash. What does that equate to, about 28c off a $4 gallon. Not going to get "consumers" very far.

Tue, 11/29/2011 - 17:37 | 1927510 RMolineaux
RMolineaux's picture

Appreciation to Tyler for bringing this item onto his site where it can be read by a wider audience.  Hopefully it will bring more action from those in power or influence to put a stop to the impending craziness. 

The IAEA report contained no new information and is full of unfounded speculations sponsored by the US and Israel.

Where will a common sense reaction come from?   Military officers who are sick of fighting illegal wars for oil and Israel?  Wall street occupiers?  Parents and grandparents of the military?   Time to speak up or get caught up in the maelstrom.


Tue, 11/29/2011 - 13:09 | 1926018 ded_moroz
ded_moroz's picture

Scenario 5: Bernanke drops 1 trillion $ on Iran. Crude at $500.

Tue, 11/29/2011 - 13:13 | 1926033 LawsofPhysics
LawsofPhysics's picture

Scenario 5: Bernanke (puppet for the NWO) drops 1 trillion $ on Iran for oil, Iran refuses to accept this paper in exchange for oil.  NWO stages "revolution" in Iran or goes to war outright to form central bank and force the oil onto the market in exchange for the paper anyway.


Fixed it for you. 

Tue, 11/29/2011 - 13:23 | 1926096 Abitdodgie
Abitdodgie's picture

Iran has not been allowed to trade in petrodollars for a long time

Tue, 11/29/2011 - 13:37 | 1926161 kridkrid
kridkrid's picture

not allowed by whom?  How is Iranian oil sold?  Not snarky, just curious.  I don't know these answers.

Tue, 11/29/2011 - 14:14 | 1926341 CrazyCooter
Tue, 11/29/2011 - 14:43 | 1926520 kridkrid
kridkrid's picture

yes... that's more in line with what I thought.  It isn't that they "Can't" sell in dollars... Iran, like Iraq back before we invaded them, has begun to consider other options.  And it isn't a "long time".  The way he wrote that, I read it to say that Iran hasn't been selling oil for dollars for... well... a long time... and that they were somehow prohibited from doing so.

I very much subscribe to the theory that our wars for oil have less to do with who owns it, more to do with the currency in which it is sold.  Western aligned central banks... there's that thing as well.

Wed, 11/30/2011 - 01:05 | 1928741 SystemsGuy
SystemsGuy's picture

The Iranians have been one of the primary backers for a non-dollar denominated basket of currency, and the Chinese would like to be one of the biggest players in the basket. The Chinese have maintained a dollar peg with only minor variation for the last couple of decades, resisting calls to unpeg because it meant their imports were cheap. Should the US get drawn into a war with Iran, the Chinese would most likely unpeg at that point, after divesting themselves of as much of their US reserves as possible (note - this has been going on for a while now). The Renminbi would rise, reducing demand for Chinese goods, but at that point they're already at war with their previous trading partners anyway, and apolitical investors would flock to the Chinese currency because it is in fact strengthening even as other currencies weaken.

This is neither Chinese nor Iranian bashing. Both countries have strong reasons not to see the United States continue undisputed as the sole global superpower, and China is (at least in the short term) ample reason to want to become the dominant global power, not least of which being that it is the only way that the country sustains it growth and keeps it population under control. Longer term, China's in trouble - it's a nearly landlocked "island" with comparatively little in the way of most natural resources per capita, and this means that if it can't develop its own colonial extensions, things get very ugly there by 2035. 

Tue, 11/29/2011 - 16:25 | 1927155 Ag1761
Ag1761's picture



Tue, 11/29/2011 - 13:42 | 1926177 LawsofPhysics
LawsofPhysics's picture

Iran has been trading with the BRICs just fine, until recently.  Now shit gets real again.

Tue, 11/29/2011 - 13:57 | 1926247 Hansel
Hansel's picture

Greece turns to Iranian oil as default fears deter trade - Reuters

That story is from earlier this month. A war in Iran could piss off the Greeks.

Tue, 11/29/2011 - 15:01 | 1926637 Elwood P Suggins
Elwood P Suggins's picture

And the Greeks are so incredibly happy at the moment that we surely don't want to do anything to piss them off.  Why they might go on strike, burn things, blockade buildings, refuse to pay taxes and no one would want that.

Tue, 11/29/2011 - 16:26 | 1927166 Ag1761
Ag1761's picture

They may even start spreading their contagous debt if we piss them off....wait a minute!

Wed, 11/30/2011 - 00:03 | 1928586 dubbleoj
dubbleoj's picture

Greece buys $500 million of weapons from US and France, that story from last month. Interest free for 5 years by the way. War doesnt always stop the flow of oil, Iran sold oil to Israel for years after the Iranian Revolution, they even had a direct pipeline.  War is just another way to profit. Its like doing a Chinese fire drill when your stuck in traffic, gotta mix things up when peace gets too boring.,1518,792189,00.html

Tue, 11/29/2011 - 16:58 | 1927339 cranky-old-geezer
cranky-old-geezer's picture



Iran has not been allowed to trade in petrodollars for a long time

Ahhh yes, the REAL reason America wants to invade Iran.   Just like Iraq, just like Libya.

Tue, 11/29/2011 - 13:24 | 1926100 john39
john39's picture

NWO tried the false flag revolution last year... and failed, at least for now.

Tue, 11/29/2011 - 13:30 | 1926130 LawsofPhysics
LawsofPhysics's picture

They never stopped trying.  You'll know it's a ruse when the revolutionaries beg the IMF for help setting up their central bank.

Tue, 11/29/2011 - 13:35 | 1926153 SheepDog-One
SheepDog-One's picture

The thing is after this Iran BS gets rolling right along, they turn on the american people next.

Tue, 11/29/2011 - 15:02 | 1926633 DosZap
DosZap's picture

Irans shutting off oil would DO NOTHING to the US mkt.(IF we were honest with the American public).

We are EXPORTING millions of barrels a month now, from our EXCESS supplies.

Now, someone tell me WHY?, never mind ,it's because we are already producing more than we can use here.

Tue, 11/29/2011 - 15:07 | 1926674 DosZap
DosZap's picture


How ya figure dude?,we just got thousands of troops maimed, and killed,physcologically damaged for life,won the SO called war.And we do not TAKE ONE DRUM from them for free.

Matter of fact, (as usual) we spend trillions winning their freedom, and they hate our guts,and give the oil to the new highest bidder.China,Russia, and /or India.

Tue, 11/29/2011 - 15:47 | 1926905 Things that go bump
Things that go bump's picture

Since when did this have anything to do with winning anyone's freedom?  They have simply traded one master for another, harsher master and foreign to boot, kind of like the French in WWII.  It really hurts me when I have to explain to my grandchildren that we are the bad guys and I deliberately bring out comparisons to the Nazis when they come home from school spouting the sort of ridiculous nonsense you just wrote.  I tell them that we invaded Iraq without provocation and raped and bombed and murdered the people into submission.

Tue, 11/29/2011 - 16:19 | 1927125 Leraconteur
Leraconteur's picture

People around the world don't want the American version of 'Freedom'. 

Not anymore.

It's not 1990 or 2000.

This is residual Protestant Evangelicism, morphed into USA foreign policy.

"No, you should try this! Really, you will like it!"

"No, I said try Freedom!'

"God Damn it!! {racks M240} You are going to try Freedom, it's for your own good!"

[[Bombs Drop]]

See! Freedom is Good!

Tue, 11/29/2011 - 13:10 | 1926020 SHEEPFUKKER

Armageddon is transitory. 

Tue, 11/29/2011 - 13:13 | 1926032 CPL
CPL's picture

Bullish in fact

Tue, 11/29/2011 - 13:58 | 1926256 Oh regional Indian
Oh regional Indian's picture

Even more bullish in Fiction.

Which would bring me naturally to Spain.

El Gored! ;-)


Tue, 11/29/2011 - 14:11 | 1926318 CPL
CPL's picture's bad pun week on ZH. lol

Tue, 11/29/2011 - 13:40 | 1926172 Schmuck Raker
Schmuck Raker's picture

I thought it was a Barbaric relic.

Tue, 11/29/2011 - 14:24 | 1926378 navy62802
navy62802's picture

Humanity is transitory.

Shit, everything is transitory on a long enough time scale, even the fabric of reality, itself.

Tue, 11/29/2011 - 20:10 | 1928025 SteveNYC
SteveNYC's picture

Brilliant comment. The final part about the fabric of reality itself though, what if time does not exist as we conventionally think it does? There is something beneath, which does not move.......

Tue, 11/29/2011 - 21:36 | 1928224 navy62802
navy62802's picture

Personally, I am forced to believe in the multi-universe theory of things which posits that our universe exists inside of another universe. The theory goes that our big bang resulted from the explosion of a black hole singularity. The main reason I have to believe this is that I, like most people, can't fathom the concept of nothingness without time and space. However, nothingness is precisely the state of things prior to the Big Bang if you buy the current theory of the cosmos.

Tue, 11/29/2011 - 13:13 | 1926034 GeneMarchbanks
GeneMarchbanks's picture

Pimco = PPT.

Tue, 11/29/2011 - 13:19 | 1926071 Mike2756
Mike2756's picture

Pimco? It was that fed c u next tuesday killing the buck today.

Tue, 11/29/2011 - 13:13 | 1926039 Tense INDIAN
Tense INDIAN's picture

just keep the stock markets rolling man ....thats all I need....the world is going to hell anyway

Tue, 11/29/2011 - 13:15 | 1926050 Pretorian
Pretorian's picture

Short entered. 99.39$ barrel

Tue, 11/29/2011 - 13:29 | 1926125 CPL
CPL's picture

Wait for over $100 and keep your stop at $104.  Sell and reposition yourself if able today.

Tue, 11/29/2011 - 13:36 | 1926160 LongBallsShortBrains
LongBallsShortBrains's picture

Hanging on to heating oil shorts from 3.1080

I'm with ya

Tue, 11/29/2011 - 13:16 | 1926056 Internet Tough Guy
Internet Tough Guy's picture

Oil over 99. You must have manure for your brains, MOMO. LOL...

Tue, 11/29/2011 - 13:17 | 1926060 dcb
dcb's picture

since the bernank has political trouble with another qe to bring about inflation instead of deflation. the powers that be have decided that by knocking out iran's oil supply it will help the world economy by preventing deflation (NOT). It's one of the big reasons to get lybia back on line. also what about Iraq and us pulling troops out. any potential disruption there.

Tue, 11/29/2011 - 13:20 | 1926078 Cdad
Cdad's picture

Joe Teranova calling energy the sector he "has most confidence in."  

This guy has not been right in weeks.  Beyond this, SELL the hyperbolic call in WTI.  Front Run City.

Tue, 11/29/2011 - 13:47 | 1926201 jcaz
jcaz's picture

Weeks?   This guy has done nothing but pimp his book since the day he got air time.............

Tue, 11/29/2011 - 14:03 | 1926278 Cdad
Cdad's picture

I am simply commenting on J. Teranova's recent record per his calls.  BACKWARDS on a daily basis [although he did just call long fixed income ETFs...which is probably right].

Yes, he is a book are all of them over at the BlowHorn [CNBC].

Tue, 11/29/2011 - 13:20 | 1926081 Pampalona
Pampalona's picture

Opinnion recently given to me by an Iranian living in USA who left more than 20 yrs ago (he is very anti the Iran reigime but also anti current US foreign policy in the mid east):

'The nuke stuff is now way too spread out to be able to destroy(not sure what he's basing this on), just temporarily hamper, and even then they could be passing out nasty stuff to others to make 'dirty bombs' with.......he essentially felt that its now impossible to prevent them from building the bomb.......Also Iran is not Iraq - is population is much vaster and any kind of ground invasion would be much more deadly to US forces than Iraq.'

If we or israel attack first it leaves Iran able to counter in our cities and claim theyre justified in doing to in retaliation.....If they develop the bomb they can flex their muscles in the region, but would they use it unprovoked on Israel knowing the response? Are their leaders really so religiously indoctrinated that they are prepared to turn Iran into the first suicide bomber nation? 

Why does Ahmadinejad sound like ArmagedonJihad?


Tue, 11/29/2011 - 13:24 | 1926099 Fake Jim Quinn
Fake Jim Quinn's picture

Attack would not be on nukes. Too well protected. Would attack Revolutionary Guard. That might allow Iranians to do their own regime change.  But this is all wild speculation

Tue, 11/29/2011 - 13:25 | 1926108 john39
john39's picture

the nuke threat is all bullshit and the Israelis/U.S. know it full well.  the goal is to destroy Iran, not the fake nuclear program.

Tue, 11/29/2011 - 13:32 | 1926142 LawsofPhysics
LawsofPhysics's picture

yes, Iran must get in line with the NWO's wishes and the spice must flow.

Tue, 11/29/2011 - 15:27 | 1926794 Iwanttoknow
Iwanttoknow's picture

John 39,I always enjoy your post.wanted to add two cents.1)Cent 1;Poor Isreal.In the happy days of Shah,Israel was exempted from the OPEC embargo of 1973.i always thought this was hilarious.20Cent 2:SAVAK,Shah's secret police was trained by no other than Gen Norman Schwarzkopf,hero of gulf war I.

Tue, 11/29/2011 - 13:21 | 1926084 rambler6421
rambler6421's picture

The PPT will start shorting oil.

Tue, 11/29/2011 - 13:32 | 1926145 john39
john39's picture

similar to 911, rest assured that the psychos behind all of this have stocked up on options accordingly to profit from the spike in oil...

Tue, 11/29/2011 - 13:23 | 1926098 tahoebumsmith
tahoebumsmith's picture

Have no fear Sheep, the consumer confidence is higher then its been in decades! Folks, we are actually in the last stages of the largest heist in global history. If you can't hear that sucking sound you need hearing aids. Actually you probably have contracted hearing aids, you know that disease you get from listening to assholes? They have tossed the hot potato around the world and now they are running out of places to throw it. Check this video out, it explains what happens when they run out of ways to steal, actually it explains what happens when they run out of money to steal... There is no money, there is no gold it's all just electronic 000's on balance sheets across the world. Good luck people, prepare yourselves, this time it's for real, it's coming apart at the seams...


Tue, 11/29/2011 - 13:24 | 1926101 adr
adr's picture

The only words I give to Pimco is GO FUCK YOURSELF!!!!!!

If gasoline goes back above $4 a gallon you can forget about the fake 9% unemployment number, we'll be talking about a real number above 50% within months. Contrary to the bullshit put out by the media thousands of corporations are on the brink of bankruptcy. 100 million jobs hang by a thread just waiting to be cut and this holiday season is the last for the American consumer so they better make it a good one.

THIS IS THE PLAN AND HAS BEEN THE PLAN FOR A VERY LONG TIME. Obama is the keystone and was put there to finalize the global dome of technocrat rule. There will be no election in America next year. War will break out in Iran and a major attack will be carried out somewhere in the USA. My guess is that between 15 and 20 planes will be shot out of the sky at once in a coordinated attack at different airports using shoulder fired missiles stolen from Afghanistan. This will happen sometime in March. A dirty bomb in NY is too messy because it kills too many people and harms the district where the billionaires like to play. Having a few planes shot out of the sky kills a few hundred people but is way within the acceptable loss tolerance margin of the elites and will have the same effect on the population and will allow Obama to cancel the upcoming election.

The talk around canceling the election is already out there. Technocrats and Goldman Sachs alums have already been placed at the helms of major countries without major bloodshed. During a global crisis what is there to stop the same thing from happening in the USA? Obama has been working for three years to make congress irrelevant. The American Airlines bankruptcy coming out now has to be connected to future terrorist attack on airlines. The airline will once again need to be "saved" by the US government.

The endgame of the globalist plan is coming faster than anyone can imagine. The new global currency is going to have Blankfein's face stamped on it. It will be called the Goldman. It even fits perfectly with the massive shift of gold reserves. ITS THE GOLD MAN.

Tue, 11/29/2011 - 13:43 | 1926183 farmerjohn2112
farmerjohn2112's picture

You forgot to take your meds this morning, didn't you?

Tue, 11/29/2011 - 13:25 | 1926110 LostWages
LostWages's picture

the endgame cannot commence until a proper scapegoat is found.  Now the anger can be deflected off the idiots who caused the problems onto a common enemy. 

Tue, 11/29/2011 - 13:32 | 1926144 Potemkin Villag...
Potemkin Village Idiot's picture

Scenario 1: Exports minimally effected. Concerns would drive initial price response; Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125

aka - The FED announces QE3 in January (of $600B) Scenario

Scenario 2: Iranian exports cut off for one month. In this case, we would expect prices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping

aka - The FED announces QE3 in January (of $600B) Scenario (with up to $1.5T 'shadow' easing to private banks)

Scenario 3: Iranian exports are lost for half a year. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level

aka - The FED doesn't know how much to print, so it just says FUCK IT & turns all the machines on...

Scenario 4:  Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario

aka - Everybody just turns the fucking machines on at full blast


Keep blaming it all on IRAN until the elections are over...


Tue, 11/29/2011 - 13:33 | 1926151 Flakmeister
Flakmeister's picture

Iran is roughly 5% of world exports... (2 mmbpd out of 40) Historical price inelasticity suggests that cutting that supply will result in about a 80% increase in price... That ain't gonna happen as the world economy shuts down long before that...

Tue, 11/29/2011 - 13:35 | 1926152 SunBlaster
SunBlaster's picture
Sea alert: Russian warships head for Syria

Tue, 11/29/2011 - 14:13 | 1926279 i-dog
i-dog's picture

Whew! ... Just in the nick of time! ... Those 3 ships are due to arrive in Syria in February next year.

Tue, 11/29/2011 - 14:17 | 1926354 LawsofPhysics
LawsofPhysics's picture

exactly, the BRICs want the oli on the market just as badly and are on the same page with the NWO.  The spice must flow.

Tue, 11/29/2011 - 17:05 | 1927376 Ag1761
Ag1761's picture

Oh Yes, the Spice Must Flow


Tue, 11/29/2011 - 15:17 | 1926722 High Plains Drifter
High Plains Drifter's picture

so it takes them 3 months to sail from their black sea ports to the eastern mediterranean ?  gads.... they must be in a real hurry.   one thing is for sure. after all of this rhetoric and posturing, by the russians, and still they do nothing when nato attacks syria, then we will know one thing for sure.  russia is controlled and is just playing out its part.........frankly at this juncture that is what i think anyway.  what else can i expect from them?  

Tue, 11/29/2011 - 15:20 | 1926747 High Plains Drifter
High Plains Drifter's picture

i have come to one conclusion. its the american people who must stop this . no one else will do it. no one else is willing to do  it. we are it . it is our fate. we must embrace it. we must accept it. it is our kharma.......something born and bred into us. we are the leaders whether for good or for bad. our blood has been shed so many times for the wrong reasons. yet this one time perhaps, we can shed it for the right reasons. nobody in this world is willing to stand against this madness. nobody except maybe...........civil war is coming to america.......

Tue, 11/29/2011 - 13:36 | 1926158 zeuzeus
zeuzeus's picture

I guess if they attack Iran , the iraninas will close the strait of Hormuz and the price may jump well above 300$. The  war with Iran  may take up to a year they are not Afganistan or Irak they have the backing of Syria and Russia may step in,  China oaso and we may have WW3.

Tue, 11/29/2011 - 13:49 | 1926207 DogSlime
DogSlime's picture

Evr'y day, it's a-gettin' closer

Going faster than a roller coaster :)

Tue, 11/29/2011 - 13:49 | 1926212 mayhem_korner
mayhem_korner's picture



I'm supposin' this is a bad thread to advertise that I have a '98 Ford Excursion extra-cab with the mega-tow package and twin 12-cylinder blocks.  :D

Tue, 11/29/2011 - 14:03 | 1926280 fuu
fuu's picture

But it's a diesel right?

Tue, 11/29/2011 - 13:51 | 1926221 flacorps
flacorps's picture

Armageddon it! Areyouageddon it?

Tue, 11/29/2011 - 13:57 | 1926230 i-dog
i-dog's picture

"Iran Invasion"

Let's see how they go with the practice run in Syria first, shall we?

It should be a walk in the park for NATO's courageous high altitude bombers and pilotless drones ... after all, Syria has a minority Shia population supporting Assad (12%), squeezed between Turkey and Israel, and just 1/4 of Iran's total population. Piece of cake ... to stitch up Obomber's next Nobel Piece Prize.

Tue, 11/29/2011 - 14:02 | 1926273 Jim in MN
Jim in MN's picture

In the Doomsday scenario, there is no price.  Oil is just distributed by central authorities according to a priority schedule.  Chances are no one who reads this blog is on it.

What was the price in the USSR? 

Tue, 11/29/2011 - 14:14 | 1926335 LawsofPhysics
LawsofPhysics's picture

Exactly correct, no set price, just whether or not you could even get some.  I was in Russia in 1996.  People in the U.S. really have no idea what the fuck they are talking about when it comes to Russia.  I remain optimistic that when the capital controls and supply chain disruptions start hitting the U.S., people will revive many local economies.  One thing is for sure, the black markets will explode.  In many ways I see America's situation much like where Russia was in 1990.  For reference, in 1995/1996 one dollar bought you 2,500 rubles I believe.

Tue, 11/29/2011 - 15:45 | 1926901 MrSteve
MrSteve's picture

The collapse of the USSR was predicted when their electricity production had stagnated for years while the Kremlin blew smoke and marched hardware around Red Square. The USA is doing the same drama, using the MidEast and the financial markets as its Red Square.

How about those junk silver dimes and quarters for a hedge on FRN cash? The perfect small change for a gold-oriented preservation scenario, Scenario # 1.

Tue, 11/29/2011 - 14:13 | 1926334 Georgesblog
Georgesblog's picture

When investment firms talk about the effect of invasion on oil prices, the reality is just around the corner. With what is going on in Iran, right now, the day is young. Corporatism marches on and the central banks are having their way with nations.

Tue, 11/29/2011 - 14:15 | 1926342 JW n FL
JW n FL's picture



so that we are all clear.. an attack on Iran not only gets the United States yet another 100 year supply of oil.. but as well drives prices upwards to secure more profits for the oil industry!


Sounds Like a Win, Win! for Big Oil and a Lose, Lose for the little Sheepeople.. what's not to like about this, by the people who count.. the ones that have a say.

Tue, 11/29/2011 - 14:34 | 1926447 Totentänzerlied
Totentänzerlied's picture

"[...] where not even coordinated global printing will do much"

Ha! Don't make St. Ben The Printer and his fleet of Heidelberger Druckmaschinen laugh! With the power of the printer, the Bernank cannot fail!

Tue, 11/29/2011 - 14:35 | 1926463 Let them eat iPads
Let them eat iPads's picture

Scenario 5:

A pissed off Russia pulls it's 12% share of oil from the world market.


Tue, 11/29/2011 - 14:38 | 1926485 Calmyourself
Calmyourself's picture

Ohh, did Russia actually get the hang of growing wheat??

Tue, 11/29/2011 - 15:20 | 1926744 Mr_Wonderful
Mr_Wonderful's picture

Govt. bonds holding up well, their price being 2% shy of a 100-year high. Rally very likely to continue.

The dollar continues its rally off a cyclical low. Target 90, where it has been three times in the last three years.

Sell commodities and US stocks.



Tue, 11/29/2011 - 15:21 | 1926751 HungrySeagull
HungrySeagull's picture

Maybe then we can finally drill, pipe and actually USE what shit we have availible here in the USA and Canada.


Tree Huggers and oil leak chasers not allowed.

Tue, 11/29/2011 - 15:30 | 1926816 the grateful un...
the grateful unemployed's picture

The real loser in the global oil game is China. China has been expanding its search for oil to the ME, and the US is reluctant to interfere in places like Darfur, because Chinese oil is being used to make products for export to America. recall China has an oil pipeline agreement with Iran? and Russia had oil agreements with Iraq, which the US cancelled the day of the invasion.

the end of the Chinese export machine signals the end of biased CPI reporting in the US, (yes food really is more expensive, and now you have to tell the truth because cheaper flat screen TVs can't hide the truth) and higher inflation numbers. $125 will have a neglible effect on the US, but inflation feed through from China could be a lot worse.

Tue, 11/29/2011 - 15:50 | 1926932 Mr_Wonderful
Mr_Wonderful's picture

The market is almost entirely driven by technicals.

Monday, one in seven US stocks was manhandled above the 50-day moving average, zombies and all. About three percentage points of that mess have dropped below today. Meanwhile Bank of America´s stock continues its march towards zero. A one for ten reverse split seems inevitable there in the coming weeks.

Tue, 11/29/2011 - 16:53 | 1927306 Doc Strangelove
Doc Strangelove's picture

The possible blockade of the Straits of Hormuz is a myth! If you can read german read this and you will know:,3672,4339101,00.html

Tue, 11/29/2011 - 17:10 | 1927392 Ag1761
Ag1761's picture

When oil goes through the roof, you may need one of these.



Tue, 11/29/2011 - 22:41 | 1928352 SillySalesmanQu...
SillySalesmanQuestion's picture

PIMPCO has probally gone long on oil futures, which is precisely why they have released this "white paper"...typical Goldman Sucks strategy for pimping your own investments, and then doubling or tripling down on exactly the opposite of what they tell/sell their clients....bankster bitchez...

Sun, 12/04/2011 - 12:26 | 1943985 JJSF
JJSF's picture

Short euro airlines..for two reasons..

Loads of debt and oil up up up..

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