Tag Archives: oil prices

Oil at $300 or $500 per Barrel If Israel Attacks Iran

Oil at $300 or $500 per Barrel If Israel Attacks Iran

But it would be nothing compared to the cost if Israel attacks. In 2006, as Israel and the U.S. began to rattle sabers over Iran’s nuclear program, Iran’s Revolutionary Guards deployed bottom-tethered mines in the Strait of Hormuz, according to a defector.

“The plan is to stop trade,”
the source told Newsmax. One third of the world’s oil passes through the Strait of Hormuz.

The deployment was mentioned in a plan produced by the Strategic Studies Center of the Iranian Navy in 2005. It also called for a single operational headquarters integrated with Revolutionary Guards missile units, strike aircraft, surface and underwater naval vessels, Chinese-supplied C-801 and C-802 anti-shipping missiles, mines, and coastal artillery, according to the intelligence office of the Ministry of Defense in Iran.

Revolutionary Guards missile units have identified “more than 100 targets, including Saudi oil production and oil export centers,” the defector said. “They have more than 45 to 50 Shahab-3 and Shahab-4 missiles ready for shooting” against those targets and against Israel, he added.

The CIA, however, dismissed the source, Hamid Reza Zakeri, as a fabricator. In addition to the array of weapons above, Zakeri said Iran will use biological and nuclear weapons if attacked.

In 2009, Iran tested a new generation of missiles, including the Fateh-110, a short-range ground-to-ground missile, and Tondar-69, a short-range naval missile.

Israel takes the possibility of Iranian retaliatory strikes seriously. Last week it staged a drill simulating a missile attack in the center of the country. Thursday’s simulation involved various Israeli emergency services, with ambulance workers and soldiers, some wearing masks and equipment to protect against chemical weapons, practicing treating the wounded, according to Reuters.

A group of 13 generals and admirals produced a report warning that a “sustained disruption” of oil “would be devastating – crippling our very freedom of movement.” The report, entitled “Ensuring America’s Freedom of Movement: A National Security Imperative to Reduce U.S. Oil Dependence,” was sponsored by a San Francisco-based Energy Foundation.

“Under a worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds that the U.S. would lose nearly $75 billion in GDP,
” reports National Defense Magazine.

Last week, the Rapidan Group predicted oil prices over $175 per barrel if Iran is attacked. According to a survey conducted by the group of oil industry specialists, oil prices would rise on average by 23% in the first hours of the attack.

Arnaud de Borchgrave, writing for the UPI, suggests the price of oil would go much higher. “One bomb on Iran and oil prices could shoot up to $300 or even $500 a barrel,” he writes. “The Strait of Hormuz, between Oman and Iran, is the world’s most important oil chokepoint with a daily oil flow of 16 million barrels, roughly 33 percent of all seaborne traded oil, or 17 percent of oil traded worldwide.”

“While many experts in the market believe that a war on Iran would send oil prices soaring high between, at least, $200 and $300 for each barrel, the most optimistic analysis of the impact on oil markets of an Israeli attack on Iran and the subsequent closure of the Strait of Hormuz said oil prices could spike by as much as $175/bbl,”
reports the Fars News Agency, Iran’s official news outlet.


Oil to go up, and up, and up

BI-ME , Author: Posted by BI-ME staff
Posted: Tue March 8, 2011 10:09 pm

INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor sees oil prices extending their bull run despite the 15% run-up this year alone.

In an optimistic scenario demand for oil will rise as the global recovery takes hold, and in a pessimistic scenario prices still go up if the Middle East unrest spreads and crude production is curtailed. In both cases, he says, you should be long energy and energy related shares.

Protests and Prices: A rise of the cost of food and oil

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Protests and the pump

The Egypt effect may be more pronounced for food than oil

Commodities and the Middle East

    THE tide of unrest sweeping Egypt has whipped up waves in the oil market. Anxiety often has a role in determining the price of black gold and traders, with plenty to fret about, sent a barrel of oil above $100 for the first time in two years on January 31st. Fears abounded that the upheavals in Egypt might disrupt the passage of tankers through the Suez Canal and, worse still, that the popular uprisings in Egypt and Tunisia might spread across the Middle East.

    Oil..the other white meat

    So far the concerns seem overblown. Egypt is a small producer and actually imports a little oil. It is better known for its role as a transit route. Over 4% of global supplies of oil—after the lows of 2009 that equates to nearly 4m barrels a day now, according to Barclays Capital—are transported through the country, either by ship on the Suez Canal or along the SUMED pipeline (see map). Crude and refined products travel both ways on the canal (along with many other goods). But there is little hint that Egyptian authorities have any intention of disrupting this trade or that protesters have the means to prevent the oil from moving, even if they wanted to.

    If the canal shuts down, the pipeline has the spare capacity to take much of the displaced crude northward. Even a total halt would be far from catastrophic. There are plenty of spare tankers that could shift Gulf oil the long way to Europe around the Cape of Good Hope—putting a couple of weeks and some added expense on the journey. Some rebalancing of global flows might lessen the impact of plying the longer route: Gulf oil bound for Europe could be dispatched east and African oil bound for Asia sent to Europe instead.

    Hungry Hungry Hippo

    The world is in any case in a position to take some pain. It has decent stores of oil. As Adam Sieminski of Deutsche Bank points out, OECD inventories, with enough to cover 59 days of consumption, are relatively high compared with the historic average of 55 days. But the amount that China, the world’s second-largest importer, has in reserve is unclear.

    A far bigger concern in oil markets is that the troubles in Tunisia and Egypt could spread more widely in the Middle East, given the same mixture of unemployment, inequality and autocratic government that has underpinned the unrest in Egypt and Tunisia (see article). But even if similar problems did arise in the Gulf, Algeria or Libya it is far from clear that the spigots would be turned off. The most recent war in Iraq disrupted Gulf oil supplies for only three weeks.

    Route canal

    Events in Egypt may turn out to have a greater impact on other commodities, notably food. High food-price inflation has cut spending power across emerging economies (see article), where keeping bellies full accounts for a much larger share of income than in rich countries. The high cost of food is one reason that protesters took to the streets in Tunisia and Egypt. The price of bread has shot up since last summer when a drought in Russia, one of the world’s largest wheat suppliers, hit harvests and prompted an export ban.

    Analysts at Goldman Sachs point out that countries in the region may feel the need to head off political instability by spending to stockpile grain. Saudi Arabia, Algeria and Jordan have all stepped up efforts to build stockpiles. This could raise the pressure on other countries to hoard wheat, pushing prices even higher. In the short term this might even result in lower oil prices if OPEC countries pump more out of the ground to raise cash to assuage uppity populations.

    Irrespective of events in the Middle East, however, the pressure on oil prices is likely to grow. The market has recovered very strongly from the lows of 2009 thanks to bumper growth in emerging markets and a decent recovery in America. As Francisco Blanch of Bank of America Merrill Lynch points out, OPEC has not yet responded with extra supply to tame prices. It regards oil, priced in dollars, as a currency that the Federal Reserve is debasing with its “quantitative easing” money-printing, and would rather leave it in the ground for now. Even if OPEC eventually makes use of its spare capacity the world’s thirst for oil could start to outpace supplies in the next two years. Then $100 a barrel could look like a bargain.

    from PRINT EDITION | Finance and Economics