Oil prices could double if Middle East conflict escalates

Oil prices could double if Middle East conflict escalates
Barrel traders recently pushed the price of West Texas Intermediate (WTI) oil above $55; the first time in over two years.

Scarcity doesn’t really justify the upward price movement. There isn’t a shortage of oil in the world. But there could be, in the worst case, if missiles start flying between two of the world’s largest oil players: Saudi Arabia and Iran.

Maybe it won’t happen. But maybe it will. And that’s what the “geopolitical risk premium” is all about. It’s an anxiety surcharge that’s tacked onto every barrel of oil, in fear of supply disruption on a moment’s notice. And the fear is back.

After three years of naivety we’re back to acknowledging the known unknowns of the Middle East, the uncertainties that strap a 10-to-20 percent premium on the price of a barrel.

Paying a risk premium for oil is nothing new. It’s been around for decades and has gone up and down with the hostility thermometer of the Middle East.

Unusually, the pricing of risk dropped to zero around 2015. Three main reasons prompted a sense of world peace: the promise of the Iranian nuclear deal; a feeling that booming oilfields in Texas could offset any disruption; and a growing surplus of oil inventories in storage tanks around the world.

Of late, the notion of oil obsolescence has also perpetuated a feeling of nonchalance. “Who cares about the Middle East and their oil?” has been a question driven by the utopian narrative: “I’m not worried, everyone will be driving electric cars in a few years anyway.”

But it’s all been a false sense of security.

Electric cars are still rare. Oil remains vital to the world economy. Its geographic concentration is such that a large proportion of the world’s needs is produced from underneath layers of geopolitics, religious antagonism, authoritarianism, civil strife and corruption.

Saudi Arabia v Iran: What’s behind bitter feud between Middle Eastern powers? https://on.rt.com/8rug 

Saudi Arabia v Iran: What’s behind bitter feud between Middle Eastern powers? — RT World News

Tensions between Saudi Arabia and Iran continue to escalate, plunging the two regional powers into a new spiral of confrontation.

rt.com

When I reflect on the extremes of oily politics, I pull out my old copy of Life Magazine from 1973, the year of the Arab oil embargo. Back then, in a rare moment of unity, Arabs came together to curtail oil shipments to the west, demanding that Israel cede lands it captured in the 1967 war.

I’m struck by the two-page spread showing a Dutch freeway that’s completely empty, not a car on the road due to widespread gasoline and diesel shortages. The disruption was less than three percent of world supply and lasted only a few months, but it was enough to momentarily paralyze transportation in affected countries—and change attitudes about energy security too. The fallout led to big changes in personal mobility—smaller cars, greater fuel economy and alternate modes of transport like high-speed rail—especially in Europe and Japan.

Juxtaposed on the fuel-starved image is a photo inset of a meeting between various leaders of the embargo. The snapshot is taken at a moment with lots of laughter, suggesting the not-so-subtle message that they were pleased with their destabilizing accomplishment. Maybe.

But no one is laughing now. Regional animosity is elevated, the weaponry is lethal and it’s hard to figure out allegiances and regional political ambitions. And the scale of consequence is bigger too: In 1973 oil consumption was almost 56 million barrels a day. Today it’s pushing 100 million bpd, with a quarter flowing through the Strait of Hormuz, a narrow, strategic chokepoint between Saudi Arabia and Iran.

The geopolitical premium is likely to increase over the next year. Oil markets are slowly heading back towards what OPEC calls “balance” and global inventories are gradually draining. The calculus is pretty simple: Progressively thinner margins for error, plus greater risk of disruption, equals more volatile prices to the upside.

If oil supply is pinched again, for whatever machination or military operation, the price of a barrel could easily double (prices quadrupled as a result of the 1973 embargo). And 20 years from now we may look back at a magazine spread of a freeway, this time showing a handful of cars—only the electric variety.

Higher oil prices are generally welcomed by petroleum producers and their upstream stakeholders. Yet amplified volatility and the potential of another oil crisis is a greater friend to purveyors of electric vehicles; they are the natural beneficiaries to their rival’s instability.

This article was originally published on Oilprice.com

Courtesy: RT

ISIS car bomb kills 20, injures 30 at site for displaced families in eastern Syria – state media

ISIS car bomb kills 20, injures 30 at site for displaced families in eastern Syria – state media
Twenty people have been killed and 30 others injured by a car bomb planted by Islamic State (IS, formerly ISIS/ISIL) at a site for displaced families in eastern Syria, according to state media.

The blast occurred near the city of Deir ez-Zor, according to SANA state news agency. It took place near the al-Jafra area, which is controlled by the Syrian government. The People’s Protection Units (YPG) confirmed the incident on their Facebook page, calling it a “massacre.

Earlier this month, the Syrian Army announced the fight against IS in Syria was coming to a close, after the city of Abu Kamal – considered to be the last terrorist stronghold in the country – was liberated. The takeover of the area in eastern Syria close to the border with Iraq also prevented the militants from moving freely between the two countries.

READ MORE: Damascus vows to ‘deal with any illegal invader force’ to restore peace across Syria

However, strikes continue to target certain positions where terrorists gather. This month, Russian Air Force long-range bombers have carried out a number of successful missions in eastern Syria, destroying IS hideouts where armored vehicles and other military equipment were located.

URGENT: Russian long-range bombers & submarine launch ‘massive strike’ on  hideouts in Syria https://on.rt.com/8rcw 

 

Courtesy: RT

‘Enough is enough’: Riyadh calls on Hezbollah to disarm amid ‘aggressive’ Iranian actions

‘Enough is enough’: Riyadh calls on Hezbollah to disarm amid ‘aggressive’ Iranian actions
Lebanon’s Hezbollah movement must disarm and become a regular political party for the situation in Lebanon to stabilize, Saudi Foreign Minister Adel al-Jubeir said. He added that Riyadh’s policy is a reaction to Iran’s “aggression.”

In an interview with Reuters, the minister called the Shiite Hezbollah party and militant group a “subsidiary” of the Iranian Revolutionary Guard Corps, and said that Saudi Arabia is currently consulting with its allies to decide what leverage it can use to force the Lebanese movement to comply with its demands. He added that Riyadh would make a decision “in time.”

Jubeir went on to say that his country decided to take action in response to what it called the increasingly aggressive behavior of Iran in the region, particularly in Yemen and Lebanon. “Any way you look at it, they (the Iranians) are the ones who are acting in an aggressive manner. We are reacting to that aggression and saying enough is enough,” he said.

Riyadh’s role in the ongoing Lebanese political crisis remains obscure. In early November, Lebanese Prime Minister Saad al-Hariri abruptly resigned in a surprise announcement made during a visit to the Saudi capital. He has remained in the kingdom ever since.

This situation gave rise to speculation that the politician was not acting of his own free will. On Wednesday, Lebanese President Michel Aoun said he considers Hariri “detained” by the Saudis, as “nothing justifies” his “lack of return for 12 days.”

After announcing his resignation, Hariri accused Iran and Hezbollah of a “desire to destroy the Arab world” and said that he feared for his life. The Saudi officials then accused the group of “kidnapping” Lebanon.

In response, Hezbollah leader Hassan Nasrallah denounced the whole situation around Hariri’s resignation an “unprecedented Saudi intervention” in Lebanon’s internal affairs. He also accused Riyadh of taking Hariri “prisoner” in an attempt to “impose its will on the Lebanese government.”

On Thursday, Jubeir said that Hariri’s resignation was his own decision, adding that the Lebanese politician would independently decide when to return to his homeland. The Saudi minister also rejected all allegations concerning Saudi Arabia detaining Hariri as “baseless.”

The tensions around Hariri’s resignations were partially defused as the politician agreed to visit France upon the invitation of President Emmanuel Macron. A spokeswoman for the French presidency said on Wednesday that Hariri would arrive in Paris “in the coming days.” Following the news, Aoun expressed his hope that this move would put an end to Lebanon’s political crisis.

After his visit to Paris, Hariri is expected to fly home to Beirut to officially submit his resignation. Earlier, Aoun said he would not accept Hariri’s resignation until he presents it himself upon his arrival in the Lebanese capital.

Courtesy: RT

Second wave of refugees will sweep Europe, says UN food chief

Second wave of refugees will sweep Europe, says UN food chief
Europe may face a second wave of migration as the situation in refugee camps in Africa and the Middle East is only getting worse, the head of the UN World Food Programme said. He added there is a clear link between hunger and migration.

Living conditions, mostly food distribution, in refugee camps in crisis-affected regions had deteriorated dramatically before the European migrant crisis struck in 2015, David Beasley, the executive director of the World Food Programme (WFP) told German newspaper Die Zeit.

“We paid a heavy price for this mistake and I’m afraid we’re about to make it once again,” Beasley believes. According to the UN food chief, while many asylum seekers wanted to stay in their home region, the lack of food has driven them away. “If they don’t have enough food, they will leave. And many of them would go to Europe,” Beasley said.

While the UN has been seemingly making progress in fighting world hunger over the last 10 years, the number of people suffering hunger worldwide has now dramatically increased again, Beasley said, adding that the food crisis is caused mainly by wars and climate change. Yemen is threatened by famine because Saudi Arabia is blocking the country’s ports, preventing aid deliveries, Beasley said, urging Gulf countries not to stand aside but instead join the food aid program for crisis-stricken regions.

A WFP report from March says that some 108 million people across the globe faced “crisis food insecurity or worse,”a dramatic increase from 2015 when the figure was 80 million. The document says that major food crises were fueled by “conflict, record-high food prices and abnormal weather patterns.”

The number of asylum seekers in the EU during the second quarter of 2017 reached 149,000, according to statistical data from Eurostat. The applications mainly came from Syria, Nigeria and Afghanistan. Germany, Italy, France, Greece and the UK account for almost 80 percent of all first-time applicants in the union, the data shows.

Courtesy: DW

Next stop, Paris: The strange journey of Lebanon’s Saad Hariri

Next stop, Paris: The strange journey of Lebanon’s Saad Hariri
In early November, Lebanese PM Saad Hariri shocked the world by unexpectedly flying to Saudi Arabia and announcing his retirement. The Lebanese people suspected foul play on the part of Riyadh. Now they may finally have a chance to hear the full story.

In the latest twist in this incredible tale, Saad Hariri is expected to leave Saudi Arabia for France in several days before traveling to Beirut where he will reportedly formally resign as prime minister. To say Hariri’s return will be a momentous event would be a great understatement. Naturally, speculation is rife among Lebanese citizens that Hariri, a Sunni Muslim politician with strong bonds to Saudi Arabia, was coerced to quit.

Lebanese President Michel Aoun said Thursday that he looked forward to Hariri’s return following the latter’s acceptance of the French invitation. “I await the return of PM Hariri to Beirut so we can decide on the situation of the government – if he wants to resign or rescind his resignation,” Aoun said, according to presidential sources quoted by Reuters.

Earlier, French President Emmanuel Macron invited Hariri to France after speaking to him and the Saudi Crown Prince, the Elysee Palace said on Wednesday. Macron insisted that the invitation is not an offer of political exile.

The flight of Hariri

This sensational story began on November 3 when Hariri suddenly and without apparent warning boarded a flight from Beirut to Saudi Arabia. The next day, from the capital Riyadh, he announced his resignation, pointing to the “regional interference” of Iran and Hezbollah as the reason for his decision. He also said he feared assassination, which is certainly reasonable given that his father, former Prime Minister Rafik Hariri, was killed in a massive truck bombing in 2005.

Analysts are of the opinion that Riyadh had grown exasperated with Hariri’s power-sharing arrangement with Hezbollah. And with Iran and Hezbollah’s success in helping to defeat Islamic State terrorists in Syria, tossing President Bashar Assad a veritable lifeline, this was seen as the last straw.

Hariri’s flight to Saudi Arabia and subsequent resignation, however, was just one earthquake among many to rock the kingdom at about the same time.

On the evening of Hariri’s announcement, Crown Prince Mohammad bin Salman (MbS) initiated an extraordinary anti-corruption raid, which led to the arrest of 11 princes, four ministers and many businessmen. The Riyadh Ritz Carlton has been converted into a luxury jailhouse to hold the detainees. In addition to tightly consolidating King Salman’s son’s grip on power, the move could potentially add $800 billion to Saudi coffers. There was probably hope in Riyadh that all of the events, taken together, would spark chaos on the streets of Lebanon. However, if that is the case, that effort failed, as has been the case with so many Riyadh initiatives of late. In fact, Lebanon seems to have been energized and united by the Hariri scandal.

“In one week of Hariri being in Saudi Arabia, the Lebanese PM has achieved more in unifying the Lebanese than he could ever have hoped for in a lifetime of politics,” Beirut-based journalist Martin Jay wrote in an RT opinion piece this week.

As if the purge of Saudi Arabia’s princedom and business elite were not enough, MbS began a dangerous saber-rattling display aimed at regional countries.

Saudi saber-rattling

Days after Hariri announced his resignation, Riyadh accused Lebanon of “declaring war on Saudi Arabia” because of purported “aggression” by the Iran-backed Lebanese Shiite group Hezbollah. In reality, however, this was a poorly feigned attack on Iran, which for Riyadh is the real bugbear in this story.

Although Iran-Saudi relations have been strained for over a decade, things really took a turn for the worse in January 2016, following the execution of a prominent Saudi Shiite cleric.

Then, on June 7, 2017, Iran suffered its first terrorist outrage in a decade as Islamic State militants carried out attacks against the Iranian Parliament building and the Mausoleum of Ruhollah Khomeini, leaving 17 civilians dead and 43 wounded. Many Iranian officials suggested that the attacks were the work of “foreign governments,” including Saudi Arabia.

Meanwhile, Saudi Arabia is beginning to suspect that it is being outmaneuvered in its ‘near abroad’ by Tehran, which now enjoys an arc of influence extending from Iraq to Lebanon, and beyond, as well as in the tiny outposts of Yemen and Qatar. Riyadh exaggerates the danger of this “Iranian influence,” while at the same time failing to recognize its flatfooted foreign policy as a major reason for its setbacks of late.

For example, in its three-year war against Yemen, which has already killed some 10,000 civilians, a humanitarian disaster of epic proportions is underway, threatening some 7 million Yemenis with starvation. The turbulent events of Nov.4 were partially designed, it seems, to shroud the Yemen breakdown.

As Saad Hariri issued his resignation from Riyadh, and Saudi princes and officials were being rounded up and arrested, the young Crown Prince, 32, said his military had intercepted a Houthi ballistic missile, launched from Yemen towards an international airport on the outskirts of the Saudi capital. Some analysts are of the opinion no rocket was ever fired. In any case, MbS blamed Iran for supplying the Houthi rebels with missiles.

“The involvement of the Iranian regime in supplying its Houthi militias with missiles is considered a direct military aggression by the Iranian regime,” MbS told UK Foreign Secretary Boris Johnson in a telephone conversation. He added for good measure that the move “may be considered an act of war against the kingdom.”

At this point in our Arabian mystery, it cannot be denied that Riyadh is working closely with the United States and Israel. It did not go unnoticed, least of all by Iran, that US President Donald Trump’s son-in-law and senior adviser, Jared Kushner, had paid a visit to the Crown Prince just one month before the November tumult began.

Although the contents of that meeting have never been made public, Iran’s foreign minister, Mohammad Javad Zarif, fired off a tweet that got no Trump response: “Visits by Kushner & Lebanese PM led to Hariri’s bizarre resignation while abroad. Of course, Iran is accused of interference.”

Judging by the secretive Kushner meeting, Riyadh appears to be working as a proxy of sorts for the region’s real power-brokers, the United States and Israel.

“We don’t know if the Saudis are playing a game whereby they will let Hariri go back to Lebanon as a reminder… that they can go to any extreme to remove power from him,” Beirut-based Martin Jay told RT via telephone.

Now it remains to be seen if Saad Hariri and his family will remain a long-term guest of Emmanuel Macron in Paris, or if he will, as promised, continue on to the next leg of his mysterious journey back to Lebanon, where he will certainly be the center of attention from all sides.

Robert Bridge, RT

@Robert_Bridge 

Courtesy: RT

Houthis threaten to sink Saudi battleships & oil tankers unless Yemen blockade is lifted

Houthis threaten to sink Saudi battleships & oil tankers unless Yemen blockade is lifted
Yemen’s Houthi rebel government has threatened to sink Saudi coalition warships and oil tankers unless Riyadh lifts its blockade which threatens the lives of millions in the war-torn country.

“Battleships and oil tankers of the aggressor and its movements will not be immune from the fire of Yemeni naval forces if directed by the senior leadership,” Al Masirah news cited the country’s navy and coast guard as saying Sunday.

Earlier, Brig. Gen. Sharaf Ghalib Luqman, a military spokesman for the Houthi rebels, said that “systematic crimes of aggression” and the “closure of ports” compels the Houthi forces “to target all sources of funding” of the aggressor. He added the country is ready to “respond to the escalation of the Saudi-US aggression promptly.”

The threat of a military response to the ongoing blockade was made after Houthi leader Maj. Gen. Yousef al-Madani met leaders of the naval, coastal defense and coast guard forces Saturday. That same day, Houthi leader Abdel-Malek al-Houthi posted a message on Facebook assuring that “international navigation will remain safe as it was before,” making clear that “only those who attack our country” will be targeted.

The Saudi-led military coalition announced last week that it was temporarily shutting all of Yemen’s land border crossings as well as its air and sea ports in response to a ballistic missile that targeted Riyadh on November 4. The kingdom accused Houthis of firing an Iran-supplied rocket at the Saudi capital, and responded with bombing raids on the Yemeni capital, Sana’a. Iran has denied allegations that it supplies weapons to the Houthis, but concedes it backs the rebels’ cause.

Following the November 6 closure of all ports of entry into Yemen, a range of UN bodies expressed concern over the fate of civilians in the country, where nearly 7 million people are starving while others depend on humanitarian assistance amidst a deadly cholera epidemic.

“The recent closure of the Yemen’s airspace, sea and land ports has worsened the already shrinking space for the lifesaving humanitarian work. It is blocking the delivery of vital humanitarian assistance to children in desperate need in Yemen. And it is making a catastrophic situation for children far worse,” Meritxell Relano, the UNICEF Representative in Yemen said Friday.

Also describing the situation in Yemen as “catastrophic,” a spokesperson for the UN Office for the Coordination of Humanitarian Affairs (OCHA) urged the Saudis to lift the blockade, as up to 90 percent of Yemen’s daily needs are served through humanitarian aid.

“That lifeline has to be kept open and it is absolutely essential that the operation of the United Nations Humanitarian Air Service (UNHAS) be allowed to continue unhindered,” Jens Laerke emphasized.

READ MORE: British arms sales to Saudi Arabia jump 500% as coalition seals off Yemen borders

UN spokesman Stephane Dujarric warned that the Saudi-led blockade “has had a tremendously negative impact on a situation that is already catastrophic.”

Unless Saudi Arabia lifts the blockade, “it will be the largest famine the world has seen for many decades, with millions of victims,” Mark Lowcock, the UN under-secretary-general for humanitarian affairs, warned earlier this week.

The UN Security Council demanded that the Saudi-led coalition keep Yemen’s air and sea ports open to aid deliveries into the country following a session discussing Riyadh’s draconian measures.

The Saudi-led coalition has been waging a military campaign against Shiite Houthi rebels in Yemen since March 2015. According to the latest UN figures, the three-year-old conflict has so far claimed the lives of over 5,000 civilians, in addition to nearly 9,000 people that have been injured.

Courtesy: RT

Saudi Arabia agrees to lift blockade on Yemen as children face starvation & cholera

As children in war-torn Yemen continue to face severe malnutrition and a deadly cholera outbreak, Saudi Arabia has agreed to reopen air and sea ports following a week-long blockade. RT has met with children affected by the dire situation.

Riyadh’s decision, announced earlier on Monday, comes four days after the United Nations Children’s Fund (UNICEF) said that nearly 400,000 children in Yemen are “at risk of death from severe acute malnutrition.” Children are also facing a deadly cholera outbreak, with 50 percent of the cases belonging to those under the age of 15.

The UN and over 20 aid groups warned the blockade – imposed on November 6 – could make things worse in the war-torn country. “The humanitarian situation in Yemen is extremely fragile and any disruption in the pipeline of critical supplies such as food, fuel and medicines has the potential to bring millions of people closer to starvation and death,” the organizations wrote last week.

RT Arabic spoke with two young brothers who have felt the severe impact of the ongoing civil war and the blockade. Forced to quit school, the children now rummage through trash bins looking for tin cans which can bring their family a little bit of money. “We are taking care of our family…we collect cans to buy food and pay the rent, and to feed all our family,” the older brother said.

However, the blockade will now be lifted. “The first step in this process will be taken within 24 hours and involves reopening all the ports in areas controlled by [Yemen’s internationally recognized government, which the coalition backs],” the Saudi mission at the UN said on Monday, as quoted by AP.

The ports referred to by the mission are located in Aden, Mocha and Mukalla. The mission says it has asked the UN to provide a team of experts to determine ways to prevent weapons from being smuggled in.

Yet, Abdu Ilahi al-Harazi from the Special Hospitals Union said that civilians should never be deprived of necessities simply because Riyadh is worried about weapons coming into the country. “Food and medicine are not weapons, they’re things that have nothing to do with weapons. They shouldn’t be manipulated,”he said.

The chair of the Islamic Human Rights Commission, Massoud Shadjareh, echoed that sentiment. “There is no logical reason that we couldn’t…take medicine and deal with the issue of cholera. There is no logical reason that we couldn’t…give food and support to those who are starving…the only thing that is holding us back is the fact that the Saudis and their allies, with the help and support of the United States and the West, are putting very effective…blockade which no food, no medicine gets through,” he said.

The Saudi-led coalition, which is backed by the US, launched an aerial campaign against Shiite Houthi rebels in March 2015, and later began a ground operation. The coalition is allied to Abd Rabbu Mansour Hadi, who fled to Saudi Arabia when the Houthis took power in Yemen. According to the latest UN figures, the conflict has so far led to the deaths of over 5,000 civilians. More than 8,500 people have been injured in the ongoing fighting.

Courtesy: RT