NYT: Oil Markets Are Jittery Over Iran

[DeepModem Mom]

Oil Markets Are Jittery Over Iran
By JAD MOUAWAD
Published: January 20, 2006


As world leaders and diplomats debate how to deal with Iran's nuclear ambitions, the worry among analysts these days is the fate of the country's oil sector.

The prospect of sanctions against Iran might have been easily shrugged off a few years ago, when the world sat comfortably on millions of barrels of untapped oil capacity. But the picture today is quite different. Iran exports more oil than the world's current spare capacity.

The lurking fear among many oil analysts is a darker version of what happened in Iraq: a diplomatic or military confrontation with a major Middle East oil producer that again leads to disruptions in supplies and provokes a spike in oil prices.

If for any reason exports from Iran, which pumps twice the oil Iraq does, suddenly stopped, other producers would not be able to make up the loss - in contrast to 2003, when Saudi Arabia and Kuwait cranked up output to make up for the drop in Iraqi exports after the American-led invasion.

These concerns are not completely ill-founded. Over the weekend, Iran's president, Mahmoud Ahmadinejad, hinted that his country might be willing to use the "oil weapon" - that is, curbing oil exports - if faced with international sanctions. At the same time, some members of the United States Senate said Iran should be sanctioned regardless of the consequences for oil prices....


http://www.nytimes.com/2006/01/20/business/worldbusiness/20oil.html?oref=login

[no_more_rhyming]

1. OPEC and nukes

New reason to hike up the price of oil.

[megatherium]

2. no conspiracy.

A nonrenewable commodity with a rather inelastic demand curve is in short supply, and there are genuine concerns about the stability or reliability of certain of the suppliers. Given those circumstances, it is to be expected that the price will be volatile and will increase. No conspiracy need be assumed, this is predictable.

[fedsron2us]

7. Dupe. Self Delete

[fedsron2us]

9. Hmmm. This may all be true

but even one of the moderators on the peakoil.com message board could not help commenting that every time the price of oil started to slip the administration in Washington launched some foreign policy initiative that seemed to push it up. The US government did not have to invade Iraq. It did not have to try to destabilise Venezuala by backing strikes and plots against Chavez. The administration does not have to start muttering war and sanctions threats against Iran. Maybe Bush and company want to bring forward the impact of Peak Oil so that they can control it. After all the removal of Iran's oil from the market would probably not have too great an impact on actual supplies to the US, it would just put the price through the roof. This would be tough shit for US consumers and industry but I can think of one or two other nations in the world that would miss Iranian oil even more since their economies are physically dependent on it.

[megatherium]

14. World oil demand and production are both about 85 million barrels

per day, I don't think there's currently more than a million barrels or maybe 2 of slack. Very tight, in other words. If this commodity were in over supply, then the suppliers wouldn't be able to play these games. This is what happened in the early 1980s, when the price of oil plunged. Twenty years later, no one expects that to happen again, indeed demand is supposed to go up to 125 million bpd by 2025 but no one seems to know where the increased production is going to come from. (The usual supposition is that the middle east will supply that, in particular Saudi Arabia. Some now believe that the Saudis are lying about their reserves and that their production is already dropping.)

If Iranian oil were shut off (that's 10% of world production), we would feel it. Even though other parties buy Iran's production, they would go to other producers with their money jingling -- the producers we buy from. I'm thinking of China in particular.

I'm not really one of those people who think we're doomed. We will switch to electric cars or coal gassification, etc; or conserve like we mean it. But there may be some rough times because of our dependence on oil from volatile regions, and of course global warming is an increasing threat.

[Earth_First]

3. Well, well...who holds the trump card(s) now? n/t

[cliss]

6. Yes:

the supplier or the end user? Hmmm, let me guess.

[wiggs]

4. More gigantic profits for major oil companies and B*sh friends. nt

[Mountainman]

5. Freepers still think that if we fight in the Middle East they will get

to buy their gas cheaper. I heard one of them on Ray Taliaferro's show the other week. He says the reason to be in a war with Iraq and Iran is to insure a supply of cheap gasoline for Americans. It didn't seem to impact his reasoning that the price of gas has gone up since the start of the Iraq war.

[lovuian]

8. This is about a US power grab to get oil reserves...

Iran knows its fighting for its oil...

[kineneb]

15. Power grab would be to protect value of dollar

from Iranian oil bourse, which will set their price in Euros.

See Iran start oil bourse.
See US dollar tank against Euro.
See BushCo lose money (they don't care about people here starving in the streets).
See US Empire fail.

[Gregorian]

10. Shouldn't that read: Oil Markets Are Jittery Over Bush.

It's not Iran. It's Bush that's causing the problem.

[goforit]

11. Hmmmm.....Stock holders weary?.....Eyes wide open,eh?

[wordpix]

12. good time to make issue about Cheney's secret energy meetings -we demand

to know who was there!!!!

[thebigidea]

13. soon they'll be telling us the markets "want" an attack on Iran

just like they did about Iraq.