dr.umer
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Is this the reason why US is after Iran?
Reported by Press TV
Iran is a crucial player in the energy world. Isn't it time such a position is more widely acknowledged?
Former Israeli war minister Shaul Mofaz threatens to attack Iran. What happens the very same day? US oil futures leap more than $11 dollars a barrel.
"If Iran continues its nuclear weapons program, we will attack it," Mofaz declared in a June 6 interview with Yediot Aharonot.
Such aggressive rhetoric by the Israeli deputy prime minister, himself an Iranian-born Jew, caused the black gold to see its biggest one-day jump ever - to close near $140.
On June 7, Antoine Halff, an analyst at Newedge Group, warned: "The Mofaz comments bring home the point that the dispute over Iran's nuclear program remains unresolved and that the risks of military confrontation are indeed increasing. This will likely be a growing source of market volatility until a solution to the dispute is found," he pointed out.
Panicked by the unprecedented oil spike, Israeli and US officials fell all over themselves dismissing Mofaz's threat as 'his personal view' aimed at 'positioning himself for a premiership' in case scandal-ridden Ehud Olmert is forced to step down.
The White House even tried to downplay the Israeli war speak, parroting that it remains committed to resolving Israel's concern about the threat posed by 'a nuclear-armed Iran' through diplomacy.
"We are trying to solve this diplomatically," said White House spokeswoman Dana Perino.
Let's look at recent developments in the oil market.
Almost a month after the Mofaz military threat, oil prices climbed to an all-time high of more than $146 per barrel on July 3,setting record highs for retail gasoline and diesel prices.
Brent crude reached $146.69 before falling back to $146.08; US crude jumped $1.72 to $145.29 after hitting $145.85.
And the next day? Iranian Foreign Minister Manouchehr Mottaki gave a written response to a letter of his European counterparts about the country's nuclear program. He expressed Tehran's readiness to open comprehensive negotiations with the EU Foreign Policy Chief, Javier Solana, and the six world powers involved. Even a 'positive response' from Iran was enough to pull back the price of oil slightly on Friday. The price of oil plummeted 4 percent during July 4-8; Iran was moving to ease tension with the West. The dollar rose, limiting the appeal of commodities.
But as the first decade of the 21st century comes to the end, there exists a tremendous apprehension about obtaining supplies of non-renewable energy.
Oil prices have surged nearly 40 percent since January, having seen a six-fold increase in the last six years. Some analysts predict that oil might surge to as high as $200 or even $250 a barrel.
The tumbling US dollar, supply jitters, rising demand by emerging economic powers like China and India as well as speculation contribute to spiraling oil prices. However, fears about a new Middle East conflict between Iran and the US/Israel can be singled out as the main factor pushing crude up.
Is the link becoming apparent? Iran is pivotal in energy markets. What else could have induced a host of politicians and energy analysts to take positions against Bush? Why have the upper echelons of Tel Aviv cooled down on threats of war?
Venezuelan President Hugo Chavez Friday urged Washington to stop making threats against oil-producing Iran to see a decline in prices.
On Saturday, Iranian Oil Minister Gholam-Hossein Nozari warned anti-Iran rhetoric 'pushes oil prices up by 10 to 15 dollars'.
Even Democratic presidential hopeful Barak Obama believes that harsh remarks against Iran have driven up the price of crude. There are some geopolitical issues that affect the price of oil. So for us to ratchet down the rhetoric when it comes to Iran, for example, and engage in tough, principled diplomacy, as I've called for, might calm the markets down," said the Illinois senator this week.
It seems everybody realizes the role Iran plays in the oil market - excepting the neo-cons and their hawkish allies in Tel Aviv.
Iran is the second largest oil producer in the Organization of the Petroleum Exporting Countries, a group that supplies 40 percent of the world's oil.
Iran controls the second largest oil reserves of the planet. The west Asian country is also the world's fourth largest oil exporter, just after Saudi Arabia, Russia and Norway. It exports about 2.5 million barrels of oil per day.
Iran sits atop the world's second largest gas reserves. It holds 16 percent of the world's gas reserves. With mounting oil prices, Iran gathered 78 billion dollars during the last fiscal year (March 2007-08). It is predicted that the country's oil revenues to exceed 100 billion dollars this fiscal year (March 2008-09).
Despite US sanctions and a Washington-backed Iraq war, Iran has managed to increase its oil production capacity each year. This is in large part thanks to investments by Asian energy majors as they continue to snub White House sanctions.
In mid-1970s, Iran produced more than 6 million barrels of crude a day. The output dropped to 1.5 million barrels a day during the eight-year Iraq war against Iran (1980-88). Two decades on the resource-rich, labor-abundant country produces over 4.2 million barrels of oil per day.
As confirmed by OPEC President Chakib Khelil, Iran's status is such that the oil market will not be able to find a substitute should the country suspend export.
"It's obvious that if you curtail 4 million barrels per day from the market, you are going to have a big problem. I don't see who can replace that, including OPEC," Khelil, who is also Algeria's Oil Minister, warned at a news conference in Madrid on July 1.
"If something happened in Iran, it would be difficult to replace 4.2 million barrels a day . . . the price [of crude] will go up of course."
Last and certainly not least is Iran's position on the planet's crust. Iran is the northern half of the world's most important energy corridor, the Strait of Hormuz. Roughly 40 percent of the world's oil travels through that narrow waterway. Iran's armed forces are able to shut it down.
Islamic Revolution Guards Corps (IRGC) Commander Mohammad-Ali Jafari warned last month that in case the country comes under attack, Iran would consider anything within its power to repel the invaders.
"When a country comes under attack, it naturally uses all its capacities to confront the enemy," he cautioned, signaling that in the event of war, Tehran may consider, among other things, closing the Strait of Hormuz.
Chief of Staff of Iran's Armed Forces echoed the remarks in early July. "The Strait of Hormuz is a strategic waterway and it is therefore very important for us to keep it open," Major General Hassan Firouzabadi said, adding, It should be made clear that we will not allow anyone to pass through the waterway if Iran's regional interests are endangered."
The writing is on the wall. Will it be read? A war will force Iran into utilizing every means at its disposal. And a blockage of the important oil passage would certainly bring about appalling consequences. It would be a disaster for the entire world, as admittedly or not, the country is an energy superpower.
