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Oil prices and the policy of «the edge of the abyss»
On: Sun 01/29/2012 19:44
* Walid Khadduri
Crude oil prices ranging between $ 100 and $ 110 a barrel, while the dominant policy of «the edge of the abyss» between Iran and the West in international politics during this phase. It is not the first crisis of its kind in modern history, it was preceded by «the Cuban missile crisis» in October 1962, when he threatened U.S. President John F. Kennedy attack missiles loaded with nuclear weapons, laid by the Soviet Union in Cuba and face toward the United States. But after the difficult days, President Khrushchev withdraw Soviet missiles from Cuba, and ended with dangerous confrontation between the two giants, having lived a difficult world for days.
Policy does not differ «edge of the abyss» broke now, in principle, from past experience. On the one hand, Iran insists on continuing its nuclear policy, without any change in priorities. While claiming the Western countries, and behind Israel, military, and that the program is to produce a nuclear bomb. But Tehran denies these allegations without allowing Western countries to make sure the real objectives of the program, raising doubts about its intentions.
Iran is trying to show its military strength in the current confrontation, either through the dissemination of news and documentary films on rockets available to it, or through a review of its naval power, and the threat to close the Strait of Hormuz to international shipping. However, the Western countries moved quickly to respond by sending battleships, the cross-Strait military to prove its right and power in the use of this vital corridor for the transit of crude oil to world markets. And remain so even compete with the open, with the presence of elements of strength and weakness of each of the parties at the same time, oil prices remain above the normal level because of these abnormal circumstances, for reasons purely economic factors related to supply and demand. Europe is aware that the crisis lead to higher prices, and clear it is willing to pay that price, while Iran knows full well that could compensate for its exports to Europe (about 400 thousand barrels per day) either Almkhozonin strategic or business in these countries, or to buy oil from countries other. Here, too, it is clear that Iran is ready to adopt this policy despite the negative impact on its economy.
Iran has threatened to close the Straits, without specifying the period of time. She knows very well that any closure, even for a very short duration means a move against the Western countries, in order to open the corridor. The close for a long time, is a step will have a violent reaction. As you know, Tehran, that there are sufficient alternatives to Nfotha, either through the use of strategic reserves of industrialized countries, sufficient for about two months in some cases, or by increasing the production of some oil-producing countries, either to avoid shortages in the market as it is known policy of the States of the major oil, or production at maximum capacity available for some countries to take advantage of the shortage in supplies and take advantage of rising prices, as is the case in most oil-producing countries. This is not new in the world of oil, Iran has tried to have the maximum output power available to it during the nineties to take advantage of the embargo on Iraqi oil.
Looking Iranian Shura Council is a new policy for an immediate halt oil exports to Europe, as an attempt to punish him to Europe prior to receiving the pledges of alternative supplies make up for what was Stvkdh in the first of July as agreed by the European Union. It is natural that such action will raise crude oil prices, but will it lead to the deterioration of the European economy, and community believes in Tehran? There is no doubt that, since the total Iranian exports to Europe are limited. They are not large in quantity that can not be replaced. Of course, stop the oil from Europe now, you may damage some countries, especially Greece, which get high discounts from Iran. But it is possible to compensate for this oil from other countries, or with financial assistance from the European Union. But, as the case will be difficult for Europe, it will be difficult also to Iran. Indeed, there is an economic price paid by Iran for the fatal policy of this abyss. Real prices fell a record, even before the implementation of sanctions, and lost half its value as a result of the policy to stop the flow of dollars from Iran, which is the desired result of the embargo policy.
We note here that the policy of «the edge of the abyss» is not the only reason for high prices during the last year and this. Has received a significant lack of supplies from Libya, and decreased production of both Syria and Yemen, after the Arab spring. But more important is the market's fear of Arab spring expands to other producing countries, and then a serious shortage of supplies. It is interesting that Europe has identified the first of July to the beginning of the embargo on Iranian oil, which is roughly the same period which is scheduled to return the Libyan production to the level before the revolution.
Another factor contributing to the high prices at the beginning of the year, is the lack of energy productivity in the non-member States of the Organization of «OPEC». Decreased supplies from outside the «OPEC» about 600 thousand barrels per day in 2011, rather than to rise.
* Iraqi writer specialized in energy
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