Return of Iranian oil unlikely to budge OPEC’s output cut stance.

Return of Iranian oil unlikely to budge OPEC’s output cut stance. (Taz).

The Gulf members of OPEC have so far been adamant that they will not cut production to support prices, despite calls from other members, especially Iran. There is no reason for them to change this stance once Iran resumes higher oil exports, Thomas Pugh, commodities economist at British economic research and consulting company Capital Economics believes.

The recent deal between Iran and the West means that it is now very likely that substantial volumes of oil from Iran will return to the market, according to the economist’s report, obtained by Trend.

“The return of Iranian exports may actually reinforce OPEC’s no output cuts stance, putting even more pressure on US shale producers, especially since the policy is showing signs of working,” Pugh said in a report.

What’s more, Saudi Arabia and its Gulf allies will probably have little sympathy for their regional rival making them even less likely to cut Production, economist believes.

“Nonetheless, the possible return of higher Iranian exports is likely to be heavily discussed at the group’s next meeting on 5th June, Pugh said. There have already been rumours of a return to individual quotas, which were quietly dropped in favour of a target for total production in 2008”.

However, the group is already producing above its 30 million barrel per day (bpd) target. And even when the group did have individual quotas, these were largely seen as a floor rather than a ceiling, according to the economist.

Pugh doubts that Saudi Arabia is going to cut its oil production to make room for Iran.

“Therefore, if and when Iranian oil exports begin to come back to the market they should put significant downward pressure on prices. Indeed, this is one reason why we expect the price of a barrel of Brent to only be $60 by the end of this year,” he said.


OPEC members held a meeting in ministerial level November 27, 2014 to evaluate the global oil market and the falling trend of the oil price. Iran and Venezuela wanted to lower the Cartel's oil output and set a new ceiling level below the current 30 million bpd level.

Iranian Foreign Minister Mohammad Javad Zarif to visit the UAE on Wednesday.

Iranian Foreign Minister Mohammad Javad Zarif to visit the UAE on Wednesday.HT: UskowiOnIran.

Iranian Foreign Minister Mohammad Javad Zarif today appealed to Saudi Arabia to work with Tehran toward achieving regional stability.

“We believe that Iran and Saudi Arabia should work together in order to promote peace and stability in the region,” Zarif said. “I believe that our relations with Saudi Arabia should expand as we consider Saudi Arabia an extremely important country in the region and the Islamic world.” (AFP/Daily Star, 2 December)

Zarif made the comments while in Doha in the last leg of a three-country tour of Qatar, Oman and Kuwait. Zarif’s current tour is part of the new Iranian government’s charm offensive to improve relations with the Arab states of the Persian Gulf, as well as the West.

“I am ready to go to Saudi Arabia, but it is just a matter of being able to arrange a mutually convenient time. I will visit it soon inshallah,” Zarif said.

Iran’s Press TV reported tonight that Zarif will visit the UAE on Wednesday. The latest trip is to improve the restrained relations between the two countries.

During his one-day official visit to Abu Dhabi, Zarif will hold meetings with Sheikh Khalifa, the President; Sheikh Mohammed, the Prime Minister; and Sheikh Abdullah, the Foreign Minister of UAE.

The contentious issue in Iran-UAE relations is the fate of the three islands of Abu Musa and Greater and Lesser Tunbs, claimed by both countries. Iran’s announcement that Zarif would visit the UAE on such a short notice could signal the readiness of both sides to resolve their disputes over the islands.

Iran launches new Jamaran-2 destroyer in the Caspian Sea.

Iran launches new Jamaran-2 destroyer in the Caspian Sea.
(RT).President Mahmoud Ahmadinejad was present at the launch of theJamaran-2 destroyer in the port city of Anali, 250 kilometers northwest of the country’s capital. During the ceremony, the leader hailed the construction of the destroyer as a “great achievement” for the Islamic republic, Xinhua news agency reported.

The 1,420-ton destroyer is equipped with a 20,000-horsepower engine and can travel at a top speed of 30 knots, and has the capability to carry helicopters, different surface-to-surface and surface-to-air missiles, advanced artillery and torpedo systems,Press TV reported.

Jamaran-2 is set to officially join the Iranian navy's fleet withinthe next six months, following the completion of final testing.

The move will mark the first heavyweight Iranian military presencein the oil-rich Caspian Sea. The five surrounding countries – Iran,Russia, Azerbaijan, Kazakhstan and Turkmenistan – have not reached an agreement on exploitation of its resources.

Tehran wants all five nations to share the sea's resources equally.However, the other four nations support exploitation through mutual pacts, putting Iran's share at about 12 percent.

In February 2010, the Iranian navy launched the Jamaran-1 destroyer in the Persian Gulf – the country’s first domestically-built destroyer – equipped with modern radar and electronic warfare capabilities.Read the full story here.More Pictures HT: UskowiOnIran.

Zafar Missile Test A Hoax? Blogger Uskowski Claims Iranian Missile test a fake.

Zafar Missile Test A Hoax? Blogger Uskowski Claims Iranian Missile test a fake.(UOI).By: Jabbar Fazeli, MD. Yesterday, the Iranian Pasdaran (IRGC) proudly announced yet another test of an indigenously produced anti-ship cruise missile. It is reported to be the fastest and latest such missile.

The IRGC released a video of that test which was posted on this blog yesterday.

http://www.uskowioniran.com/2013/02/zafar-anti-ship-missile.html

Video link for the Feb 24, 2013 test:

https://www.youtube.com/watch?v=_dxTq0CyTbQ

There is only one little problem with this latest missile test: the same clip was posted on YouTube on Jan 26, 2013:

http://youtube.com/watch?v=OOHpn66qC2w&feature=plpp

And again on August of 2012:

http://www.qeyik.com/watch=-qqfEIOXcrc_zafar-missile-launching-iran.html

And yet again on Feb 20, 2012:

http://www.youtube.com/watch?v=Z7qWUaXkA7c

And finally, the same missile test can be seen in this Feb 4, 2012 clip:

http://merih-news.com/irans-new-ballistic-missile-zafar-inagurated/

Based on the above, it appears that the IRGC kept reusing the clip of the first test every time they announced a new test of the Zafar missile. Considering that all the Zafar missile test clips look the same, the IRGC actually has no proof that it ever conducted a test since the unveiling of the Zafar missile 12 months ago.Read the full story here.

Hmmmm...... “All warfare is based on deception. Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.” ~ Sun-Tzu: The Art of Warfare

Iran to commission submarines and hovercrafts to country's Navy.

Iran to commission submarines and hovercrafts to country's Navy.(TI).As part of Navy Week in Iran, the country will commission two Ghadir-class submarines and two hovercrafts to the national Navy, IRNA reported. Iran's Navy Commander Rear Admiral Habibollah Sayyari said that Iranian experts have also build special submarine simulators, which will be used to prepare for real submarines. In September, upon the order of the Supreme Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei, Iran has released new military submarine "Tareq 901" into water in Bandar Abbas port, IRINN Tv channel reported. Tareq 901 is a three Kilo class, Russian type 877EKM, submarine which was delivered to the Iranian Navy from 1992 to 1997. 
Iran's submarine force currently consists of Russian Kilo-class diesel-electric submarines (Tareq 901, Noor 902, Yunes 903), one 500-ton Nahang and four 120-ton Yono-class (also referred to as Qadir or Ghadir-class) midget submarines.
Iran also released "Sahand" frigate into water, along with the submarine. This particular Sahand frigate was manufactured by Iranian engineers. The original Iranian frigate Sahand, a British-made Vosper Mark V class frigate (also known as Alvand class frigate), was commissioned as part of a four-ship order. The ship was originally called Faramarz, named after a character in Ferdosi's Shahnameh. However after the Islamic Revolution it was renamed Sahand, after the Sahand volcano. Sahand frigate is of second class among Jamaran destroyer frigates. The construction of Sahand has been completed ahead of schedule, in 9 months. It is planned to equip the frigate with modern defense technology as well as special stealth capabilities. Both the submarine and frigate were released upon the order of Khamenei, in the Bandar Abbas port of Iran.Read the full story here.

Iran Launches Submarine and Destroyer into Gulf During US Naval Exercises.

Iran Launches Submarine and Destroyer into Gulf During US Naval Exercises.(OP).By Charles Kennedy.This week the US, UK, France, and a few Middle Eastern countries are conducting naval exercises in the Gulf of Persia to practice clearing mines that Iran, or other groups may place around the Straits of Hormuz in an attempt to disrupt the movement of oil tankers in the region. Mohammed Ali Jafari, the commander of the Islamic Revolutionary Guard Corps, said that the “exercise is a defensive exercise and we don't perceive any threats from it. We are not conducting exercises in response.”
Yet this is not the impression that is given. Just yesterday, according to the official IRNA news agency, upon the direct orders of Supreme Leader Ayatollah Ali Khamenei Iran launched a refitted Tareq-901 submarine and a Sahand destroyer into the Gulf from the port of Bandar Abbas.
At the same time, as stated on Khamenei’s official website, the Supreme Leader was visiting the northern coastal city of Nowshahr to observe naval cadets practice planting mines, rescuing hijacked ships, destroying enemy ships, and rapid deployment via helicopters.
Khamenei addressed his troops, saying that “the armed forces must reach capabilities such that no one can attack the strong fence of the country and the dear people of Iran.” Israeli Prime Minister Benjamin Netanyahu announced on Sunday that Tehran is now very close to building a nuclear bomb, leading some to fear that Israel may take things into their own hands and strike against Iranian nuclear facilities.Read the full story here.

Iran considers flooding the Persian Gulf with massive oil spill'.

Iran considers flooding the Persian Gulf with massive oil spill'.HT: IsraelMatzav.A report in the German-language Der Spiegel claims that Iran is considering deliberately spilling oil into the Persian Gulf in response to international sanctions against it. Iran is considering the possibility of spilling oil in the Persian Gulf in order to contaminate the waters of the strategically important Strait of Hormuz, German weekly Der Spiegel reported on Sunday.
The spill would be a way of "punishing" the West and forcing it to decrease the economic sanctions imposed against Tehran.
Citing Western intelligence sources, Der Spiegel reported that the plan, codenamed "Murky Waters," is meant to block shipping routes in the Gulf to international oil tankers. In addition to driving up oil prices, the resulting environmental disaster would force Western countries to start a large-scale cleanup operation in cooperation with Iran, which could reduce the sanctions currently placed on the country. The plan was developed by the commander of Iran's Revolutionary Guard, Gen. Mohammad Ali Jafari, and Navy Commander Rear Admiral Ali Fadavi, according to the report. Der Spiegel reported that the decision on whether or not to implement the plan was now in the hands of Iran’s Supreme Leader Ayatollah Ali Khamenei.Read the full story here.

Iran to make its guard boats 3 times faster than those of U.S. - commander.

Iran to make its guard boats 3 times faster than those of U.S. - commander.(TI).Iran will make its guard boats three times faster than those of the U.S., Navy Commander of the Islamic Revolution Guards Corps (IRGC) Rear-Admiral Ali Fadavi said, Fars reported. Fadavi noted that thus far Iran has managed to double the speed of boats, and will triple it by the time country's Five year development plan is over (2015). Iran's Navy Commander Rear Admiral Habibollah Sayyari said several days ago that country's naval forces will expand their international presence to safeguard the Islamic Republic's interests and rights. Iran's Navy has been multiplying its naval presence in the international waters since last year, deploying vessels to the Indian Ocean and dispatching two ships via the Suez Canal to the Mediterranean for the first time in February 2011. In addition, in line with international efforts to combat piracy, the Iranian Navy has been conducting anti-piracy patrols in the Gulf of Aden since November 2008 to safeguard the vessels involved in maritime trade, especially the ships and oil tankers owned or leased by Iran.Read the full story here.

US, allies set to launch anti-mine naval exercises in Persian Gulf.....What if they find any?

Belgium Minesweeper Alkmaar Class

US, allies set to launch anti-mine naval exercises in Persian Gulf.....What if they find any?(Boston).By Adam Schreck.DUBAI, United Arab Emirates (AP) — The United States and more than two dozen allies are gearing up for the largest naval exercise ever in the Middle East focused on countering the threat of anti-ship mines. A wary Iran says it will be watching closely. The maneuvers starting next week are the latest flexing of American military muscle in and around the Persian Gulf, even as Washington tries to convince ally Israel that diplomacy and sanctions aimed at pressuring Iran to scale back its nuclear program need more time to work.
U.S. Navy officials insist that the anti-mine exercise is not about any specific country or a response to Iranian threats to shut the narrow Strait of Hormuz at the mouth of the Gulf, the route for one-fifth of the world’s oil. But the drills will likely be perceived around the world as a challenge to Tehran, which has thousands of anti-ship mines it could deploy to disrupt shipping and drive up oil prices in response to any airstrike on its uranium enrichment facilities. The U.S. and several of its allies accuse Iran of seeking to develop nuclear weapons, but Iran says its atomic program is solely for peaceful purposes. ‘‘This is one of many engagements conducted alongside regional defense forces,’’ said Lt. Greg Raelson, a spokesman for the Navy’s 5th Fleet. ‘‘Freedom of navigation through international waterways is critical to the international community and to nations in the region, including Iran.’’ The exercises, which will focus on a hypothetical extremist organization, are a way to boost cooperation with foreign navies and prepare to deal with threats that could block vital trade routes at sea, American officials say. Raelson noted that waterborne bombs have struck a number of ships in the region in recent years, including a mysterious blast that damaged the Japanese oil tanker M. Star as it entered the Strait of Hormuz in 2010.
An obscure al-Qaida-linked group later claimed responsibility for that attack. Even so, the maneuvers carry an implicit message for Tehran. ‘‘Who is the 800 pound gorilla in the room? It’s Iran,’’ said Scott Truver, a Washington-based naval analyst who has written about mine warfare. ‘‘I’m sure we’re sending them a message of: Here’s what we can do. So don’t try it.’’
Next week’s maneuvers are unprecedented in scope. France, Japan, Jordan and New Zealand are among the more than 30 countries expected to take part in the exercise, which begins Sunday and lasts through Sept. 27.
Some, such as Britain, will be contributing ships and other hardware. Others are sending personnel and observers. In addition to the Gulf, anti-mine practice is planned for the Gulf of Oman and the Gulf of Aden, the gateway to the Red Sea that has been a focus of international efforts to fight Somali pirates. Practice exercises are vital in ensuring allied navies are able to work in tandem with their American counterparts, Truver said. Each country has its own command structures and routines, and problems arise in times of war if ‘‘you don’t practice in peacetime,’’ he noted.

Iran has said its forces will be monitoring the maneuvers. ‘‘We are very sensitive about security in the highly strategic Persian Gulf and we are watching closely,’’ Iranian Foreign Ministry spokesman Ramin Mehmanparast said when asked about the exercise. ‘‘They should pay attention that violations of security and tranquility in the region can be a very sensitive phenomenon.’’Read the full story here.

Iran reiterates sovereignty over disputed Gulf Islands‎.

Iran reiterates sovereignty over disputed Gulf Islands‎.(AA).The Iranian Foreign Ministry spokesman reiterated this week that the disputed islands of Abu Musa, Greater Tunb, and Lesser Tunb, claimed by both Iran and the United Arab Emirates, will remain Iranian forever. “The islands of Abu Musa, the Greater Tunb and the Lesser Tunb are indispensable parts of the Islamic Republic of Iran’s territories and they will remain Iranian forever,” Iranian Foreign Ministry Spokesman Ramin Mehman-Parast said in a statement on Tuesday. Mehman-Parast denied statements made by foreign ministers of the Gulf Cooperation Council (GCC) countries in their 124th meeting about the islands being occupied by Iran. “These statements are absolutely groundless and they have no proof of their validity,” he said. In the meeting held Sunday in the Saudi city of Jeddah, GCC officials condemned Iran’s constant intervention in the domestic affairs of Gulf countries and lashed out at Iran’s insistence on “occupying” the three islands which, they argued, belong to the UAE. The GCC issued a statement declaring that its member states support the UAE in its claim over the islands, controlled by Iran since the withdrawal of British troops in 1971. “We support the UAE’s sovereign rights on the three islands, which are part of its territories,” the statement read.Read the full story here.

Iran Inaugurates Production Line of New domestic made Anti-Armor Missile System.

Iran Inaugurates Production Line of New domestic made Anti-Armor Missile System.(Fars).Iranian Defense Minister Brigadier General Ahmad Vahidi on Saturday inaugurated the production line of a new home-made anti-armor missile system named 'Dehlaviyeh'."The Dehlaviyeh missile is one of the most hi-tech anti-armor missiles designed for destroying different advanced tanks which are equipped with reactive armor," Vahidi said at the inauguration ceremony of the missile system.
He also reiterated that the missile has been equipped with a special guiding system (which is resistant to different types of enemy's electronic warfare), a warhead and a missile-launcher and a portable engine-propeller.
"The missile system has been designed in a way that it can hit both fix ground targets and mobile armored targets," Vahidi said. Last August, the Iranian Defense Ministry started mass-production of 73-mm anti-armor rockets capable of piercing and destroying armored vehicles from a 1,300-meter distance. "The weapon is mobile and due to its low weight, it can be carried by an individual trooper," Vahidi told reporters on the sidelines of a ceremony held to launch the production line of the rocket at the time. Tehran launched an arms development program during the 1980-88 Iraqi imposed war on Iran to compensate for a US weapons embargo. Since 1992, Iran has produced its own tanks, armored personnel carriers, missiles and fighter planes. Yet, Iranian officials have always stressed that the country's military and arms programs serve defensive purposes and should not be perceived as a threat to any other country. Defense analysts and military observers say that Iran's wargames and its advancements in weapons production have proved as a deterrent factor, specially at a time of heightened threats by the US.Read the full story here.

Iranian Commander of Aerospace Force: IRGC Will Destroy 35 US Bases in Region if Attacked.

Iranian Commander of Aerospace Force: IRGC Will Destroy 35 US Bases in Region if Attacked.(Fars). Brigadier General Amir Ali Hajizadeh said that the IRGC has detailed contingency plans to hit 35 US bases in the region in the early minutes of a possible conflict."We have thought of measures to set up bases and deploy missiles to destroy all these bases in the early minutes after an attack," Hajizadeh said on Wednesday, referring to Iran's contingency plans for any potential confrontation with the US. He said that the US has 35 bases around Iran, and stated, "All these bases are within the reach of our missiles. Meantime, the occupied (Palestinian) lands (Israel) are good targets for us as well."
The commander explained that the current IRGC missile wargames is a practice of targeting a single hypothetical enemy airbase which is a replica of the US bases in the region. On Tuesday, the IRGC Aerospace Force started massive missile wargames, codenamed Payambar-e Azam 7 (The Great Prophet 7), by firing tens of short, mid and long-range missiles from bases across the country at a single target in Central Iran. The IRGC units fired tens of Shahab 1, 2 and 3, Fateh, Qiyam, Persian Gulf and Zelzal missiles at a hypothetical enemy air base - which IRGC officials had earlier said is a replica of the air bases of the trans-regional powers (the US) - in Iran's Lut Desert simultaneously. The Islamic Republic's top military officials have repeatedly warned that in case of an attack by either the US or Israel, the country would target all American bases in the Middle East and close the strategic Strait of Hormuz. An estimated 40 percent of the world's oil supply passes through the waterway. In similar remarks last month, Hajizadeh had said that the numerous military bases of the trans-regional powers in Iran's neighborhood have provided an "opportunity" for the IRGC. He said Iran believes that the US military bases in the region "are no threat; rather we view them as an opportunity". Hmmmm......Read the full story here.

Iran Warns to Close Strategic Waterway in case of Full Sanctions Practice.

Iran Warns to Close Strategic Waterway in case of Full Sanctions Practice.(Fars)."If we completely go under the sanctions, we will not let a single oil drop pass through the Hormuz Strait," Arsalan Fathipour, head of the Iranian Parliament's Economic Commission, told the Iranian students news agency on Tuesday, a day after Europe began to enforce an oil embargo against Iran. Also on Tuesday, the Iranian foreign ministry spokesman welcomed a draft bill of the parliament requiring the government to close the Strait of Hormuz to those tankers shipping crude to the countries that support sanctions against Iran, and said the government will implement the bill once it receives the approval of the legislature. "The parliament members are the nation's representatives and they reflect the Iranian nation's views and the Iranian nation's public opinion about the hostile moves against the country," Foreign Ministry Spokesman Ramin Mehman-Parast said in a weekly press conference in Tehran on Tuesday. On Monday the National Security and Foreign Policy Commission of the Iranian Parliament drafted a bill requiring the government to stop oil tankers from shipping crude through the Strait of Hormuz to countries that support sanctions against Iran. Mehman-Parast also described the oil sanctions against Iran as "provocative and threatening" to the security of crude supplies, and said, "They should account for their actions and accept the consequences of such decisions which will include social and economic crises in the western countries." An EU embargo on Iranian oil went into effect on Sunday. Tehran has repeatedly cautioned that such measures will hurt talks with world powers over its nuclear program. Iran has threatened to close the strategic Strait of Hormuz at the entrance to the oil-rich Persian Gulf if its nuclear program is targeted by air strikes that Israel and the United States reserve as an option. Situated between the Gulf of Oman and the Persian Gulf, the Strait of Hormuz is a passageway for 40% of the world's oil production, including much of the crude extracted in Saudi Arabia. That threat, repeated since December, helped propel oil prices to a four-year high of $128 for a barrel of Brent North Sea reference crude in early March.Read the full story here.

What the Crude Oil Market is telling us.

What the Crude Oil Market is telling us.(EM). Crude oil prices, along with world stocks, surged on Friday after euro zone leaders reached an accord on directly recapitalizing regional banks as well as measures to cut soaring borrowing costs in Italy and Spain. Brent crude jumped more than 7% in one day to close at $97.80 a barrel, while WTI also settled up 9.36% to $84.96 a barrel on NYMEX. However, for the quarter, spot Brent and U.S. oil futures still fell 20.4% and 17.5% respectively--their steepest quarterly percentage drops since the fourth quarter of 2008 post financial crisis. Looking ahead, we believe this little 'Euro pop' will soon fizz out weighted down by the reality of basic market fundamental factor. 
First of all, the Euro accord bandaid does not fundamentally change what's causing the current crisis to begin with--high sovereign debt, out-of-control government spending, and insolvent regional banks. Add to this scenario is a slowing of European demand, parts of Europe are in a recession, and this not only affects less oil being consumed in Europe, but backs all the way up the supply chain from Ford automobiles being sold and needing to be manufactured, to Chinese factories needing to ratchet manufacturing cycles down to account for less demand out of Europe.
Macroeconomics aside, the oil inventory picture in the U.S. is also quite interesting these days, to say the least. 
For example, On 1/27/2012 there was 338,942 Million Barrels in US storage facilities, then on 2/24/2012 it started slowly rising to 344,868 Million, then Inventory builds started accelerating as on 3/23/2012 there were 353,390 Million on hand, then we jumped dramatically to 375,864 Million Barrels on 4/27/2012, with another sizable increase to 384,740 on 5/25/2012, and on 6/22/2012 the number stands at 387,166 Million Barrels in US Storage facilities, way above the five-year range.
This is taking place despite the domestic refinery run rate has increased from 85% in January to 92% in the week ending June 22 (See Chart Below). As of June 1, 2012, crude oil inventories held at Cushing, OK were 47.8 million barrels, the highest level on record, according to the U.S. Energy Dept. These are historically high numbers, but the magnitude of the rise over what is generally the stronger part of the US business cycle each year is the more compelling story.
With record refinery runs, we still cannot make a dent in the oil Inventories, which implies that there is a lot of oil in the market. In fact, if this trend continues, even just for the next three months, we are going to shatter previous storage records here in the US. At current rate, the inventory number could smash through the 400 Million Barrel level over the next quarter.
This does not bode well for the oil market when the slow part of the year comes around in August and September, where Gasoline demand drops off rather sharply, and is usually the slowest part of the year in terms of fuel usage, demand, and prices typically drop significantly each year. Technically, WTI could easily blow below $70/b with no major support till $60/b comes this August/September, and prices would remain challenged in the short to medium term.
What are the reasons for this glut of oil in the US? There are several, China has slowed manufacturing and exports, i.e., their economy has pulled back considerably. India is having all sorts of credit worthiness concerns, and is also growing at a slower rate. So in short, the emerging market economies are using less oil.  
The demand picture in the U.S. is also quite dismal. EIA data show in the first quarter, total U.S. liquid fuels consumption fell 3.7% YoY due to high prices and record warm weather. For the second half of 2012, and 2013, EIA expects a YoY increase of only 1.2% and 0.6% respectively in liquid fuels consumption. Internationally, the Libyan oil is back on line, and other oil producing countries pumping more oil out of the ground compared to the last 5 years during this era of elevated oil prices. The Saudis are producing at the high end of their range as well. In a recent report, U.S. EIA noted that global company held oil inventories in industrialized nations will be sufficient to cover 57.7 days of demand at the end of 2012, the highest level in 15 years.
Basic economics plays a role in this story as well. Just ask this one question--Where are the high margin business opportunities over the last 5 years? It sure isn`t in the Banking Industry with deal-making and large scale private equity deals falling off a cliff. It hasn`t been in the real estate market either.
Market dynamics 101 stipulates that high oil prices leads to higher margins, which leads to more investment resources being directed to this sector which ultimately rebalances the market, and oil prices come back down. This is why there is often a boom and bust cycle that plays out in many investment sectors, and historically the energy and oil sectors have been the poster kids to this rule.
So essentially, five years of really high prices--higher than the actual fundamentals of the economy should dictate--have caused an artificial market scenario where longer-term demand was being stifled by currency concerns, inflation concerns, while commodity investment in general has served as a case of over investment in this area in relation to true, actual Global demand.
Throw in the fact that it seems everybody (governments as well as consumers) is in debtnobody has any money, credit issues are becoming increasingly burdensome to deficit financing to artificially stimulate growth via the government intervention route, all these factors are forming a perfect storm for the oil market to face some major headwinds for the next 5 years. Hmmm.........Things would look bleak for the oil business..................unless you start a war in the oil region of the Middle East.Read the full story here.

100 Iranian MPs sign a draft law aimed at blocking Europe-bound oil tankers from using the Strait of Hormuz

                                 Iranian bases in the Strait of Hormuz.


100 Iranian MPs sign a draft law aimed at blocking Europe-bound oil tankers from using the Strait of Hormuz.(AJ).Iran's National Security and Foreign Policy Committee has drafted a bill calling for Iran to try to stop oil tankers from shipping crude through the Strait of Hormuz to countries that support sanctions against it. "There is a bill prepared in the National Security and Foreign Policy committee of Parliament that stresses the blocking of oil tanker traffic carrying oil to countries that have sanctioned Iran," Iranian MP Ibrahim Agha-Mohammadi was quoted by Iran's parliamentary news agency as saying on Monday. "This bill has been developed as an answer to the European Union's oil sanctions against the Islamic Republic of Iran."Agha-Mohammadi said that 100 of Tehran's 290 members of parliament had signed the bill as of Sunday. Iran has been floating the threat of closing the strategic Strait of Hormuz at the entrance to the oil-rich Gulf if its nuclear programme is targeted by air strikes that Israel and the United States reserve as an option. While this is a preliminary move that may go no further, even a credible threat to shutting down the strait could lead to oil prices nearly doubling. So far, Iranian political and military officials have said they had no intention on carrying out any threat to close the strait.Hmmmm.....As i said last year once there's an alternative to transport Saudi oil the game will be on.Read the full story here.

Iran - "We take the control of the Hormuz Strait, we will not allow a drop of oil to pass through the strait,"

Iran - "We take the control of the Hormuz Strait. We will not allow a drop of oil to pass through the strait,"(TI).A member of the Iranian parliament (Majlis) said that Iran will close the Hormuz Strait if the economic sanctions against the Islamic Republic take effect. Arsalan Fathipour in an interview with Alalam News Network said that the recent oil price fall will not last for long. "We take the control of the Hormuz Strait. If we are supposed to be sanctioned, we will not allow a drop of oil to pass through the strait," he said, Fars News Agency reported. "In such a situation, oil price will surge and we will see that those who have imposed sanctions will not be able to be accountable for their people," he noted. He noted that Iran can find new customers for oil. Iran has stored up imports and hard currency for a "battle" against EU sanctions, officials said on Sunday, the day that the measures aimed at pressuring the Islamic Republic over its nuclear program take effect. Vice President Mohammad Reza Rahimi said the country has stockpiled the population's daily needs to reduce the impact of the embargo hitting the oil and banking sectors. "Today, we are facing the heaviest of sanctions and we ask people to help officials in this battle," Rahimi was quoted by the IRIB News. He said the "dastardly sanctions" might cause "occasional confusion" in the market, but that the Iranian nation would not be stopped. Central bank governor Mahmoud Bahmani also told the Mehr News Agency that Iran has "plans" to deal with the embargo and enough hard currency to meet its import needs. The EU said earlier this week that all contracts for importing Iranian oil will have to be terminated from Sunday.Hmmmm....."May you live in interesting times" Not a Chinese curse!Originated in Brittain!Read the full story here.More on This here.

Iranian oil minister Rostam Qasemi calls for emergency OPEC meeting.

Iranian oil minister Rostam Qasemi calls for emergency OPEC meeting.(TI).The Iranian oil minister on Saturday called for the Organization of Petroleum Exporting Countries (OPEC) to hold an emergency meeting to cut output as oil prices have dipped to a "critical level" under $100 a barrel, MNA reported. "We have asked the secretary general to set up an emergency meeting as prices have become irrational," Rostam Qasemi was quoted as saying by the Shana News Agency. Qasemi stressed that the last OPEC meeting, on June 14, had decided the organization's overall quota would be 30 million barrels but "members' production has reached 33 million barrels a day." OPEC had agreed that "when the prices go below $100 a barrel, they have reached a critical level," and therefore an emergency meeting was needed before the next scheduled OPEC meeting in December, Qasemi said.Hmmmm.......No decrease in Production......closure of the Strait of Hormuz?Read the full story here.

Iran - Deputy chief commander of the Revolutionary Guards "There will be war – and we'll win."

Iran - Deputy chief commander of the Revolutionary Guards "There will be war – and we'll win."(WND).By Reza Kahlili.Just days after the breakdown of talks with the West over Iran’s nuclear program, the deputy chief commander of the Revolutionary Guards announced that there soon will be war – and that Allah will ensure his forces are victorious. The last round of talks between Iran and the P5+1 (the United States, Britain, France, China, Russia and Germany) ended in Moscow last week without any agreement on Iran’s illicit nuclear program.
Gen. Hossein Salami, in a televised interview, boasted that, “Iran has complete control of all the enemy’s interests around the world and is on a path to reach equivalency with world powers.” The commander emphasized that Iran’s nuclear program is irreversible, the Islamic Republic News Agency reported. Salami said war is inevitable, and the Iranian forces are ready. “The current sanctions will only help Iran with its progress, and the Iranian ballistic missiles can target the enemy’s moving carriers with 100 percent accuracy,” he warned the West. “The Guards’ operational plan includes a radius of deterrence in the region in which all interests of the enemy have been identified, and in case of war, those interests will be attacked.” Guards’ commanders have stated previously that all U.S. bases in the region are targeted with missiles and will be attacked should America strike Iran. Salami said Iranian ballistic missiles can travel at several times the speed of sound and cannot easily be tracked and destroyed. “Our defense inventory is so great that at times our brothers in the Guards face limitations with space.” The Revolutionary Guards have more than 1,000 ballistic missiles capable of reaching all U.S. bases in the region, all of Israel and some capitals in Europe. In collaboration with China and North Korea, they are also working on intercontinental ballistic missiles. Salami said the Guards are on high alert, adding, “Our forces in relation to our internal security will complete their mission with all of their capability.”Hmmmm.......Sounds like a lot of Salami Baloney.Read the full story here.

Iran Arming Warships with Short-Range Missiles.

Iran Arming Warships with Short-Range Missiles.(Fars).Tehran - The Islamic Revolution Guards Corps (IRGC) has begun to outfit Iranian warships patrolling the Strait of Hormuz with radar-evading short-range missiles.The missiles being moved onboard Iranian naval vessels have an effective range of between 200 to 300km, IRGC Navy Commander Ali Fadavi said Friday. At that range, those missiles would be able to strike targets in the Strait of Hormuz or the Sea of Oman from the Iranian coastline, Fadavi said.
The IRGCN move came after the US Navy commanders beefed up their Persian Gulf fleet. The US Navy is doubling the number of its mine-hunting ships patrolling the key waterway. The US commanders have also outfitted their Navy destroyers and cruisers in the region with powerful Gatling guns. The weapons are specially use for taking out the small, fast-moving patrol boats the Iranian navy commonly uses to patrol the strait. 
Iran's naval power has even been acknowledged by foes. (Quote: "You Sunk my Carrier")In a Sep. 11, 2008 report, the Washington Institute for the Near East Policy also said that in the two decades since the Iraqi imposed war on Iran, the Islamic Republic has excelled in naval capabilities and is able to wage unique asymmetric warfare against larger naval forces. According to the report, Iran's Navy has been transformed into a highly motivated, well-equipped, and well-financed force and is effectively in control of the world's oil lifeline, the Strait of Hormuz. The study says that if Washington takes military action against the Islamic Republic, the scale of Iran's response would likely be proportional to the scale of the damage inflicted on Iranian assets. The Islamic Republic's top military officials have repeatedly warned that in case of an attack by either the US or Israel, the country would target 32 American bases in the Middle East and close the strategic Strait of Hormuz. An estimated 40 percent of the world's oil supply passes through the waterway. A recent study by a fellow at Harvard's Olin Institute for Strategic Studies, Caitlin Talmadge, warned that Iran could use mines as well as missiles to block the strait, and that "it could take many weeks, even months, to restore the full flow of commerce, and more time still for the oil markets to be convinced that stability had returned".Hmmmm.....I still say the countdown is running, will it be before or after the U.S. Elections?Is this why US Army is 'exercising' for 'riots' on U.S. Soil? Read the full story here.

Has the 'Go-Ahead' been given and is the Countdown running for the Attack on Iran?

Has the 'Go-Ahead' been given and is the Countdown running for the Attack on Iran?(JPost).DUBAI - Saudi Arabia has reopened an old oil pipeline built by Iraq to bypass Gulf shipping lanes, giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz, industry sources say. The Iraqi Pipeline in Saudi Arabia (IPSA), laid across the kingdom in the 1980s after oil tankers were attacked in the Gulf by both sides during the Iran-Iraq war, has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990.
Saudi Arabia confiscated the pipeline in 2001 to compensate for debts owed by Baghdad and has used it to transport gas to power plants in the west of the country in the last few years. Iran in January threatened to block the Strait of Hormuz in retaliation for US and European sanctions that target its oil revenues in a bid to stop Iran's nuclear program. Alarmed, Saudi Arabia has now quietly reconditioned IPSA to carry crude, test pumping along the line over the last four to five months, several sources with knowledge of the project say. "The testing started because Saudi Arabia wanted to secure alternative routes to export oil," an industry source in Saudi Arabia said. Western industry sources said the tests through the 1.65-million barrel-a-day line had delivered into storage facilities at Mu'ajjiz near Yanbu on the Red Sea for at least four months. More than a third of the world's seaborne oil exports pass through the narrow Strait of Hormuz from the oilfields of Saudi Arabia, Iran, Kuwait, Iraq, the United Arab Emirates and Qatar. Qatar's liquefied natural gas exports are all shipped through Hormuz. As tensions over Iran's nuclear program ratcheted up, Riyadh decided to put IPSA on standby to transport more crude west in an emergency. The United Arab Emirates has built its own Hormuz bypass pipeline, which is due to start exporting from the Gulf of Oman next month.MFS - The Other News -22 June: United Arab Emirates - First oil flows through UAE’s Hormuz bypass.
“This is a great solution for the UAE but it’s not a 100 percent solution for the whole problem,” said Theodore Karasik, research director at Dubai-based security consultancy INEGMA Group. The new pipeline has a stated capacity of around 1.5 million barrels per day (bpd) while UAE exports total around 2.4 million bpd. Some sources say the pipeline could carry around 2 million bpd of the UAE’s biggest export at a push. The 370-km (231-mile) Abu Dhabi Crude Oil Pipeline carries oil from fields in the UAE’s western desert to the east coast port of Fujairah, a major oil storage and fuel bunkering hub. “Today oil has been received at the main oil terminal in Fujairah and 1 million barrels is coming in,” a source directly involved in the project said. “The plan is to load the first oil tanker around July 1... We will slowly increase it to 1.5 million bpd.”Hmmm.......Great for Iranian 'Target practice'.It seems the countdown is on.
The main question is will it be BEFORE or After the U.S. Elections?Read the full story here.