Iran worries and oil prices - Oct 26

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Strike on Iran Would Roil Oil Markets, Experts Say
Steven Mufson, Washington Post
A U.S. military strike against Iran would have dire consequences in petroleum markets, say a variety of oil industry experts, many of whom think the prospect of pandemonium in those markets makes U.S. military action unlikely despite escalating economic sanctions imposed by the Bush administration.

The small amount of excess oil production capacity worldwide would provide an insufficient cushion if armed conflict disrupted supplies, oil experts say, and petroleum prices would skyrocket. Moreover, a wounded or angry Iran could easily retaliate against oil facilities from southern Iraq to the Strait of Hormuz.

…Although the Bush administration is not openly threatening a military strike against Iran, the president recently spoke of needing to avoid “World War III,” and Vice President Cheney said that the United States would “not stand by” while Iran continued its nuclear program. “We will not allow Iran to have a nuclear weapon,” he said.

Oil traders said that even if the chances of military conflict with Iran were small, the huge run-up in oil prices that would result encourages some speculators and investment funds to bid up the price of oil, adding a premium of $3 to $15 a barrel.

“It will be chaos. . . . I can’t really see it,” said Abdulsamad al-Awadi, an oil trading consultant and former executive at Kuwait Petroleum. “Having been in the marketplace for almost 30 years, I can’t see a scenario for it, or precautionary measures” that oil companies could take. “There are no precautionary measures.”

“If war breaks out, anticipate that all hell will break loose in the oil markets,” said Robin West, chairman of PFC Energy, a District oil consulting firm.
(26 October 2007)

Iran – tension and pressure up again
Jerome a Paris, European Tribune
Just in, via the Wall Street Journal:

In an ambitious bid to cripple Iran’s military-industrial complex, the Bush administration imposed a sweeping array of new sanctions against banks, companies, officials and agencies affiliated with the country’s weapons programs and support for foreign armed forces.

… U.S. officials are making their strongest efforts to date to depict Iran as a rogue nation on a war footing, stirring up trouble in Iraq, Lebanon, Afghanistan and the Palestinian territories with a well-organized bureaucracy which funds terrorism, distributes weapons, and conducts advanced weapons research.

The Treasury and State departments are announcing the new measures jointly today in a well-coordinated public relations effort.

I had begun to hope that the prospects of war with Iran had receded. We’ve had so many warnings that it was forthcoming, and nothing happening, that I’ve been musing that ‘someone’ (Russia or China, presumably) had made it clear to the White House that an attack would not be tolerated. But with the resignation of the Iranian diplomat in charge of nuclear negotiations , Ali Larijani, and his replacement with a hardliner, and the steady ratchet of sanctions and threats from Washington, El Baradei’s words that Iran is not a threat seem increasingly dismissed as those of a shrill partisan…

One major item is that France is now seen as being on board for war. Insiders suggest that Sarkozy is much less aggressive in private, but this is essentially irrelevant as the perception is now set amongst the pundits that France will support war – and the absence of that potential obstacle is enough to create the perception of momentum towards, and justification for, war (“even the French support it this time!”).

I’m worried again. (Well, I’m scared to death, given how I fail to see how an attack on Iran would not end up in a nuclear exchange, if Iran tries to disrupt oil flows, which is highly likely).
(25 October 2007)
Also at Daily Kos.

Related:
From New York Times: New Steps by U.S. Against Iranians
From Juan Cole: US Sanctions on Iran

Oil Rises to Record Over $92 After U.S. Says Iran Backs Terror
Alexander Kwiatkowski, Bloomberg
Oil rose above $92 a barrel for the first time in New York after the U.S. accused Iran’s military of supporting terrorism and stepped up pressure on foreign companies to cut ties with the Middle East oil producer.

Crude oil also rallied as Turkey warned of a wider military assault into northern Iraq and OPEC officials yesterday said record prices didn’t justify a further increase in crude production.

“The door is open to $100,” said Kevin Norrish, energy analyst at Barclays Capital Inc. in London. The dispute between the U.S. and Iran will “continue to ratchet up in terms of tension.”
(26 October 2007)

Oil keeps rising, briefly tops $92 a barrel
Barbara Hagenbaugh, USA Today
Crude oil prices spiked above $92 a barrel in Asia Friday on growing tensions in the Middle East and renewed concern about oil supplies.

Light, sweet crude for December delivery rose $1.07 to $91.53 a barrel in electronic trade on the New York Mercantile Exchange in Singapore. It briefly rose to a trading record of $92.22 during Asian trading.

The Nymex crude contract jumped $3.36 to settle at $90.46 a barrel Thursday in the U.S., closing above $90 a barrel for the first time.

Oil prices are within striking distance of the all-time high when adjusted for inflation of $93.09 set in January 1981, according to the Energy Department.

The combination of supply worries and geopolitical concerns has pushed crude oil prices up more than 7% since Tuesday.
(26 October 2007)

Oil Tops $90 on Range of Worries
Neil King Jr. and Shai Oster, Wall Street Journal
Oil soared past $90 a barrel to a record on a mix of unsettling news that ranged from Middle East tensions to supply concerns, demonstrating the delicate state of world petroleum markets heading into the energy-intensive winter months.

The events — which included a statement by a top OPEC official to The Wall Street Journal that the world’s oil cartel doesn’t see a need to check the price surge — might not have moved oil markets dramatically by themselves. But oil’s 3.9% rise yesterday to an exchange high of $90.46 a barrel shows that prices are responding to a slew of economic and geopolitical forces and suggests further big swings could lie ahead.
(26 October 2007)
Very good summary. You may have to go through GoogleNews to get public access to the article. -BA