Last Wednesday, the U.N. Security Council approved a resolution for a fourth round of sanctions against Iran, which includes prohibiting Tehran from buying heavy weapons, tightening financial transactions with Iranian banks and new cargo inspections.
The main thrust of the sanctions is against military purchases, trade and financial transactions carried out by the Islamic Revolutionary Guards Corps, which controls the nuclear program and has taken a more central role in running the country and the economy.
It also authorizes nations to conduct maritime inspections of vessels suspected of transporting prohibited items for Iran and adds 40 entities to a list of people and groups subject to travel restrictions and financial sanctions.
The resolution followed five months of strenuous negotiations between the United States, Britain, France, Germany, China and Russia. With 12 votes in favor, it received the poorest support in the 15-nation council of the four Iran sanctions resolutions adopted since 2006. Turkey and Brazil voted no, while Lebanon abstained.
After vehemently opposing sanctions, Russia appears to be taking a tougher line with Iran. Officials said yesterday that Moscow would comply strictly with the new UN sanctions and signalled that a deal to supply Iran with air-defense missiles was now off.
Predictably, Iranian President Mahmoud Ahmadinejad said Israel was "doomed" and singled out U.S. President Barack Obama for derision, blaming Washington for orchestrating the sanctions.
The Obama Administration has hailed the sanctions as a key diplomatic victory despite having its proposals watered down in order to gain Chinese support and only garnering 12 votes. Domestically, however, the administration is reportedly working with Congress to ease restrictions. According to the L.A. Times, administration officials have begun negotiations with congressional leaders, who are working on versions of House and Senate bills that would punish companies that sell refined petroleum products to Iran or help the country's oil industry.
Unlike the U.N. measures, congressional action would pertain only to U.S. policies and agencies and would not be binding on other countries. Other countries and groups of nations are also considering additional measures.
For its part, Tehran has completely dismissed the sanctions. For months, President Mahmoud Ahmadinejad has warned that Iran would respond aggressively, even militarily against U.S. and Isaeali interests in the region. Any military action by Iran would undoubtedly be targeted at disrupting oil supplies through the Straits of Hormuz, an outcome the world hopes desperately to avoid.
Saudi Arabia, no friend of Israel, views Iran as the bigger threat. Sources in the Gulf say that Riyadh has agreed to allow Israel to use a narrow corridor of its airspace in the north of the country to shorten the distance for a potential bombing run on Iran.
Sources in Saudi Arabia say it is common knowledge within defense circles in the kingdom that an arrangement is in place if Israel decides to launch a raid. Despite the tension between the two governments, they share a mutual loathing of the regime in Tehran and a common fear of Iran’s nuclear ambitions.
The 4 main targets for any raid on Iran would be the uranium enrichment facilities at Natanz and Qom, the gas storage development at Isfahan and the heavy-water reactor at Arak. Secondary targets include the lightwater reactor at Bushehr, which could produce weapons-grade plutonium when complete.
Israeli officials refused to comment on details for a possible raid on Iran, which Prime Minister Binyamin Netanyahu, categorically refuses to rule out. Asked about the possibility of a Saudi flight path for Israeli bombers, Aharaon Zeevi Farkash, who headed military intelligence until 2006 and has been involved in war games simulating a strike on Iran, said: “I know that Saudi Arabia is even more afraid than Israel of an Iranian nuclear capacity.”
It looks like "show time" in the Middle East is at hand. In the last several years, Tehran has built an impressive aresenal of advanced Russian-made weapons which make Iran no pushover, even with a massive military presence by the U.S. across the border in Iraq, as well as the potent military capability of Israel.
Should any military action ensue, its economic effects may be life-changing for the entire planet. Disrupting oil flow will not be that difficult, with severe repercussions for the world. For investors, companies engaged in the production of energy outside of the Middle East ought to be huge beneficiaries. In addition, the uncertainty caused by any altercation ought to be explosively bullish for Gold.
Marko's Take
If you're looking for some great investing information at a reasonable price, we would like to suggest that you check out the following sites: http://www.lemetropolecafe.com/, http://www.aegeancapital.com/, http://www.marketviews.tv/, http://www.goldpennystocks.com/, and, of course, our FREE and, oh so informative You Tube channel at http://www.youtube.com/markostaketv.
Showing posts with label Saudi Arabia. Show all posts
Showing posts with label Saudi Arabia. Show all posts
Saturday, June 12, 2010
Tuesday, March 16, 2010
Peak Oil: Going Mainstream
We've written twice about "Peak Oil", the notion that world oil production has peaked with no possibliltiy of exceeding the brieflly achieved record in 2008. (http://markostake.blogspot.com/2010/01/what-exactly-is-peak-oil-part-1.html) and (http://markostake.blogspot.com/2010/01/what-exactly-is-peak-oil-part-2.html).
The notion of Peak Oil has been controversial, especially given the claims from larger Middle Eastern producers that their reserves keep growing. Most Middle-Eastern producers, including giant Saudi Arabia, have not let Western scientists access to geological data necessary to verify their reserves. However, now the conventional wisdom is shifting dramatically.
Kuwait has now admitted that global production will peak in 2014. Their work represents an updated version of the famous Hubbert Model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak.
Thier prediction is flawed. Even their own scientists acknowledge that the world continues to consume its oil reserves at a rate of about 2.1% each year. According to the Hubbert Model, that rate of decline will accelerate. They plan to continue including new data that can refine the model as time goes by.
Some, like Marko's Take, have said production has ALREADY peaked, barring the fluke discovery of some unknown humungous, readily accessible oil field. FAT CHANCE! One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. Other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: OIL IS FINITE!
The issue's profile was raised recently with a new report projecting increased demand. After peaking above $140 a barrel in mid-2008, crude oil prices dipped to below $40 in early 2009, as global demand tanked amid the recession. Prices have been rising ever since and are above $80 now. Recently, the International Energy Agency (IEA) said it expects demand to resume the sort of growth that was common in recent years. Much of that growth has involved the modernizing economies of China and India.
Production cycles reflect the influence of new technological innovations in the oil industry, government regulations, economic conditions and political events. The factors include the discovery of new oil deposits, the recent economic recession (aka DEPRESSION) and the rise of renewable energy. As we've pointed out, renewable energy, AT THIS TIME, is insufficient to materially dampen the supply for oil FOR YEARS!
A perfect example is Mexico. The nation, which has been a top oil exporter, has experienced cacscading production and might even begin IMPORTING oil within the decade, the New York Times reports! Its troubles have arisen from a lack of technology to explore more inaccessible oil deposits and a misguided, nationalistic policy stemming from a 1938 law that banned foreign oil companies.
More complications may still change the ultimate end date for peak oil. OPEC's latest projection suggests that world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated Press story this week. That follows a period of low oil demand during the height of the worldwide recession in 2009.
There is now little doubt that Peak Oil is more than just a lunatic "doomsday" notion. As oil does peak, if even by some fluke, it occurs this year or next year instead of 2008 as we have contended, the result will be the same: MUCH HIGHER OIL PRICES!
Marko's Take
We have two video blogs on "Peak Oil" if you wish to familiarize yourself with some of the statistics backing up our assertion. They can be found here http://youtube.com/markostaketv.
The notion of Peak Oil has been controversial, especially given the claims from larger Middle Eastern producers that their reserves keep growing. Most Middle-Eastern producers, including giant Saudi Arabia, have not let Western scientists access to geological data necessary to verify their reserves. However, now the conventional wisdom is shifting dramatically.
Kuwait has now admitted that global production will peak in 2014. Their work represents an updated version of the famous Hubbert Model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak.
Thier prediction is flawed. Even their own scientists acknowledge that the world continues to consume its oil reserves at a rate of about 2.1% each year. According to the Hubbert Model, that rate of decline will accelerate. They plan to continue including new data that can refine the model as time goes by.
Some, like Marko's Take, have said production has ALREADY peaked, barring the fluke discovery of some unknown humungous, readily accessible oil field. FAT CHANCE! One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. Other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: OIL IS FINITE!
The issue's profile was raised recently with a new report projecting increased demand. After peaking above $140 a barrel in mid-2008, crude oil prices dipped to below $40 in early 2009, as global demand tanked amid the recession. Prices have been rising ever since and are above $80 now. Recently, the International Energy Agency (IEA) said it expects demand to resume the sort of growth that was common in recent years. Much of that growth has involved the modernizing economies of China and India.
Production cycles reflect the influence of new technological innovations in the oil industry, government regulations, economic conditions and political events. The factors include the discovery of new oil deposits, the recent economic recession (aka DEPRESSION) and the rise of renewable energy. As we've pointed out, renewable energy, AT THIS TIME, is insufficient to materially dampen the supply for oil FOR YEARS!
A perfect example is Mexico. The nation, which has been a top oil exporter, has experienced cacscading production and might even begin IMPORTING oil within the decade, the New York Times reports! Its troubles have arisen from a lack of technology to explore more inaccessible oil deposits and a misguided, nationalistic policy stemming from a 1938 law that banned foreign oil companies.
More complications may still change the ultimate end date for peak oil. OPEC's latest projection suggests that world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated Press story this week. That follows a period of low oil demand during the height of the worldwide recession in 2009.
There is now little doubt that Peak Oil is more than just a lunatic "doomsday" notion. As oil does peak, if even by some fluke, it occurs this year or next year instead of 2008 as we have contended, the result will be the same: MUCH HIGHER OIL PRICES!
Marko's Take
We have two video blogs on "Peak Oil" if you wish to familiarize yourself with some of the statistics backing up our assertion. They can be found here http://youtube.com/markostaketv.
Friday, January 8, 2010
"What Exactly Is Peak Oil?... Part 2
There are more reasons for concern regarding the concept of "Peak Oil", which were outlined yesterday.
First and foremost are the rapid quantity and quality of oil reserves. Saudi Arabia hasn't had its reserves verified in decades. It's certain that something is amiss. Most of the exports from Saudi Arabia have deteriorated to a vastly lower quality oil. Crude is actually a blend of many hydrocarbons. The most valuable portion of a barrel is Jet Fuel, which is also known as kerosene. Next is gasoline which is followed by Diesel Fuel.
Crude Oil also is referred to as either "sweet" or "sour". The level of sweetness is dependent on the amount of sulphur found in the oil. The less sulphur, the better. Oil is also classified as "light" or "heavy". Light refers to the proportion of the higher valued liquids, such as kerosene, gasoline and diesel. Sour oil is filled with large amounts of Residual Fuel Oil and Tar. "Resid", as it's known in the trade, is used on marine vessels, as it is known to be highly pollutive. Tar is known for its use in paving roads.
Saudi Arabia exported light-sweet crude, but now exports heavy-sour crude. So clearly, the good stuff is going. Venezuela, another very large oil exporter, also delivers heavy-sour crude.
Even the worst quality crudes can be converted into more valuable products through refineries which have "crackers". No, I don't mean graham crackers! Crackers actually split the molecules, thereby allowing the transformation from heavy to light. The longer the molecule, the heavier the product. But cracking is expensive and the number of refineries with the requisite technology is falling behind the deterioration in crude.
Only a few countries, such as Russia, are producing increasing quantities of light-sweet crude, while most countries are on the decline in quantity and quality.
Marko's Take? Peak oil is coming faster and becoming more dangerous at a rapidly accelerating rate!
Tomorrow, we'll re-examine the latest economic data as new information continues to appear.
Marko's Take
First and foremost are the rapid quantity and quality of oil reserves. Saudi Arabia hasn't had its reserves verified in decades. It's certain that something is amiss. Most of the exports from Saudi Arabia have deteriorated to a vastly lower quality oil. Crude is actually a blend of many hydrocarbons. The most valuable portion of a barrel is Jet Fuel, which is also known as kerosene. Next is gasoline which is followed by Diesel Fuel.
Crude Oil also is referred to as either "sweet" or "sour". The level of sweetness is dependent on the amount of sulphur found in the oil. The less sulphur, the better. Oil is also classified as "light" or "heavy". Light refers to the proportion of the higher valued liquids, such as kerosene, gasoline and diesel. Sour oil is filled with large amounts of Residual Fuel Oil and Tar. "Resid", as it's known in the trade, is used on marine vessels, as it is known to be highly pollutive. Tar is known for its use in paving roads.
Saudi Arabia exported light-sweet crude, but now exports heavy-sour crude. So clearly, the good stuff is going. Venezuela, another very large oil exporter, also delivers heavy-sour crude.
Even the worst quality crudes can be converted into more valuable products through refineries which have "crackers". No, I don't mean graham crackers! Crackers actually split the molecules, thereby allowing the transformation from heavy to light. The longer the molecule, the heavier the product. But cracking is expensive and the number of refineries with the requisite technology is falling behind the deterioration in crude.
Only a few countries, such as Russia, are producing increasing quantities of light-sweet crude, while most countries are on the decline in quantity and quality.
Marko's Take? Peak oil is coming faster and becoming more dangerous at a rapidly accelerating rate!
Tomorrow, we'll re-examine the latest economic data as new information continues to appear.
Marko's Take
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