| The
exploding energy pie Today will be remembered as the day America played a deuce of trumps. Ostensibly the Federal Reserve announced an extension of an existing program to swap US Dollars for Euros, Swiss Francs, British Pounds and Japanese Yen. Why? -- to assist foreign banks in meeting their obligations to pay out Dollars. To pay out US Dollars for what? -- for oil. Issuers of fiat currencies have an abhorence for gold, which is ruthlessly hammered whenever it threatens to replace paper money. Nowhere is this threat more pronounced than in the world market for light sweet crude. With Brent and Louisiana Light at $120, WTI over $100, European depositors fleeing, European governments unable to roll their debt, and Japan bidding up crude to generate electric power that was lost from nuclear plants, demand for oil is growing at a time when supply is uncertain. Iran is the #3 exporter. War would cut off oil & gas exports from Saudi Arabia, Kuwait, Iraq, and Egypt. OECD oil importers agreed to swap their currencies for US Dollars to keep gold at bay and to pay US Dollar contracts, hoping to control oil prices. That has zero chance of success, because diplomacy with Iran has ended. |
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| NPR U.S. Targets Iran Bank Legislation moving through the U.S. Congress would target the central bank of Iran, with the effect of severely limiting Iran's oil exports.The proposal has strong support from both Democrats and Republicans, including leading Republican presidential candidates who supported the idea during last week's foreign policy debate. Under legislation pending in Congress, U.S. banks would generally be banned from doing business with any |
financial institution that in turn
does significant business with the central bank of Iran. Foreign
companies that buy Iranian oil and pay for it through Iran's central
bank would have to halt those transactions or lose the chance to do
business in the United States. "It's a pretty dangerous game," Jamie Webster, a manager with PFC
Energy told NPR. "It's a very tight oil market. Whether we want to
admit it |
Saudi Arabia's [supposed]
excess
oil production capacity has always acted
as insurance for the global oil market: If a crisis somewhere disrupts
oil production, the Saudis can make up for the lost supply. Michael Wittner, global director of oil research for the French investment bank Societe Generale, says the Saudis could similarly make up for lost supplies from Iran. Wittner cautions, however, that tapping into excess Saudi capacity would leave less spare capacity, at a time of continued unrest in the Middle East and North Africa."It would clearly be bullish for oil prices," he said. Oil prices would likely rise. |
Major General Zhang Zhaozhong, a professor from the Chinese National Defense University, said China will not hesitate to protect Iran even with a third World War. Russia is another ally of Iran, with similar policy to that of China. |
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