geopolitical issue

"Open War" in the Middle East
By Dahr Jamail
t r u t h o u t | Perspective
From: http://www.truthout.org/docs_2006/071806J.shtml
Tuesday 18 July 2006
"In my judgment, the best way to stop the violence is to understand why the violence occurred in the first place." That one sentence (a surprisingly rare example of a complete sentence spoken by Cheney spokesman George W. Bush), taken on its own, would fully explain why the Middle East is now on the brink of regional war. But of course, Bush always finds a way to engage in Orwellian newspeak. At a news conference with Russian President Vladimir Putin on Saturday, he managed to rewrite history in the very next sentence by blaming Hezbollah for instigating the violence by launching rocket attacks into Israel and capturing Israeli soldiers. But then, George most likely has no idea where Gaza is, let alone what has been occurring there for decades.

As puppet Bush goes on saying things like "Every nation has a right to defend itself," referring to his favorite ally, Israel, his use of the word "every" would of course exclude Lebanon, since their army is using anti-aircraft guns against Israeli warplanes. And let us not forget the Iraqi resistance - as it may never cross his feeble mind that they are defending Iraq from the American invaders.

Most Arab leaders are refusing to back Hezbollah, although US-influenced Egyptian president Hosni Mubarak and Jordan's King Abdullah II issued the usual statements demanding "an immediate halt on attacking civilians and vital infrastructure," saying that such attacks breach the international humanitarian conventions. As if Israel will listen. As if the US listens to any calls from countries demanding similar actions by the occupation forces and Western contracting companies who are busily raping and pillaging Iraq. As if any country in war ever abides by the Geneva Conventions nowadays. And without a functional UN to actually take a stand for human rights or real justice, why should they?

The typical response among the people here in the Middle East is to scoff at their leadership - who continue to cower and bow to US interests.

Friday at the Lebanese/Syrian border, I spoke with a 50-year-old Kuwaiti man, Emad, as he fled Beirut with his family. "It's very bad there, as the Israelis are attacking civilians, bombing police and petrol stations and even the fuel storage depots," he told me, "In fact, they have even bombed the airport once again. I saw F-16's bombing and there is smoke everywhere. This is a big disaster for the Lebanese."
When I asked him what he thought it would take to end the fighting, he promptly replied, "It looks like the Arab governments are not moving their asses, so I am leaving."
Yet as consistently as the Arab governments fail to get busy "moving their asses" toward something resembling a solution to this crisis, just as consistently are the people repressed by those same governments raising their voices.
On Friday, tens of thousands of Arab protestors hit the streets, condemning the Israeli invasion of Lebanon and their actions in the Gaza Strip. 5,000 angry protesters gathered at a mosque in Cairo carrying banners that read, "Hey Arab leaders, you should be united." In Amman, over 2,000 demonstrators gathered at a mosque after Friday prayers, shouting "Zionists get out, get out!" and "Lebanon, Palestine and Jordan are one people!"
Thousands marched in Gaza, waving Palestinian and Lebanese flags.

Meanwhile in Baghdad, thousands of angry Iraqis marched, praising Hezbollah's leader, Sheikh Hassan Nasrallah, while denouncing Israel and the US for the attacks. Shia cleric Muqtada al-Sadr hinted that he may be prepared to put his Mehdi Army militia into action against the Americans due to the Israeli actions in Lebanon and Gaza.

In an earlier piece titled "An Alliance of Violence," I detailed how violence perpetrated on the people of Palestine by the Israeli military has immediate ramifications in Iraq. The same is now brewing yet again.

In Kuwait, protesters rallied in front of the parliament building, shouting "Death to Israel!" and "Death to America!" Meanwhile, a Kuwaiti lawmaker named Musallam al-Barrak lashed out at his and other Arab governments when he stated, "Arab countries can do nothing but condemn."
There is a frightening undercurrent of rage among the people in the Middle East toward their governments: The Arab world is on fire over the injustice meted out against the Palestinian people, as well as to the Lebanese. The Israeli people are deeply angered at their government for failing to provide security (of course our corporate media would never report on the fact that hundreds of thousands of Israelis oppose their government's actions in Gaza and beyond) - instead, preferring peaceful resolutions rather than brutal, unjust, failed occupation and ongoing acts of aggression.
Predictably, the impotent UN Security Council goes about its machinations of futility, holding emergency meetings while hoping for resolutions - which rarely, if ever, change anything on the ground to stop the needless massacre of civilians on both sides of the conflict. Ah, the UN - where the US is responsible for eight out of the last nine vetoes, seven of which had to do with the Israeli-Palestinian conflict. So why pin any hope on the UN, when the US has already vetoed a resolution demanding that Israel stop its military offensive in the Gaza Strip?

Meanwhile, the bloodletting continues as the situation escalates and spins further into chaos while threatening to spread deeper into the region.

Israel, the only nuclear power in the region, hopes to completely annihilate Hezbollah from southern Lebanon. They have now insured total, unending war by demanding Hezbollah to completely disarm, leave southern Lebanon and hand over the Israeli soldiers, demands which Hezbollah will surely brush aside.

Let us not forget that both Israel and the US announced in January that the Palestinian people would be punished for voting the wrong way by electing Hamas to power. That unjust act, which began the chain of events leading to our current crisis, may well be marked as the match that lit this hellish bonfire. Because it certainly seems, judging from their actions in Gaza and now in southern Lebanon, that the aim of the Israeli government is to wipe out the Palestinian people, in addition to Hamas and Hezbollah.

So we naturally have open war in Israel, Palestine and Lebanon. Israel declared it by their act of bombing and invading Lebanon, then bombing Nasrallah's Beirut offices. Nasrallah, unhurt by the attack, promptly appeared on television announcing "open war" against Israel.

On Hezbollah's TV channel in Beirut, he said, "You wanted an open war and we are ready for an open war." He announced, "Look at the warship that has attacked Beirut [referring to an Israeli warship off the coast that was lobbing shells into Lebanon] while it burns and sinks before your very eyes."

The ship was heavily damaged and four of its 80 soldiers on board went missing after being attacked by an explosive drone launched by Hezbollah, the first time such a weapon has been seen from their arsenal.

"Now in the middle of the sea, facing Beirut, the Israeli warship that has attacked the infrastructure, people's homes and civilians - look at it burning," Nasrallah mocked, in his address that aired late Friday night.

In footage aired by the same channel, dozens of Lebanese danced in the streets of Beirut to celebrate the announcement of the attack on the Israeli ship. This, of course, contradicts Israel's goal in pressuring Lebanon: Israel hoped that by punishing the Lebanese they would force the country to pressure Hezbollah. Despite the propaganda of the dancing Lebanese aired by Hezbollah TV, reaction thus far is mixed in besieged Lebanon.

Deepening the crisis, Nasrallah threatened to attack deeper inside Israel, "beyond Haifa."

And Saturday the bloodshed continued as the Israeli Air Force bombed bridges, fuel storage tanks, petrol stations in southern and eastern Lebanon. At least four people were killed in Lebanon's Bekaa Valley and more bridges south of Beirut were destroyed.

The same day, at least 15 Lebanese villagers, including women and children, were killed by an Israeli air strike on their vehicles as they fled their village of Marwahin in southern Lebanon after being ordered to evacuate by the Israelis.

Leaflets dropped by Israeli aircraft over Beirut warned the Lebanese not to back Nasrallah. Yet, giving further evidence to the Lebanese army's outwardly opposing the Israelis, after the leaflets were dropped they were promptly collected and taken away by Lebanese security forces.

Underscoring this, Saadeddine Rafik Hariri, majority leader in the Lebanese Parliament and the son of the assassinated former prime minister of Lebanon, Rafik Hariri, told reporters in Kuwait on Saturday: "The Lebanese people must remain united. We must not allow Israel to divide us. The enemy is Israel."

Here in Damascas we're on pins and needles. The mood is one of both high anxiety and seething anger at the Israelis' war against both Lebanon and Hezbollah. Like anywhere else, nobody here supports collective punishment or attacks against sovereign countries.

As Israeli jets pound the mountains in Lebanon near the Syrian border, striking radio and satellite antennas, the concern that Syria will be drawn into the conflict grows daily.

The day before, Reuters reported that the ruling Ba'ath party in Damascas announced that they and the "Syrian people"... "are ready to extend full support to the Lebanese people and their heroic resistance to remain steadfast and confront the barbaric Israeli aggression and its crimes."


Ahmed

The war is even widening in Lebanon, as Israeli warplanes, also on Saturday, bombed an area in Tripoli, their most northern strike thus far. After Israel placed an embargo on Lebanon and shut down their main seaport in Beirut, 95% of the trade was rerouted through the port at Tripoli. Today, three bombs were dropped by Israeli war planes on that port. Other Lebanese ports now shut down include Jounieh, Amshit and Hamat, as the Lebanese economy has ground to a nearly complete standstill.

At least 79 civilians have been killed and over 250 wounded since Israel began its attack against Lebanon on Wednesday.

Civilians dying aren't only in Lebanon. Over a dozen rockets were fired by Hezbollah into several towns in northern Israel, in addition to over 90 fired into a total of 15 towns in Israel thus far, killing at least four and wounding scores.

Thus, both Hezbollah and the Israeli government have their "open war." As usual, while the politicians and the UN wring their hands and twiddle their thumbs, those bearing the brunt are the civilians on both sides, whether they live in Israel, Lebanon or Palestine.

Ahmed

Geopolitical issues and the US Economy
Kamala SarupIf Iran oil is traded only in Euros, then everyone else in the world will do so. That's an proved conclusion. US economic will collapse as a result. That's another proved conclusion.

Not a bad idea, IMO, for the world to get off the dollar. That will bring the gross imbalance of world trade into better balance and, after a worldwide depression, the world will continue with a healthier balance of consumption and production in all the countries.

Currently, the US is the great consumer, which provides each of the less developed countries with the market to grow by saving, investing and building production facilities. (It does not have a big enough market to sell to itself.) As the biggest consumer, US has a chronic unfavorable trade balance and the undeveloped countries have a chronic favorable trade balance. Remove the dollar, dump them, and prices for imports and exports in dollars fall, US consumes less, exports to US fall, production in US and around the world falls and depression results. World trade falls to levels where each country, including US, has to live with trade balances instead of imbalances.

After the storm is over, developing countries will grow less rapidly with balanced trade, since they can no longer use US as the insatiable market to support their production. Developed countries, including US, will resume growth patterns, but by unknown amounts. US economic power does not necessarily diminish. In fact, with a better balance between production and consumption, it might resume its economic.

Even on the other side today, A few companies, like Eastman-Kodak, IMB, and Corning Glass Works, paid and treated their employees well enough that no strikes ever occurred and no labor unions were established.

An US economy provide the money and take the risks. It is true, Us has buy equipment, goods and labor services to create products for sale. Even today, some capitalists with insufficient capital, ability, motivation, and luck will "go broke" and lose their investments and maybe everything else, while others will make "a living". A favored few will make enormous profits. Inevitably, a continuum of incomes among persons and families ranging from the poorest to the richest, however defined, will be the result. Thus, in a decentralization economy, money creates greater amounts of money and greater average living standards, which are distributed unequally among its people.

Ahmed

Currently almost all oil buying and selling is in US-dollars through exchanges in London and New York. It is not accidental they are both US-owned.

The Wall Street crash in 1929 sparked off global depression andWorld War II. During that war the US supplied provisions and munitions to all its allies, refusing currency and demanding gold payments in exchange.

By 1945, 80% of the world's gold was sitting in US vaults. The dollar became the one undisputed global reserve currency -- it was treated world-wide as `safer than gold'. The Bretton Woods agreement was established.

The US took full advantage over the next decades and printed dollars like there was no tomorrow. The US exported many mountains of dollars, paying for ever-increasing amounts of commodities, tax cuts for the rich, many wars abroad, mercenaries, spies and politicians the world over. You see, this did not affect inflation at home! The US got it all for free! Well, maybe for a forest or two.

Over subsequent decades the world's vaults bulged at the seams andmore and more vaults were built, just for US dollars. Each year, theUS spends many more dollars abroad that at home. Analysts pretty much agree that outside the US, of the savings, or reserves, of all other countries, in gold and all currencies -- that a massive 66% of this total wealth is in US dollars!

In 1971 several countries simultaeously tried to sell a small portion of their dollars to the US for gold. Krassimir Petrov, (Ph. D. in Economics at Ohio University) recently wrote, "The US Government defaulted on its payment on August 15, 1971. While popular spin told the story of `severing the link between the dollar and gold', in reality the denial to pay back in gold was an act of bankruptcy by the US Government." (1) The 1945 Bretton Woods agreement was unilaterally smashed.

The dollar and US economy were on a precipice resembling Germany in 1929. The US now had to find a way for the rest of the world to believe and have faith in the paper dollar. The solution was in oil, in the petrodollar. The US viciously bullied first Saudi Arabia and then OPEC to sell oil for dollars only -- it worked, the dollar was saved. Now countries had to keep dollars to buy much needed oil. And the US could buy oil all over the world, free of charge. What a Houdini for the US! Oil replaced gold as the new foundation to stop the paper dollar sinking.

Since 1971, the US printed even more mountains of dollars to spend abroad. The trade defecit grew and grew. The US sucked-in much of the world's products for next to nothing. More vaults were built.

Expert, *Cilnn Nunan, wrote in 2003, "The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars." (2)

Dr Bulent Gukay of Keele University recently wrote, "This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar `artificially' high. This enables the US to carry out printing dollars at the price of next to nothing to fund increased military spending and consumer spending on imports. There is no theoretical limit to the amount of dollars that can be printed. As long as the US has no serious challengers, and the other states have confidence in the US dollar, the system functions." (3)

Until recently, the US-dollar has been safe. However, since 1990 western Europe has been busy growing, swallowing up central and eastern Europe. French and German bosses were jealous of the US ablility to buy goods and people the world over for nothing. They wanted a slice of the free cake too. Further, they now had the power and established the euro in late 1999 against massive US-inspired opposition across Europe, especially from Britain - paid for in dollars of course. But the euro succeeded.

Only months after the euro-launch, Saddam's Iraq announced it was switching from selling oil in dollars only, to euros only -- breaking the OPEC agreement. Iran, Russia, Venezuela, Libya, all began talking openly of switching too -- were the floodgates about to be opened?

Then aeroplanes flew into the twin-towers in September 2001. Was this another Houdini chance to save the US (petro)dollar and the biggest financial/economic crash in history? War preparations began in the US. But first war-fever had to be created -- and truth was the first casualty. Other oil producing countries watched-on. In 2000 Iraq began selling oil in euros. In 2002, Iraq changed all their petro-dollars in their vaults into euros. A few months later, the US began their invasion of Iraq.

The whole world was watching: very few aware that the US was engaging in the first oil currency, or petrodollar war. After the invasion of Iraq in March 2003, remember, the US secured oil areas first. Their first sales in August were, of course, in dollars, again. The only government building in Baghdad not bombed was the Oil Ministry! It does not matter how many people are murdered -- for the US, the petrodollar must be saved as the only way to buy and sell oil -- otherwise the US economy will crash, and much more besides.

In early 2003, Hugo Chavez, President of Venezuela talked openly of selling half of its oil in euros (the other half is bought by the US). On 12 April 2003, the US-supported business leaders and some generals in Venezuela kidnapped Chavez and attempted a coup. The masses rose against this and the Army followed suit. The coup failed. This was bad for the US.

In November 2000 the euro/dollar was at $0.82 dollars, its lowest ever, and still diving, but when Iraq started selling oil in euros, the euro dive was halted. In April 2002 senior OPEC reps talked about trading in euros and the euro shot up. In June 2003 the US occupiers of Iraq switched trading back to dollars and the euro fell against the dollar again. In August 2003 Iran starts to sell oil in euros to some European countries and the euro rises sharply. In the winter of 2003-4 Russian and OPEC politicians talked seriously of switching oil/gas sales to the euro and the euro rose. In February 2004 OPEC met and made no decision to turn to the euro -- and yes, the euro fell against the dollar. In June 2004 Iran announced it would build an oil bourse to rival London and New York, and again, the euro rose. The euro stands at $1.27 and has been climbing of late. See the European Central Bank history of the euro/dollar: http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html#1999

But matters this month became far, far worse for the US dollar. On 5th May Iran registered its own Oil Bourse, the IOB. Not only are they now selling oil in euros from abroad -- they have established an actual Oil Bourse, a global trading centre for all countries to buy and sell their oil!


Ahmed

In Chavez's recent visit to London he talked openly about supporting the Iranian Oil Bourse, and selling oil in euros. When asked in London about the new arms embargo imposed by the US against Venezuela, Chavez prophetically dismissed the US as "a paper tiger".

Currently, almost all the world's oil is sold on either the NYMEX, New York Mercantile Exchange, or the IPE, London's International Petroleum Exchange. Both are owned by US citizens and both sell and buy only in US dollars. The success of the Iran Oil Bourse makes sense to Europe, which buys 70% of Iran's oil. It makes sense for Russia, which sells 66% of its oil to Europe. But worse for the US, China and India have already stated they are very interested in the new Iranian Oil Bourse.

If there is a tactical-nuclear strike on - deja-vu - `weapons of mass destruction' in Iran, who would bet against a certain Oil Exchange and more, being bombed too?

And worse for Bush. It makes sense for Europe, China, India and Japan -- as well as all the other countries mentioned above -- to buy and sell oil in Euro's. They will certainly have to stock-up on euros now, and they will sell dollars to do so. The euro is far more stable than the debt-ridden dollar. The IMF has recently highlighted US economic difficulties and the trade deficit strangling the US -- there is no way out.

The problem for so many countries now is, how to get rid of their vaults full of dollars, before it crashes? And the US has bullied so many countries for so many decades around the world, that many will see a chance to kick the bully back. The US cannot accept even 5% of the world's dollars -- it would crash the US economy dragging much of the world with it, especially Britain.

To survive, as the Scottish Socialist Voice article stated, "the US, needs to generate a trade surplus to get out of this one. Problem is it can't." This is spot on. To do that they must force US workers into near slavery, to get paid less than Chinese or Indian workers. We all know that this will not happen.

What will happen in the US? Chaos for sure. Maybe a workers revolution, but looking at the situation as it is now, it is more likely to be a re-run of Germany post-1929, and some form of extreme-right mass movement will emerge.

Does Europe and China/Asia have the economic independence and strength to stop the whole world's economies collapsing with the US? Their vaults are full to the brim with dollars.

The US has to find a way to pay for its dollar-imperialist exploitation of the world since 1945. Somehow, eventually, it has to account for every dollar in every vault in the world.

Bombing Iran could backfire tremendously. It would bring Iran openly into the war in Iraq, behind the Shiite majority. The US cannot cope even now with the much smaller Iraqi insurgency. Perhaps the US will feed into the Sunni v Shiite conflict and turn it into a wider Middle-East civil-war. However, this is so dangerous for global oil supplies. Further, they know that this would be temporary, as some country somewhere else, will establish a euro-oil-exchange. Perhaps in Brussels.

There is one `solution' -- scrap the dollar and print a whole new currency for the US. This will destroy 66% of the rest of the world's savings/reserves in one swoop. Imagine the implications? Such are the desperate things now swimming around heads in the White House, Wall Street and Pentagon.

Another is to do as Germany did, just before invading Poland in 1938. The Nazis filmed a mock Polish Army attack on Germany, to win hearts and minds at home. But again, this is a finger in the dam. So, how is the US going to escape this time? The only global arena of total superiority left is military. Who knows what horrors lie ahead. A new world war is one tool by which the US could discipline its `allies' into keeping the dollar in their vaults.

The task of socialists today is to explain to as many as possible, especially our class, that the coming crisis belongs purely to capitalism and (dollar) imperialism. Not people of other cultures, not Islam, not the axis of evil or their so-called WMDs. Their system alone is to blame.

The new Iranian Oil Bourse, the IOB, is situated in a new building on the free-trade-zone island of Kish, in the Persian Gulf. It's computers and software are all set to go. The IOB was supposed to be up and running last March, but many pressures forced a postponement. Where the pressure came from is obvious. It was internationally registered on 5th May and supposed to open mid-May, but its opening was put off, some saying the oil-mafia was involved, along with much international pressure. Just google `pertroeuro', and the story lies before you.

From now on, anyone in the know will wake up every morning and, even before coffee, will check out the latest exchange rate between the euro and dollar.

Ahmed

Hi Ahmed

Just my thoughts

Israel-Palestinian conflict goes deeper than the both side striking each other. Not many would remember that there used to be a Palestinisn State as Part of World Community and League of Nations.The so called clash of civilisation is a big myth propagated by interested media which love grandiose phrases.

In fact Muslim , Cristian and jews share similar religious stories and draw sustenance from old testament in one way or other. The difference is in the Coming of the Messiah( the Messanger of God). Chritians believe that Jesus was such a messiah and Muslims believe that Prophet Mohamed was the Messiah. Whereas jews believe that messaiah is yet to come and once He comes he will be the Saviour of their Community.That is the reason that holiest of shrines and places for all the three religions are in the middle east. Rome has come much later after the adoption of Christianity as state religion.

When jews had chance they persecuted Christians and Christians persecuted jews when they got the chance. Muslims all along faught for their existence in a rough environment dominated by fragmented tribes of Middle east who could not joinJews(not a proselytising religion) or christians ( as they perceived these tribes to be sub humans).Meanwhile being a relatively new religion it had to fight several wars against Christians and others. But at no point of time it became extermination war as seen in Holocaust.These were geopolitical and religious wars between two new religions trying to find foothold. No clash of civilisation as such. Even in their inherent belief about messiah they never denounced Old Testament, a common thread.

The settlers in Israel were introduced for an entirely different purpose.That is the desire to control OIL.Perhaps an amicable settlement could have been drawn at the time but powers that be didn't want it to happen as new found source of oil would have gone into uncertain hands.

You have given an interesting background materials on Euro Vs Dollar Vis-a-Vis OIL.Iraq was victim of it for long when it was encouraged to fight bloody war against Iran. Arab Rulers are already a compromised lot. Iran has been singing a different tune which is not liked by Many powerful nations. Therefore, it has to face the ire of them. This Iranian Oil Bourses is a threat to Nymex and IPE.

The point is supplies of oil needs to be ensured for the world economy.Whoever controls the supply , controls the power.As supply is threatened developing economies are most threatened as its resources are diverted to meet oil demands. It does not matter for them if USA controls or IRAn controls or if it is priced in Euro or Dollars.

India and China have been trying to ensure energy supply at reasonable rates for themselves. They are competing toghether as well as against each other. Iran has put pressure on India for natural gas pricing against the backdrop of US India Civil Nuclear Coop Deal and India Voting for US resolution. Now the point is any crisis in Middle east will threaten oil supplies and cause havoc with the economies.

Middle East can not have amicable solution as OIL is their biggest enemiy.

India has to find more sources at home and reduce its dependence on oil imports. Growing economy needs to ensure more energy supplies at cheaper rates to keep it growing. ONGC has been a miserable failure in this regard.


You have written a very long dissertation. Took some time to read and need more time to digest. My view also is that NOT religion BUT OIL is the culprit.

Pankaj

Hi dada,

Well said dada OIL is the culprit.

Lets see How Geopolitical Events May Push Oil Prices Higher?

(AXcess News) New York - Geopolitical events unfolding over the weekend showed no signs of a let up with Saturday's UN Security Council meeting in which members unanimously voted for a resolution condemning North Korea's ballistic missile program. North Korea's ambassador, Pak Gil-yon, rejected the resolution and walked out.

In the Middle East, Hezbollah militants continued their attack on Israel, launching rockets into Haifa, Israel with Israeli the Israeli military launching attacks on Beruit. Israel said that Lebanon's government needed to intervene and stop the Syrian-backed Hezbolla militants from attacking. Attention also focused on Iran, which supplied rockets to Hezbollah.

Iran also rejected the UN Security Council's demand to cease uranium enrichment.

The Organization of the Petroleum Exporting Countries (OPEC) issued a statement Friday saying it was not responsible for geopolitical events and that there was plenty of supply to meet world demand. OPEC also blamed market speculators for much of the increase in crude oil prices.

Thursday, the price of OPEC's basket of eleven crudes stood at $70.38 a barrel, compared with $68.66 the previous day.

In New York, crude oil for August delivery closed up 47 cents per barrel at $78.41 after reaching high on the NYMEX during the morning trading session of $79.45.

In London, Brent crude closed up 63 cents per barrel at $77.33.

Over the weekend, energy and political armchair pundits were forecasting the possibility of $100 oil and one so called political expert said it could reach $200 to $300 per barrel if things explode across the Middle East region and Iran blocked ships from entering the Straight.
World leaders attending the G8 Summit in St. Petersburg, Russia Sunday adopted a document on global energy security, one of the three main issues on the agenda.

G8 leaders called for increased transparency and predictability of global energy markets.

In a statement released Sunday, the G8 leaders said, "Transparent, predictable national energy policies and regulatory environments facilitate development of efficient energy markets. We invite the International Energy Forum (IEF) to study ways of broadening the dialogue between energy producing and consuming countries on these issues including information exchange on their medium- and long-term respective policy plans and programs."

Nuclear energy was also discussed as well as the developing nations use of nuclear power in light of the situation in the Middle East.

In statement issued Sunday, Russian President Vladimir Putin said that there is no world crisis in oil, blaming the rising cost of oil to the absence of infrastructure at deposits.

"There are sufficient hydrocarbon reserves in the world, and the only issue is that their cost is rising," Putin told the Junior 8 Youth Forum, comprising students from G8 member countries, on the sidelines of the G8 summit near St. Petersburg.

Putin, along with President Bush, is pro-nuclear energy.

But regardless of world leaders attempts to calm fears, try telling that to the commodity traders on London's ICE exchange or in New York come Monday when energy markets are apt to react negatively to the actions that took place over the weekend.

Monday, energy prices are apt to react to geopolitical news negatively during the morning hours in New York, just like futures trading did on Friday, but profit-taking and more stable readings of global conditions should prevail as the trading session moves forward with futures prices once again retreating - but levels will most likely hold in the higher 70s range and could even top $80.

With oil's recent roller coaster intra-day movements its patterns have become knee jerks against every saber-rattling political extremist the press gives notice to. So calm thinking is the focus and hopefully, that rubs off on energy traders in New York and London.


Ahmed

High crude oil price not to retreat if 4 major hot spots remain un-resolved

U.S. Department of Energy announced on Wednesday that the crude oil reserves are much less than the expected quantity, and a drastic crude oil price increase has once again pushed the crude price to the highest level in e-board trading.

The commodity price has seemed to be out of the nagging from interest rate worries, and so far the geopolitical situation and fundamental factors have played a decisive role. Such explosive incidents as railway bombings in India, missile test in the Democratic People's Republic of Korea (DPRK) as well as Iran's Uranium enrichment issue have become the important factors affecting the crude and metal prices. However the interest rate policy adopted by central banks in various countries seemed to decide the trends of these assets.

Basically, the trend of recent international oil price is controlled by turbulent international political climates.

First, the pending Iraq's nuclear issue has become the motive force that has triggered the long-term oil price rise. Iranian president Mahmoud Ahmadinejad has reiterated that his country would not make any concessions on those issues concerning Iran's nuclear right. Despite the fact that the Iranian government has repeatedly stated that it would not take crude as a weapon, some market analysts still hold such mentality that they would rather believe that Iraq took crude as a weapon than have the faith in its commitment. And such move has pushed the oil price continue to rise.

Secondly, the Japanese government has cried for a preemptive attack on the DPRK's missile facilities and the stability in East Asia might be broken.

Thirdly, the war on terror launched by the U.S. side has given rise to more terrorist activities in Middle East. Instead of being brought under control, the terrorist acts now have spread to India with the chain railway bomb blasts occurred in Mumbai, India, July 11 and this was a case in point. It seems that the international crude oil is likely to seek a still higher "terror premium".

Last, the conflict between Israel and Palestine, instead of being eased, has spread to Lebanon and Syria, which has injected new uncertainties for the deterioration of the Middle East situation.

The above-mentioned geopolitical hot issues are the catalyst agent fueling the crude price. If the four issues are not tackled, it is difficult for international crude price to have a substantive drop. Coupled with arrival of the hurricane season in the United States, the high oil rise is inevitable.

The U.S. oil price topped 70 US dollars per barrel when the Hurricane Katrina hit the mainland last year, and the price did not fall until the U.S. government drew on national reserve to subside it. The oil price has once jumped as high as 75.17 US dollars per barrel in the mid April this year. Not until the Bush administration proclaimed an order of probe, did the oil price get under control. Nevertheless, the oil price exceeded the previous ceiling, and what else can control the unbridled oil price? Will the Bush Administration again get a hand to interfere?

The Bush Administration this time possibly "look on inattentively" First of all, the U.S., Japan and other developed nations can stand the severe test of high oil price. Experts predict that the economic growth of these countries can only be slightly affected even if international oil price shot up to 80 US dollars per barrel.

Moreover, on the part of the U.S., advantages are greater than disadvantages when considering the rocketing oil price. Since the Bush administration act on behalf of interest groups of major international oil producers and financial oligarchs, President Bush would definitely not take actions to control the oil price as long as it is acceptable to most of the Americans. Apart from that, Americans' ability now falls short of their wishes.

From the perspective of technology, NYMEX crude oil futures still have rather large room for further increase. In September, NYMEX crude oil futures resistance ranges from 84 to 85 U.S. dollars per barrel, and support 74 to 75 U.S. dollars per barrel.

If NYMEX crude oil futures stand above 75 U.S. dollars per barrel, it is just a matter of time if it proceeds to ascend to 80 US dollars per barrel. In case of other unexpected accidents, it is not surprising that the oil price rises to over 85 U.S. dollar per barrel. People involved should get well prepared for the torments coming along with the price hike.

Ahmed

If Syria or Iran attacks Israel, by definition, a regional war will be under way. They remain the key. At this point, it doesn't look as though Syria has any desire to attack Israel, so the odds of conflict expansion from the former appear low. However, Iran appears more open to expanding the conflict but may be unable to do so without using Syrian proximity to Lebanon. Thus, Iran may be willing to expand the conflict but may be thwarted by Syrian fears. If Syria is the "weak link" in Iranian plans, it would behoove the West and the Arab states to lean on Syria to remain neutral.

The ramifications
For the financial markets, the primary conduit of risk is the oil market. A regional war increases instability and will boost already elevated risk premiums. The fact that oil prices have passed $75 per barrel with $80 prices seen in the winter months suggests fears are growing. This is especially true because there is a tendency for weaker gasoline prices after Independence Day.

Thus, we expect the equity markets to be affected by oil prices. The current environment of tightening monetary policies in the industrialized world amplifies the impact of higher oil prices. Therefore, world economic growth is at risk for a regional war.

At this point there is near certainty of an incursion by Israel into southern Lebanon. If this is the extent of the war, the risk premium in oil will likely ease and we will see at least a modest rebound in the equity markets. Of course, the equity markets have other issues, such as the economy and midterm elections, to grapple with as well so any rebound may be modest.

If the war expands we expect equity markets to come under further pressure and flight-to-safety instruments, such as gold, the dollar and Treasuries, to rally. Oil prices will likely rise, although oil equities may not because of fears about the economy. Thus, oil equities may not act as a proxy for crude oil; a better protection for investors is a general defensive posture.


Ahmed

http://www.santafenewmexican.com/news/46643.html


Ahmed