The Strategic Petroleum Reserve Is Slowly Dying

 

Forty years ago, in the wake of the Arab oil embargo that made the United States acutely aware of just how dependent its economy was on imported crude, the government set up the Strategic Petroleum Reserve in a bid to make sure there were no repeats of the painful shortages the embargo caused.

Now, there are about 700 million barrels in the SPR. The U.S. is producing 9.42 million barrels daily, as of the week ending August 4th, a figure that is set to continue rising as shale producers keep on pumping more. Imports as of last week averaged 7.8 million barrels daily, with the four-week average at 8 million bpd. This means that the SPR holds crude oil equal to 40 days of local production plus imports.

The End Of OPEC Is Near

 

OPEC, which has far exceeded the average life of cartels, is on the brink of failure. Though cracks have been developing in the cartel since the start of the current oil crisis, the group has managed to stay together so far. Nevertheless, the success of the current OPEC deal for production cuts will decide its future as a cartel.

What is a cartel?

A cartel is a group of like-minded producers, who act in concert—or collusion—to achieve a shared goal of increasing their profits by means of restricting supply, fixing prices, or destroying their competition by illegal means. The average life of the 20th Century cartels has been 3.7 to 7.5 years, according to various studies by Margaret Levenstein and Valerie Suslow. In the past two centuries, cartels have been able to influence prices by an average of 25 percent.

ISIS declares war on the US dollar with the “gold dinar”

The Islamic State on Sunday, Aug. 30, launched a new campaign to destabilize the US Dollar with a 54-minute video tape, produced to the professional standards of New York Madison Avenue. for general distribution. This is the first known instance of a terrorist organization declaring financial war on America. Graphic diagrams and figures are displayed to demonstrate that the mighty dollar is nothing but a piece of paper, whose value declines year by year when this is realized.

“The Jews” are inevitably presented as the prime movers behind the dollar’s false status as the world’s strongest currency.

Saudis are buying nuclear-capable missiles from China

The motive for this is three-fold:

• Frustration with the unwillingness of the Obama administration.
• A regional threat that continues to grow out of Iran and past remarks of wanting to go nuclear should Ahmadinejad’s regime continue along the nuclear proliferation path.
• Although there’s peace/stability between the two, they’re still not truly allies of Israel.

debkafile’s military sources report that Saudi Arabia has set its feet on the path to a nuclear weapon capability and is negotiating in Beijng the purchase of Chinese nuclear-capable Dong-Fen 21 ((NATO-codenamed CSS-5) ballistic missile.

China, which has agreed to the transaction in principle, would also build a base of operations near Riyadh for the new Saudi purchases.

As we reported last year, Saudi Arabia has struck a deal with Pakistan for the availability on demand of a nuclear warhead from Islamabad’s arsenal for fitting onto a ballistic missile.

Riyadh owns a direct interest in the two most active Middle East issues: Iran and Syria.

Iran’s nuclear weapons program has been advancing for two decades regardless of countless attempts at restraint by every diplomatic tool under the sun and a rising scale of sanctions – to no avail.

Tehran marches on regardless of impediments. In Istanbul, Tuesday, July 3, the six powers and Iran failed the fourth attempt to reach an accommodation on Iran’s nuclear program.

…

On July 1, they redoubled their military preparedness when the European Union clamped down an oil embargo on Iran. The Saudis, the US Fifth Fleet and the entire Gulf region are since braced for Iranian reprisals which could come in the form of closure by Tehran of the vital Straits of Hormuz to shipping or strikes against the Gulf emirates’ oil exporting facilities.

Tension shot up again when Iran’s Revolutionary Guards launched a three-day missile drill against simulated enemy bases in the region – expanding its threats to include US forces and bases in the region, Israel and Turkey.

Full article: Saudis are buying nuclear-capable missiles from China (DEBKAfile)

Iran Oil Exports Continue Off Radar

Iran continues to show that there is no bottom for third world economies.

Iran is trying to counter Western sanctions on its oil industry that aim to cripple Iran’s economy and convince it to acquiesce to Western demands regarding its nuclear program.

Reuters cites sources in the oil industry, trading and shipping who say the National Iranian Tanker Company has ordered all its captains to “switch off the black box transponders that are used in the shipping industry to monitor vessel movements.”

Full article: Iran Oil Exports Continue Off Radar (Eurasia Review)

Ahmadinejad: Iran Can Go Years with No Oil Sales

Iran can survive for years without selling oil, Iranian President Mahmoud Ahmadinejad claimed Tuesday, according to Fars news. “Even if we didn’t sell oil for two to three years, the country would manage easily,” he said.

The European Union is planning to ban Iranian oil in an attempt to pressure Ahmadinejad to drop the country’s nuclear program.

Full article: Ahmadinejad: Iran Can Go Years with No Oil Sales (Arutz Sheva)

By securing Assad and its alliance, Iran gains upper hand for nuclear talks

Bashar Assad’s victory over the 12-month uprising to unseat him is unquestioned. With massive Iranian and Russian intelligence and military support, the Syrian army was able to push the rebels out of the cities – barring isolated pockets in Homs and Idlib – and drive them to the rural periphery, where they can’t hold up for long.

One observer, describing their situation as “undergunned and overwhelmed,” reported that Syria’s rebels have to negotiate for hours for every box of bullets they haul across the border for their war against Assad. “And their frustration is starting to show.”

Tehran, Damascus and Hizballah are crowing over their success in derailing the Obama administration’s two-pronged policy for halting a nuclear Iran. It hinged on Tehran’s isolation by unraveling its alliance with Damascus and Hizballah and economic pressure through tough financial sanctions and an oil embargo.

Iran has come out of the woods firmly in position at the head of its bloc, now cemented by Assad’s defeat of his foes. Tehran’s hand is much strengthened for the coming nuclear talks between Iran and the Six Powers due to start in two weeks. Washington will have to pay for any Iranian concessions by starting the process of unwinding sanctions.

Full article: By securing Assad and its alliance, Iran gains upper hand for nuclear talks (DEBKAfile)

What sanctions? Top five countries buying oil from Iran.

Third-world economies have no bottom, therefore sanctions are unlikely to be as hard hitting as most believe. There will always be another customer for oil.

Iran is the third-largest exporter of crude oil in the world, behind Saudi Arabia and Russia. Its economy relies heavily on oil exports. Recent Western sanctions have targeted Iran’s oil industry in hopes of pressuring Tehran to address international concerns about its nuclear program.

However, the effect of the sanctions could be limited if Iran’s top customers keep buying oil, or even increase their imports. According to tallies from June 2011, here are the top 5 importers of Iranian oil:

1. China

2. India

3. Japan

4. South Korea

5. Turkey

Full article: What sanctions? Top five countries buying oil from Iran. (The Christian Science Monitor)

Iranian Endgame: Part II — The Saudi Dimension

Western powers have entered into a tense endgame with Iran over its nuclear ambitions. In the second part of this new report from the Globalist Reseach Center, energy expert Matthew Hulbert explores the critical role the China-Saudi relationship might play in its resolution.

The sanctions strategy that Western nations is enacting against Iran’s oil weath depends on more than just those Western nations. The interest (and actions) of the Gulf states and Asian nations also matters critically. Only East-West cohesion can seriously undermine Iran’s hydrocarbon economy. But getting the Saudis to wield such a brutal oil weapon to shoot down Persian nuclear plans will not be quick or easy given the stakes involved.

The al Saud are well aware of the other (more credible) hedges Iran has up its sleeve (beyond cutting off oil flows through the Strait of Hormuz). At the top of the list is stirring Shia schisms in Iraq, Bahrain, Syria, Lebanon and in Saudi Arabia itself.

The “Arab Awakening” is still sufficiently fresh in the minds of Gulf region leaders to set them on edge. Iran has dropped hints that it could have played much tougher with Riyadh over its intervention in Bahrain.

Full article: Iranian Endgame: Part II — The Saudi Dimension (The Globalist)

See also: Iranian Endgame: Part I — Sanctions and Asia (The Globalist)

Showdown: Iran stockpiling oil by the millions of barrels in tankers

Sanctions, while having somewhat of an impact on the Iranian economy, are not effective enough. History tells us that third world economies have no bottom — especially those with a solid oil revenue foundation and a long list of alternative clientele. They have also stopped trading oil in dollars.

LONDON — Iran, facing Western sanctions and attack threats, has been
quietly storing millions of barrels of crude oil in the Gulf.

Industry sources said the Teheran regime, which oversees production of 3.5 million barrels per day, was preparing for an international embargo on fuel exports to Iran.

Full article: Showdown: Iran stockpiling oil by the millions of barrels in tankers (World Tribune)

Iran Didn’t Bring Down the RQ-170. A Chinese Cyber Whiz Team Did

After establishing the cause of the crash of the unmanned American spy drone, the stealth RQ-170, over Iran on Dec. 4, 2011, the US is continuing to use that type of UAV, Air Force Chief of Staff Gen. Norton Schwartz said on Jan. 13. Without disclosing the results of the investigation, he said, ”The key thing is that it’s an ISR system that we use to provide capabilities to the combatant commanders and we’ll continue to do so.”

US officials reject Iran’s claim that it brought down the Lockheed Martin RQ-170 Sentinel but remain tight-lipped about what caused the crash.

Both American sources, while insisting that the RQ-170 was still in commission, never said it was again flying over Iran.

DEBKA-Net-Weekly’s military and intelligence sources offer three disclosures to explain the publicity strategy pursued by US officials:

1. The Americans know Iran did not bring the RQ-170 down because their intelligence agencies discovered the culprits were a Chinese cyber warfare team which seized control of the drone; Iran was given the passive role of being told where and when to hold out their arms to catch it.

The Obama administration is keeping this information to itself so as not to compromise US economic relations with China, especially in a presidential election year.

– Republican contenders would seize on this information as valuable campaign ammunition against President Barack Obama. They already accuse him of being soft on North Korea and he cannot afford to have US inaction against China added to their campaign fodder.

American needs to keep China on its side

– The US is casting about for levers to bring Beijing aboard the oil embargo on Iran. Wednesday, Feb. 1, German Chancellor Angela Merkel traveled to China at Obama’s request to try her hand at persuading Beijing to at least reduce its crude purchases from Tehran, if not join the embargo. Getting into a row with China over the stealth drone would not help persuade its leaders to cooperate in sanctions against Iran but might risk bringing US-Chinese relations to an unprecedented low.

– Washington needs Beijing’s cooperation in the global financial crisis and even more, to shore up the dollar’s value as an international currency. China holds a large part of its reserves in US government bonds and dollars. A diplomatic falling-out between Washington and Beijing might well spur the Chinese to turn away from the dollar, as Moscow, Tehran and New Delhi are in the process of doing. They have indicated their willingness to take this course on past occasions.

2. US intelligence has not discovered whether the Chinese cyber warfare team is still in Iran or has gone, leaving behind instructors and high-tech equipment for Tehran to counter US drones and planes on its own. Another RQ-170 flight over Iran might provide some answers, but President Obama is flatly against this. If Iran – and China – were to get hold of a second advanced American UAV, he would have no option but to hit back at the Islamic Republic – or even at Chinese targets in Iran.

Full article: Iran Didn’t Bring Down the RQ-170. A Chinese Cyber Whiz Team Did (DEBKAfile / War Sclerotic re-blog)

Is Israel preparing to attack Iran?

Panetta believes there is a strong likelihood that Israel will strike Iran in April, May or June — before Iran enters what Israelis described as a “zone of immunity” to commence building a nuclear bomb. Very soon, the Israelis fear, the Iranians will have stored enough enriched uranium in deep underground facilities to make a weapon — and only the United States could then stop them militarily.

Israeli Prime Minister Benjamin Netanyahu doesn’t want to leave the fate of Israel dependent on American action, which would be triggered by intelligence that Iran is building a bomb, which it hasn’t done yet.

Israeli Defense Minister Ehud Barak may have signaled the prospect of an Israeli attack soon when he asked last month to postpone a planned U.S.-Israel military exercise that would culminate in a live-fire phase in May. Barak apologized that Israel couldn’t devote the resources to the annual exercise this spring.

Full article: Is Israel preparing to attack Iran? (Washington Post)

US anticipates May as tentative date for clash with Iran. Floating SEALs base for Gulf

Here’s a list of what the US is up against in regards to threats in the Strait of Hormuz and possibly the main reason behind the ‘floating base’ sources have mentioned is being placed in the area.

A hurried decision not to de-commission the USS Ponce helicopter marine carrier after duty in Libya – but to refit it for deployment by May in the Persian Gulf as a floating base for commando teams – was confirmed by the US Pentagon and Navy Sunday, Dec. 29. This transportable floating base will expand the commandos’ range in coastal areas and support counter-measure against mines which Iran has threatened to plant in the Strait of Hormuz in reprisal for the US-EU oil embargo. The SEALs will also take on Iran’s menacing fleet of military speedboats.

DEBKAfile reports Tehran operates four different kinds of these craft in the Persian Gulf:

1. Small, fast vessels, each armed with a small missile for striking tankers and coastal oil targets around the Gulf region, such as export terminals. Earlier this month, Tehran claimed to have developed stealth cruise missiles capable of disabling aircraft carriers with a single shot.

2. Small, extra-fast boats armed with torpedoes. Iranian publications claim several such boats are capable of stealing up on US aircraft carriers and large warships from several directions without being detected and cause serious damage.

3. Floating bombs for kamikaze missions. These fast boats cannot be deflected after locking in on target, whether on sea or shore, and explode on contact.

Iran used these floating missiles piloted by suicide squads to attack oil tankers in the Gulf in November 1987. Since then, their naval tacticians have upgraded this fleet with the technology gained from the British Bladerunner 51, a model of which Iran purchased some years ago.

Since early January, the Pentagon has reported four cases of harassment by Iranian military boats sailing close to American warships in the Persian Gulf.

4. Boats carrying teams of Iranian marine frogmen trained for secret suicide underwater missions: One member of the boat’s three-man crew dives close to the targeted ship and attaches a magnetic bomb to its hull. Iran has scattered hundreds of speedboats of different types around uninhabited islands off the Iranian mainland, tucking them out of sight in well-hidden inlets and bays. The US commando teams based on the Ponce platform will have the task of ferreting out and destroying this fleet.

Continue reading article: US anticipates May as tentative date for clash with Iran. Floating SEALs base for Gulf (DEBKAfile)

Iran eyes banning oil sales to Europe

TEHRAN, Iran (AP) — Iran’s parliament will begin debating a draft bill requiring the government to immediately halt oil exports to Europe, a prominent lawmaker said Wednesday, as Tehran weighs its options following the European Union’s decision to stop importing oil from the country.

The EU embargo, announced on Monday, was the latest attempt to try to pressure Iran over a nuclear program the United States and its allies argue is aimed at developing nuclear weapons but which Iran says is for purely peaceful purposes. It came just weeks after the U.S. approved, but has yet to enact, new sanctions targeting Iran’s Central Bank and, by extension, its ability to sell its oil.

Many Iranian lawmakers and officials have called for an immediate ban on oil exports to the European bloc before its ban fully goes into effect in July, arguing that the 27 EU nations account for only about 18 percent of Iran’s overall oil sales and would be hurt more by the decision than Iran. China, a key buyer of Iranian crude, has blasted the embargo.

Continue reading article: Iran eyes banning oil sales to Europe (AP)

Iran ‘definitely’ closing Strait of Hormuz over EU oil embargo

With the looming EU embargo against Iranian oil, the Islamic Republic has responded. Turn up the middle eastern threats escalations another notch.

Tensions in the Gulf could reach a breaking point as a senior Iranian official said Iran would “definitely” close the Strait of Hormuz if an EU oil embargo disrupted the export of crude oil.

Mohammad Kossari, deputy head of parliament’s foreign affairs and national security committee, issued the warning in respone to a decision by the European Union on Monday  to impose an oil embargo on Iran over the country’s alleged nuclear weapons program.

“The pressure of sanctions is designed to try and make sure that Iran takes seriously our request to come to the table,” EU foreign policy chief Catherine Ashton said.

However, with Washington’s decision to deploy a second carrier strike group in the Gulf, the EU’s attempt to pressure Iran economically could greatly increase the likelihood of all-out war in the region.

The Strait of Hormuz is the vital link between the Persian Gulf and the Gulf of Oman.

It is also one of the most strategic chokepoints in the world when it comes to oil transit.

Continue reading article: Iran ‘definitely’ closing Strait of Hormuz over EU oil embargo (Russia Today)