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A reshuffle of crude oil exports to Asia

Asian oil refiners have been rushing to secure crude supplies in anticipation of an escalating trade war between the United States and China. Last week, Dongming Petrochemical, an independent Chinese refiner, said it has halted crude purchases from the U.S. and turned to Iranian imports amid escalating trade tensions between Beijing and Washington. U.S. crude oil exports to China reached 400,000 barrels per day (bpd) at the beginning of this July, but Beijing has recently threatened a 25 percent duty on imports of U.S. crude as part of its retaliation for Trump’s latest round of tariffs on US$34 billion worth of Chinese goods. In addition, Iran’s foreign minister said on 3 August that China was “pivotal” to salvaging a multilateral nuclear agreement for the Middle Eastern country after the United States pulled out. A reshuffle of crude oil exports to Asia is possible, with China vacuuming up much of the Iranian oil that other nations won’t buy because of the threat of U.S. sanctions.

China, India, Japan and South Korea together account for almost 65 percent of the 2.7 million barrels a day that Iran exported in May. The U.S. has been lobbying these countries and other multinational oil giants to cut crude purchases from Iran to zero by November, the deadline for re-imposition of the secondary sanctions. In view of the current trade disputes with the U.S., China has reacted defiantly to U.S. sanctions banning business ties with the Islamic republic.

…click on the above link to read the rest of the article…

All-Time Low Spare Capacity Could Send Oil To $150

August 16, 2018

All-Time Low Spare Capacity Could Send Oil To $150

While the oil market and analysts are trying to guesstimate how much Iranian oil the U.S. sanctions will stifle later this year, they all agree that the return of the sanctions is the market’s key bullish driver as well as the largest ‘known unknown’ for oil prices later this year and into 2019.

Some ultra-bullish hedge funds think that the U.S. sanctions will remove much more than 1 million bpd of Iranian oil from the market. Considering the low spare capacity for a quick ramp-up of production elsewhere, some hedge fund managers expect oil prices to jump to as high as $150 a barrel in 18 to 24 months.

“Our view is that by November 4, we will have lost between 1.3 and 1.4 million barrels [of output] a day. It is a very big number. That’s based on the view that the U.S. will allow a few temporary exception waivers,” Jean-Louis Le Mee, CEO at London-based Westbeck hedge fund told Reuters. “Ultimately, we could see losses from Iran exceed 2 million barrels a day,” Le Mee said.

According to Pierre Andurand, who manages the US$1.2-billion Andurand Commodities Fund, the world’s spare capacity is at its lowest ever, and this will be a real issue with global oil supply.

Replying to one of President Trump’s tweets blaming OPEC for the “too high” oil prices, Andurand said in mid-June that “OPEC has the lowest spare capacity ever right now. There is going to be a real issue. Prices will be above $150 in less than 2 years. Eventually higher prices will bring more supply. But right now too little supply coming over the next few years despite US supply growth.”

Generalist investors don’t have such bullish views, but “this is going to catch everybody by surprise,” Westbeck’s chief investment officer Will Smith told Reuters.

…click on the above link to read the rest of the article…

US Sanctions Foster Emergence of Multipolar World

August 16, 2018

US Sanctions Foster Emergence of Multipolar World

Russia, Iran, China, and now Turkey are in the same boat, as all have become the target of US sanctions. But none of those nations has bowed under the pressure. Russia had foreseen the developments in advance and took timely measures to protect itself. The Turkish national currency, the lira, is plummeting now that Washington has introduced sanctions as well as tariffs on steel and aluminum, in an attempt to compel Ankara to turn over a detained American pastor. Turkish President Erdogan said it was time for Turkey to seek “new friends,” and Turkey is planning to issue yuan-denominated bonds to diversify its foreign borrowing instruments. On Aug. 11, President Erdogan said Turkey was ready to begin using local currencies in its trade with Russia, China, Iran, Ukraine, and the EU nations of the eurozone.

The recent BRICS summit reaffirmed Ankara’s commitment to the Contingent Reserve Arrangement (CRA) that is geared toward de-dollarizing its member states’ economies, and the agreement to quickly launch a Local Currency Bond Fund gives that policy teeth. Turkey has also expressed its desire to join BRICS.

Ankara is gradually moving toward membership in the Shanghai Cooperation Organization (SCO). It has been accepted as a dialog partner of that organization. Last year Turkey became a dialog partner with ASEAN. On Aug. 1, the first ASEAN-Turkey Trilateral Ministerial Meeting was held in Singapore, bringing together Turkish Foreign Minister Mevlüt Çavuşoğlu, ASEAN Secretary General Dato Lim Jock Hoi, and Singaporean Foreign Minister Vivian Balakrishnan, who is serving as the 2018 ASEAN term chairman. The event took place under the auspices of the 51st ASEAN Foreign Ministers’ Meeting that attracted foreign ministers and top diplomats from 30 countries.

Ankara is mulling over a free-trade area (FTA) agreement with the Eurasian Union. This cooperation between Ankara and the EAEU has a promising future.

…click on the above link to read the rest of the article…

Economic war on Iran is war on Eurasia integration

August 16, 2018

Economic war on Iran is war on Eurasia integration

US sanctions on Iran should be interpreted as a piece in a much larger chessboard

Life carries on in Tehran despite the threat of US sanctions. Photo: Anadolu Agency/Fatemeh Bahrami

Hysteria reigned supreme after the first round of US sanctions were reinstated against Iran over the past week. War scenarios abound, and yet the key aspect of the economic war unleashed by the Trump administration has been overlooked: Iran is a major piece in a much larger chessboard.

The US sanctions offensive, launched after Washington’s unilateral pullout from the Iran nuclear deal, should be interpreted as an advance gambit in the New Great Game at whose center lies China’s New Silk Road – arguably the most important infrastructure project of the 21st century — and overall Eurasia integration.

The Trump administration’s maneuvers are a testament to how China’s New Silk Road, or Belt and Road Initiative (BRI), threaten the US establishment.

Eurasian integration on the rise

Eurasian integration is on display in Astana, where Russia, Iran and Turkey are deciding the fate of Syria, in coordination with Damascus.

Iran’s strategic depth in post-war Syria simply won’t vanish. The challenge of Syrian reconstruction will be met largely by Bashar al-Assad’s allies: China, Russia and Iran.

Echoing the Ancient Silk Road, Syria will be configured as an important BRI node, key to Eurasia integration.

In parallel, the Russia-China strategic partnership – from the intersection between the BRI and the Eurasia Economic Union (EAEU) to the expansion of the Shanghai Cooperation Organization (SCO) and the solidifying of BRICS Plus — has immense economic stakes in the stability of Iran.

The complex interconnection of Iran with both Russia (via the EAEU and the International North-South Transportation Corridor) and China (via BRI and oil/gas supplies) is even tighter than in the case of Syria in the past seven years of civil war.

…click on the above link to read the rest of the article…

The Deal: Smelling a Rat, Arabs Sense a Coming Humiliation

August 14, 2018

The Deal: Smelling a Rat, Arabs Sense a Coming Humiliation

“The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. I am asking for WORLD PEACE, nothing less!”

What on earth does this tweet from President Trump – “I am asking for World Peace” – mean? It does not at all gel with NY businessman pragmatism: that he wants to diss Obama; or, that he wants to implode Iran in order to recover US energy dominance; or, that with Iran’s implosion, the hitherto obstructed path, would thus be cleared for all Sunni Arab states desirous of normalising and trading with Israel – so to do.

But the extravagant capitalisation of WORLD PEACE implies that Trump has some wider vision, behind this new American ‘war of choice’ on Iran. ‘WORLD PEACE’: It strongly suggests Trump leading us toward a definite destiny: not just for America, but for all humanity (‘no less’). It is an apocalyptic vision. (i.e. an event that implies something not bad, but rather that the implosion of Revolutionary Iran, somehow will bring human Salvation).

The conviction that the crimes and follies of the past can be left behind in some all-encompassing transformation of human life is a secular reincarnation of early Christian beliefs. The very idea of ‘an event’ which transforms humanity and leads to ‘Salvation’ owes to religious conviction – in this case the Jewish apocalyptic current (of which Jesus was an adherent) that was assimilated into early Christianity.

Is this religious eruption Trump’s own? Or, did he absorb it from Ivanka’s conversion to Orthodox Judaism; or, has it emerged out from Trump and Pence’s Evangelical base?

…click on the above link to read the rest of the article…

Ahmadinejad Urges End To US Dollar Hegemony: “Current [World] Order Needs To Change”

August 8, 2018

Ahmadinejad Urges End To US Dollar Hegemony: “Current [World] Order Needs To Change”

As US re-imposes sanctions on Iran, former two-term Iranian President Mahmoud Ahmadinejad has spoken out against the current US hegemony.

As RT notes, Ahamdinejad says the dollar is one of the major pillars of US dominance over global finance and trade; calling for change in the current world order.

The former leader of the Islamic Republic tweeted on Monday, that “The use of the US Dollar as the standard unit of currency in global markets and the world banking system is the key strength of the American Empire. Things need to change, current orders should be reordered.”

✔

The use of the US Dollar as the standard unit of currency in global markets and the world banking system is the key strength of the American Empire. Things need to change, current orders should be reordered.#Newworldorder #DollarDictatorship

8:07 AM – Aug 6, 2018

Seemingly confirming Ahmadinejad’s warning, President Trump reiterated his warnings against breaking Washington’s sanctions, saying in a tweet that “Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

✔

The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!

5:31 AM – Aug 7, 2018

But, while it is a little premature, the relative surge in China’s ‘petroyuan’ futures contract overnight could suggest a shift away from the petrodollar to avoid US sanctions on Iranian oil…

The beginning of the end of the petrodollar?

Trump Blasts “Anyone Trading With Iran Will Not Be Trading With The U.S.”

August 7, 2018

Trump Blasts “Anyone Trading With Iran Will Not Be Trading With The U.S.”

At one minute after midnight, the first round of renewed U.S. sanctions on Iran took effect, and in one of his earliest tweets since the presidential campaign, at 5:30am EDT, a sleepless Trump blasted out the “official” US position on countries that ignore his just imposed sanctions: “The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level” Trump tweeted.

In a warning to China, India, Russia, Turkey and many other nations which have said they will defy Trump’s sanctions and continue to import Iran oil, Trump warned that “Anyone doing business with Iran will NOT be doing business with the United States.”

Then, pulling a page out of a John Lennon album, Trump explained “I am asking for WORLD PEACE, nothing less!”

✔

5:31 AM – Aug 7, 2018

As a reminder, on Tuesday, following an executive order signed by Trump, the U.S. imposed new restrictions intended to stop the purchase of dollar banknotes by Iran, prevent the government from trading gold and other precious metals and block the nation from selling or acquiring various industrial metals. The measures, which took effect at midnight in Washington, also targeted the auto industry and banned imports of Persian carpets and pistachios to the U.S.

There were some signs Trump’s aggressive policy was already working. Yesterday, Iran’s President Hassan Rouhani, under rising economic and political pressure, spurned President Donald Trump’s suggestion for talks with “no preconditions.”

…click on the above link to read the rest of the article…

Trump Warns Allies “Risk Severe Consequences” If They Violate Iran Sanctions

August 6, 2018

Trump Warns Allies “Risk Severe Consequences” If They Violate Iran Sanctions

Just hours after the European Union issued a statement Monday ahead of when renewed US sanctions are set to snap back against Iran after midnight US Eastern time, saying it “deeply regrets” the sanctions and will take immediate action to protect European companies still doing business with Iran.

Trump makes it clear that any violation (among America’s allies) will not be tolerated…

“The Trump Administration intends to fully enforce the sanctions reimposed against Iran, and those who fail to wind down activities with Iran risk severe consequences.“

The first set of sanctions will hit at the Iranian financial system, including Iranian government purchases of US dollars and its gold trade and government bond sales. The US’ dominant role in the world’s financial system means it has been able to pressure countries and companies into compliance, though China remains a key holdout.

“The JCPOA, a horrible, one-sided deal, failed to achieve the fundamental objective of blocking all paths to an Iranian nuclear bomb,” Trump said Monday, defining that its policy as applying “maximum economic pressure on the Iranian regime.”

The US denies it is seeking regime change, but rather aims to “modify the regime’s behavior,” according to an administration official.

A US administration official said the Iranian government was using financial resources freed up by the nuclear deal “to spread human misery.” The US was seeking now to address the “totality of the Iranian threat” in the Middle East.

“None of this needs to happen,” an official said on sanctions. Trump is willing to meet the Iranian leadership “any time” for talks,” the official noted.

…click on the above link to read the rest of the article…

Iranian Navy Holds Drills In Persian Gulf After Threats To Block Strait Of Hormuz

August 5, 2018

Iranian Navy Holds Drills In Persian Gulf After Threats To Block Strait Of Hormuz

Iran’s Revolutionary Guard on Sunday confirmed rumors that they moved up the timing of a large naval drill in the Persian Gulf several days ahead of the Islamic Republic’s planned annual exercises, according to Reuters. State news agency IRNA said the war games were aimed at “confronting possible threats” from enemies.

“This exercise was conducted with the aim of controlling and safeguarding the safety of the international waterway and within the framework of the program of the Guards’ annual military exercises,” Guards spokesman Ramezan Sharif said, according to IRNA.

The U.S. military’s Central Command on Wednesday confirmed it has seen increased Iranian naval activity. The activity extended to the Strait of Hormuz, a strategic waterway for oil shipments the Revolutionary Guards have threatened to block. –Reuters

While Iran didn’t comment on the size of the drill, Haaretz reported on Friday that “more than 100 vessels” would participate, citing a U.S. official.

The U.S. military’s Central Command on Wednesday confirmed it has seen an increase in Iranian naval activity, including in the Strait of Hormuz, a strategic waterway for oil shipments that Iran’s Revolutionary Guards have threatened to block.

“We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce in international waterways,” said Navy Captain Bill Urban, the chief spokesman at Central Command, which oversees U.S. forces in the Middle East. Central Command did not update its guidance on Thursday.

A third official said the Iranian naval operations did not appear to be affecting commercial maritime activity. –Haaretz

…click on the above link to read the rest of the article…

VIPS to Trump: Intel on Iran Could be CATASTROPHIC

August 1, 2018

VIPS to Trump: Intel on Iran Could be CATASTROPHIC

As drums beat again for war — this time on Iran—-the VIPS’ warning is again being disregarded as it was before the Iraq debacle and this time VIPS fear the consequences will be all-caps CATASTROPHIC.

MEMORANDUM FOR: The President

FROM: Veteran Intelligence Professionals for Sanity (VIPS)

SUBJECT: Intelligence on Iran Fails the Smell Test

Mr. President:

As the George W. Bush administration revved up to attack Iraq 15 years ago, we could see no compelling reason for war. We decided, though, to give President Bush the benefit of the doubt on the chance he had been sandbagged by Vice President Dick Cheney and others. We chose to allow for the possibility that he actually believed the “intelligence” that Colin Powell presented to the UN as providing “irrefutable and undeniable” proof of WMD in Iraq and a “sinister nexus” between Saddam Hussein and al Qaeda.

To us in VIPS it was clear, however, that the “intelligence” Powell adduced was bogus. Thus, that same afternoon (Feb. 5, 2003) we prepared and sent to President Bush a Memorandum like this one, urging him to seek counsel beyond the “circle of those advisers clearly bent on a war for which we see no compelling reason and from which we believe the unintended consequences are likely to be catastrophic.”

We take no satisfaction at having been correct — though disregarded — in predicting the political and humanitarian disaster in Iraq. Most Americans have been told the intelligence was “mistaken.” It was not; it was out-and-out fraud, in which, sadly, some of our former colleagues took part.

Five years after Powell’s speech, the Chair of the Senate Intelligence Committee minced few words in announcing the main bipartisan finding of a five-year investigation. He said: “In making the case for war, the Administration repeatedly presented intelligence as fact when in reality it was unsubstantiated, contradicted, or even non-existent.

…click on the above link to read the rest of the article…

The Madness Gripping Washington

July 27, 2018

The Madness Gripping Washington

The United States and Israel have been threatening Iran for something like twenty years, using the pretext that it was developing a nuclear weapon initially, but also more recently declaring that Tehran has become a threat to the entire Middle East. Both contentions are essentially lies, concocted by an Israel and Saudi Arabia that would prefer to have Iran removed as a possible impediment to their own ambitions. And they would like the United States to do the removing.

Iran is the hottest of all hot spots in the American view, but the tendency of the White House to threaten first before engaging in negotiations has meant that most nations have come to see the United States as the greatest threat to peace worldwide. In a recent interview, Russian President Vladimir Putin observed how the U.S. believes it can intervene militarily anywhere in the world because it is “spreading democracy,” a justification that no one believes in any event as the results of recent crusades in Afghanistan, Syria and Libya have been less that encouraging. Putin commented that Washington should treat all other nations with respect and it will then get respect – and cooperation – in return.

The track record of the Trump White House is not encouraging. It has twice launched barrages of cruise missiles against targets in Syria based on fabricated or incomplete intelligence suggesting that the government in Damascus had used chemical weapons against its own people. It also uniquely added juvenile humiliation to the American diplomatic arsenal, with Trump describing North Korean leader Kim Jong-un as a “rocket man” before going off into a rhapsody about how the nuclear arsenal button accessible to Trump was “bigger and more powerful” than that available to Pyongyang.

…click on the above link to read the rest of the article…

US Preparing To Bomb Iran’s Nuclear Capabilities As Soon As Next Month: Report

July 26, 2018

US Preparing To Bomb Iran’s Nuclear Capabilities As Soon As Next Month: Report

As the White House convenes a policy meeting on Iran Thursday involving senior Pentagon officials and cabinet advisers under national security adviser John Bolton, and after a week of intense saber-rattling by President Donald Trump and his Iranian counterpart Hassan Rouhani, a new bombshell report by Australia’s ABC says the White House is drawing up plans to strike Iran’s alleged nuclear facilities as early as next month.

Senior figures in the Australia’s Turnbull government have told the ABC they believe the US is prepared to bomb Iran’s nuclear capability. The bombing could be as early as next month. —ABC report

Crucially, Australia is part of the so-called “Five Eyes” global intelligence partners which includes the US, UK, Australia, Canada and New Zealand, and plays in a key role in hosting top-secret facilities that guide American spy satellites.

According to the breaking report, ABC [Australian Broadcasting Corporation] has learned the following based on statements of key senior defense and intelligence officials:

Senior Government figures have told the ABC they believe the Trump administration is prepared to bomb Iran
They say Australian defence facilities would likely play a role in identifying possible targets
But another senior source, in security, emphasizes there is a difference between providing intelligence and “active targeting”

The report cites high level Aussie government officials who say that secretive Australian defense and intelligence facilities would likely cooperate with the United States and Britain in identifying targets in a strike on Iran.

One particular facility, the Pine Gap joint defense facility in the Northern Territory, would play a significant targeting role in joint US-led strikes on Iran, according to the report, it’s “considered crucial among the so-called ‘Five Eyes’ intelligence partners… for its role in directing American spy satellites.”

And further, other agencies are expected to play a role:

…click on the above link to read the rest of the article…

The Most Important Waterway In The Oil World

July 26, 2018

The Most Important Waterway In The Oil World

Tensions between the United States and Iran continue to rise, with U.S. President Donald S. Trump issuing a threatening tweet against Iran’s President Hassan Rouhani amidst preparations to re-impose sanctions on Iran’s economy following the U.S. withdrawal from the 2015 nuclear deal.

The increasingly tense situation has given rise to fears of violence, perhaps even open warfare in the Persian Gulf, where one-third of the world’s oil is produced.

A key element of Iran’s strategy in such a conflict would be to close the Strait of Hormuz, the waterway through which most of the Gulf’s oil flows. Iranian officials have made several threats in this direction, in response to the escalating tensions with the U.S.

Iranian leaders frequently threaten to close the Strait, and commentators have warned that such an action is a real possibility. Iran’s military and conservative leadership, the most hardline members of its government, have rallied around President Rouhani’s threat.

Iran possesses the means to close the strait militarily, and keep it closed for several months, using a fleet of small craft, ballistic missiles and large numbers of ocean mines that would make the strait impassable.

Closing the Strait of Hormuz would send oil prices skyrocketing upwards. It would affect the members of the Gulf Cooperation Council (GCC), including Saudi Arabia, Kuwait and the United Arab Emirates (UAE). All three are major producers of oil and gas and depend on an open strait to access global markets.

But is Iran’s leadership really prepared to take such action? Despite the war of words erupting between Tehran and Washington, it is unlikely Iran’s government is prepared to take such a drastic step now or in the immediate future, even as President Trump appears to threaten Iran with military action. There are several reasons for this.

…click on the above link to read the rest of the article…

Are Oil Markets Underestimating Iran’s Threats?

July 26, 2018

Are Oil Markets Underestimating Iran’s Threats?

Iranian officials have suggested that they could shut the Strait of Hormuz if the U.S. moved to completely disrupt Iranian oil exports, a dire scenario that would present a supply shock to the oil market.

The prospect of an outage at the Strait of Hormuz repeatedly crops up when tensions between the U.S. and Iran deteriorate, but most analysts dismiss the idea as fanciful.

But the scenario may not be as outlandish as is commonly thought. Bob McNally, founder and president of energy consultancy The Rapidan Group, said that the U.S. is waging economic war against Iran and when a country is backed into a corner like that, “there has to be some risk that the country will lash out, even if it’s against a bigger power.”

“I think the market’s a little complacent,” he told CNBC, referring to the lack of movement in oil prices following the exchange of threats between Rouhani and Donald Trump. He said that Iran has much less leverage compared to 2012 when it was enriching uranium and oil prices were much higher. With oil prices much lower, Iran’s leverage is weaker, which could lead it to take drastic measures, such as shutting the Strait of Hormuz. It’s a “credible threat,” McNally said.

Obviously, that would send oil prices skyrocketing. “When you talk about Iran’s exports, that’s about 2.5 million barrels per day, but if you talk about interrupting the Strait of Hormuz, that’s 19 million barrels a day,” he said. “About 30 percent of…seaborne-traded oil goes through that strait. So that’s a much bigger problem.”

The real pain would depend on the length of the outage. Most analysts argue that the U.S. Navy would beat back Iranian attempts to close the Strait and would manage to reopen the shipping lane in a matter of days.

…click on the above link to read the rest of the article…

‘Tweet of Mass Destruction’ ratchets up tension on Iran

July 26, 2018

‘Tweet of Mass Destruction’ ratchets up tension on Iran

The Trump administration’s ultimate goal is regime change in Tehran, but was this just a distraction from the ‘treason’ in Helsinki as US Mid-Term elections loom? Or did he just want to destabilize the Eurasian giants and their New Silk Roads?

Iranians burn an image of US President Donald Trump during an anti-US demonstration outside the former US embassy headquarters in the capital Tehran on May 9, 2018. Photo: AFP/Atta Kenare

President Trump’s late-night, all-caps Tweet of Mass Destruction threatening Iran is bound to be enshrined in the Art of Diplomacy annals.

But let’s go back to how this all started. After unilaterally pulling out of the Iran nuclear deal, the Trump administration has issued what amounts to a declaration of economic war on Iran and will go no holds barred to squeeze the Islamic Republic out of the global oil market – complete with threatening allies in Europe with secondary sanctions, unless they cut all imports of Iranian oil by November 4.

This past weekend, Iran’s Supreme Leader Ayatollah Khamenei said he would support blocking all Middle East oil exports through the Strait of Hormuz if Iran’s European trade partners succumb to pressure from Washington and stop buying Iranian oil altogether.

Then President Hassan Rouhani followed Khamenei and warned the US about “playing with the lion’s tail.”

Rouhani, as his record attests, has always behaved as the epitome of cool diplomacy. Contrary to predictable US media spin, he never “threatened” to attack the US. His premise was that Tehran was pleased to offer Washington the “mother of all peace.” But if Trump instead decided to attack Iran, then (italics mine) that would open the way to the Mother of all Wars.

Ultimate goal: Regime change

…click on the above link to read the rest of the article…

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