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Waiting For The Black Swan

June 15, 2019

Waiting For The Black Swan

War with Iran would be the beginning of the end

Two more tankers were attacked near the Strait of Hormuz on Thursday morning  (6/13/19) in the Gulf of Oman, and if hostilities advance we could be facing a ‘black swan’ event. One that changes everything, and divides the world into ‘before’ and ‘after’ periods.

A lot of us are waiting for ‘something’ to happen. We know that there are too many unsustainable trends and practices running and we fall into the “let’s just rip the Band-Aid off” camp.   Some, like myself, have lost faith in the political leadership and institutions and doubt they retain any capacity to attend to anything more than their own selfish interests, let alone manage the difficult tasks ahead rooted as they are in systems theory and managing complexity.

So, let’s get on with it already.  Bring it on.  Black swans are welcome to those who feel a swift kick to the behind is sometimes needed to begin setting things straight.

Like many, I am also conflicted because I also know that getting onto a new path will be disruptive and probably quite economically and financially painful for everyone, myself included.  Hoping for ‘something to break’ and hoping nothing breaks hang in an uneasy balance.

Luckily, my hopes and wishes have nothing to do with what’s going to happen, or when.  I might as well be performing a secret hand ritual before the TV in my living room to ensure that my team’s basketball free-throw goes in.  The dry tinder of the next bonfire was laid down over many years and decades and it will catch fire when it does, no matter how much denial or how many superstitious practices we employ.

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

OPEC+ Floats 1 Million Barrel Production Cut After Oil Price Tumbles Into Bear Market

November 11, 2018

With oil prices entering a bear market last week, tumbling 21% from recent highs as it became clear that Trump will significantly water down Iran oil export sanctions by granting waivers to its 8 largest clients even as US inventory stockpiles are once again rising amid almost weekly records in US oil production, OPEC and its non-OPEC allies – which is pretty much everyone except US shale producers – are starting to sweat, and during today’s meeting in Abu Dhabi they hinted that an oil output cut to limit excess production may be coming.

Speaking to reporters, Oman’s Oil Minister Mohammed Al-Rumhy said that “a number of global producers agree they should pump less oil in 2019, and a reduction of 1 million barrels a day would be a good number” according to Bloomberg. Others echoed his sentiment, floating a range of cutbacks, however the most often cited number was a decrease in output by as much as 1 million barrels a day, roughly the amount of Iranian oil production that is expects to continue flowing thanks to the recent sanction waivers.

“I think probably there is support that right now there is too much oil in the market and stock, inventories are building up,” Al-Rumhy told reporters today in the UAE capital.

Oman min says a 1 million cut would be a good start

Of course, OPEC can not be seen as responding to every political whim in the White House, especially if it will result in higher gasoline prices and an angry Donald Trump, so a technical committee representing the coalition framed the need for a production cut in the context of its projections according to which the global oil surplus – which hit unprecedented levels in 2015 –

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

The Natural Gas War Burning Under Syria

September 25, 2016

The Natural Gas War Burning Under Syria

Syria War

Qatar always wanted to punch above its weight. In Syria, it got the chance.

In 2009, Qatar, a leading natural gas producer, approached Syria about routing its planned 1,500 mile pipeline to the gas markets of Europe through Syria’s Aleppo province. Qatar wanted a pipeline straight to Europe as its current gas transport modes were limited to Liquefied Natural Gas (LNG) tanker, mostly to Asia with limited spot shipments to Europe or the Dolphin pipeline to the United Arab Emirates and Oman. The pipeline would head north and end in Turkey after crossing Saudi Arabia, Jordan, and Syria. Syria declined Qatar’s offer, which would have cut the European market share of its partner, Russia, and instead agreed to participate in the “Friendship Pipeline” between Iran and Iraq that was considered a “Shia Pipeline” to some and a target for the Sunni monarchies of the Gulf. Not understood, or ignored, was Syria’s longstanding support of the Iranian regime, especially during the 1980-1988 Iran-Iraq War, and its long relationship with Russia, dating from 1944, which should have been a warning of who might appear if things hotted up.

In 2010, Israel and Syria held back-channel talks that reportedly included Israel’s return of the Golan Heights to Syria in exchange for security guarantees. The talks lagged due to mutual suspicions about the other side’s ability to deliver and, by early 2011, the Arab Spring had erupted across the region and leaders’ attentions turned to more immediate concerns. At this point, America had the opportunity to strike a blow against the Islamic Republic’s ally, the Assad regime. In 2011, Turkey provided a home for the opposition Syrian National Council and, in August 2011, the U.S., its allies, and the UN were calling on Bashar Assad to step down.

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

S&P Downgrades Saudi Arabia For Second Time In 4 Months, Also Cuts Oman, Bahrain

February 17, 2016

S&P Downgrades Saudi Arabia For Second Time In 4 Months, Also Cuts Oman, Bahrain

For the second time in four months, S&P has downgraded Saudi Arabia.

In late October, the ratings agency flagged sharply lower oil prices and the attendant fiscal deficit (16% in 2015) on the way to cutting the kingdom to A+ outlook negative.

At the time, S&P projected the deficit would amount to 10% of GDP in 2016. That turned out to be optimistic as the shortfall is now projected to be around 13% and that’s assuming crude doesn’t fall below $30 and stay there.

Riyadh has cut subsidies in an effort to shore up the books, but between the war in Yemen and defending the riyal peg, there’s no stopping the red ink, especially not while the kingdom remains determined to wage a war of attrition with the US shale complex.

Moments ago, S&P downgraded Saudi Arabia again, to A-.

On the bright side, the outlook is now “stable” (chuckle).

*  *  *

From S&P

Oil prices have fallen further since our last review of Saudi Arabia in October 2015, and we have cut our oil price assumptions for 2016-2019 by about $20 per barrel. In our view, the decline in oil prices will have a  marked and lasting impact on Saudi Arabia’s fiscal and economic indicators given its high dependence on oil.

We now expect that Saudi Arabia’s growth in real per capita GDP will fall below that of peers and project that the annual average increase in the government’s debt burden could exceed 7% of GDP in 2016-2019.

We are therefore lowering our foreign- and local-currency sovereign creditratings on Saudi Arabia to ‘A-/A-2’ from ‘A+/A-1’.

The stable outlook reflects our expectation that the Saudi Arabian authorities will take steps to prevent any further deterioration in the government’s fiscal position beyond our current expectations.

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

World War 3 Could Start This Month: 350,000 Soldiers In Saudi Arabia Stand Ready To Invade Syria

February 15, 2016

World War 3 Could Start This Month: 350,000 Soldiers In Saudi Arabia Stand Ready To Invade Syria

War Soldiers - Public Domain350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are massing in northern Saudi Arabia for a military exercise that is being called “Northern Thunder”.  According to the official announcement, forces are being contributed by Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Bahrain, Sudan, Kuwait, Morocco, Pakistan, Tunisia, Oman, Qatar, Malaysia and several other nations.  This exercise will reportedly last for 18 days, and during that time the airspace over northern Saudi Arabia will be closed to air traffic.  This will be the largest military exercise in the history of the region, and it comes amid rumors that Saudi Arabia and Turkey are preparing for a massive ground invasion of Syria.

If you were going to gather forces for an invasion, this is precisely how you would do it.  Governments never come out and publicly admit that forces are moving into position for an invasion ahead of time, so “military exercises” are a common excuse that gets used for this sort of thing.

If these exercises are actually being used as an excuse to mass forces near the northern Saudi border, then we should expect an invasion to begin within the next couple of weeks.  If it happens, we should expect to see the Saudi coalition storm through western Iraq and into Syria from the south, and it is likely that Turkey will come in from the north.

The goal would be to take out the Assad regime before Russia, Iran and Hezbollah could react.  For the past couple of years, Saudi Arabia, Turkey and their allies have been funding the Sunni insurgency in Syria, and they were counting on those insurgents to be able to take down the Assad regime by themselves.

 

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

Oasis at Risk: Oman’s Ancient Water Channels Are Drying Up

June 2, 2015

Oasis at Risk: Oman’s Ancient Water Channels Are Drying Up

Since pre-Islamic times, Oman’s water systems known as aflaj have brought water from the mountains and made the desert bloom. But now, unregulated pumping of groundwater is depleting aquifers and causing the long-reliable channels to run dry.

It was 47 degrees Celsius. Make that 117 degrees Fahrenheit. In mid-May, the desert of northern Oman may have been the hottest place on the planet. But in the shade of the oasis, the temperature was dramatically cooler. Ali Al Muharbi, in his white robes and beard, beamed as he showed me around the date palms. All were irrigated by water gurgling down a channel dug many centuries ago to tap underground water in the nearby Hajar mountains.

In Oman, a country on the shores of the Arabian Sea, these magical waters conjured from the most arid land imaginable are called “unfailing springs.”

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Fred Pearce
Ali Al Muharbi (right) says the flow in his water channels has been decreasing.

Even in the worst droughts, flows persist down the underground tunnels to the surface channels that course through the villages and fields. These pre-Islamic feats of hydraulic engineering remain the only water supply for many villages. Even large towns owe their existence to the perpetually flowing waters. The systems, which remain independent of the state and are run entirely by village communities, are known individually as falaj, and collectively by the plural aflaj.

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

 

 

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