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Harry Hope
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From The Washington Post, 10/26/07:
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/25/AR2007102502840.html?hpid=topnews
Strike on Iran Would Roil Oil Markets, Experts Say
Price Hits Record Close; U.S. Tightens Sanctions
By Steven Mufson
Washington Post Staff Writer
Friday, October 26, 2007; Page A01
A U.S. military strike against Iran would have dire consequences in
petroleum markets, say a variety of oil industry experts, many of whom
think the prospect of pandemonium in those markets makes U.S. military
action unlikely despite escalating economic sanctions imposed by the
Bush administration.
The small amount of excess oil production capacity worldwide would
provide an insufficient cushion if armed conflict disrupted supplies,
oil experts say, and petroleum prices would skyrocket.
Moreover, a wounded or angry Iran could easily retaliate against oil
facilities from southern Iraq to the Strait of Hormuz.
Oil prices closed at a record $90.46 a barrel in New York yesterday as
the Bush administration tightened U.S. financial sanctions on Iran
over its alleged support for terrorism and issued new warnings about
Tehran's nuclear program.
Tension between Turkey and Kurds in northern Iraq, and fresh doubts
about OPEC output levels also helped drive the price of oil up $3.36 a
barrel, or 3.8 percent.
Although the Bush administration is not openly threatening a military
strike against Iran, the president recently spoke of needing to avoid
"World War III," and Vice President Cheney said that the United States
would "not stand by" while Iran continued its nuclear program.
"We will not allow Iran to have a nuclear weapon," he said.
Oil traders said that even if the chances of military conflict with
Iran were small, the huge run-up in oil prices that would result
encourages some speculators and investment funds to bid up the price
of oil, adding a premium of $3 to $15 a barrel.
"It will be chaos. . . . I can't really see it," said Abdulsamad
al-Awadi, an oil trading consultant and former executive at Kuwait
Petroleum.
"Having been in the marketplace for almost 30 years, I can't see a
scenario for it, or precautionary measures" that oil companies could
take.
"There are no precautionary measures."
"If war breaks out, anticipate that all hell will break loose in the
oil markets," said Robin West, chairman of PFC Energy, a District oil
consulting firm.
"If it's a clinical strike like the one that Israel carried out on the
Syrian installations and no one admitted to doing it, you'd have a
fierce reaction from Iran, but it would probably die down," said Leo
Drollas, deputy executive director and chief economist of the Center
for Global Energy Studies, a London think tank founded by former Saudi
oil minister Ahmed Zaki Yamani.
"If it were a botched job with lots of targets and civilians dying and
Iranians retaliating . . . it could escalate and the price of oil
could shoot up to God knows where."
Ominous warnings about oil prices have preceded other conflicts in the
oil-rich Persian Gulf, and spikes in crude prices proved fleeting in
the past.
But during earlier conflicts in the region -- the Iran-Iraq war in the
1980s, the Gulf War in 1991 and even the 2003 U.S.-led invasion of
Iraq -- the world's oil-exporting countries had enough capacity to
make up for the disruption in oil exports.
Not so this time.
Demand has grown, and output has fallen in many oil-producing
countries.
Saudi Arabia, which accounts for about 8.7 million barrels a day,
produces almost all of the world's excess oil and is capable of
boosting output by about 2.5 million barrels a day, Drollas said.
Iran produces 2.5 million barrels a day.
Moreover, while some members of the Organization of the Petroleum
Exporting Countries fear that high prices would hurt oil demand and
undercut long-term revenue, others see no need to boost output.
In a meeting with reporters in Caracas yesterday, Venezuelan energy
minister Rafael Ramirez said that the market is "well supplied."
Earlier, Venezuelan President Hugo Ch
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/25/AR2007102502840.html?hpid=topnews
Strike on Iran Would Roil Oil Markets, Experts Say
Price Hits Record Close; U.S. Tightens Sanctions
By Steven Mufson
Washington Post Staff Writer
Friday, October 26, 2007; Page A01
A U.S. military strike against Iran would have dire consequences in
petroleum markets, say a variety of oil industry experts, many of whom
think the prospect of pandemonium in those markets makes U.S. military
action unlikely despite escalating economic sanctions imposed by the
Bush administration.
The small amount of excess oil production capacity worldwide would
provide an insufficient cushion if armed conflict disrupted supplies,
oil experts say, and petroleum prices would skyrocket.
Moreover, a wounded or angry Iran could easily retaliate against oil
facilities from southern Iraq to the Strait of Hormuz.
Oil prices closed at a record $90.46 a barrel in New York yesterday as
the Bush administration tightened U.S. financial sanctions on Iran
over its alleged support for terrorism and issued new warnings about
Tehran's nuclear program.
Tension between Turkey and Kurds in northern Iraq, and fresh doubts
about OPEC output levels also helped drive the price of oil up $3.36 a
barrel, or 3.8 percent.
Although the Bush administration is not openly threatening a military
strike against Iran, the president recently spoke of needing to avoid
"World War III," and Vice President Cheney said that the United States
would "not stand by" while Iran continued its nuclear program.
"We will not allow Iran to have a nuclear weapon," he said.
Oil traders said that even if the chances of military conflict with
Iran were small, the huge run-up in oil prices that would result
encourages some speculators and investment funds to bid up the price
of oil, adding a premium of $3 to $15 a barrel.
"It will be chaos. . . . I can't really see it," said Abdulsamad
al-Awadi, an oil trading consultant and former executive at Kuwait
Petroleum.
"Having been in the marketplace for almost 30 years, I can't see a
scenario for it, or precautionary measures" that oil companies could
take.
"There are no precautionary measures."
"If war breaks out, anticipate that all hell will break loose in the
oil markets," said Robin West, chairman of PFC Energy, a District oil
consulting firm.
"If it's a clinical strike like the one that Israel carried out on the
Syrian installations and no one admitted to doing it, you'd have a
fierce reaction from Iran, but it would probably die down," said Leo
Drollas, deputy executive director and chief economist of the Center
for Global Energy Studies, a London think tank founded by former Saudi
oil minister Ahmed Zaki Yamani.
"If it were a botched job with lots of targets and civilians dying and
Iranians retaliating . . . it could escalate and the price of oil
could shoot up to God knows where."
Ominous warnings about oil prices have preceded other conflicts in the
oil-rich Persian Gulf, and spikes in crude prices proved fleeting in
the past.
But during earlier conflicts in the region -- the Iran-Iraq war in the
1980s, the Gulf War in 1991 and even the 2003 U.S.-led invasion of
Iraq -- the world's oil-exporting countries had enough capacity to
make up for the disruption in oil exports.
Not so this time.
Demand has grown, and output has fallen in many oil-producing
countries.
Saudi Arabia, which accounts for about 8.7 million barrels a day,
produces almost all of the world's excess oil and is capable of
boosting output by about 2.5 million barrels a day, Drollas said.
Iran produces 2.5 million barrels a day.
Moreover, while some members of the Organization of the Petroleum
Exporting Countries fear that high prices would hurt oil demand and
undercut long-term revenue, others see no need to boost output.
In a meeting with reporters in Caracas yesterday, Venezuelan energy
minister Rafael Ramirez said that the market is "well supplied."
Earlier, Venezuelan President Hugo Ch
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