It turns out that all this posturing coming from israelis and their doubles in the White House about a military strike against Iran is more likely than not simply theatrical cover for the real and tangible economic warfare that's already well underway.

Moreover, Americans will be shocked (and hopefully very, very angry) to learn that contrary to the popular belief that these wars are about securing oil so Americans can pay less at the pump - it's about securing CONTROL over it specifically to ensure that we PAY MORE.

The following article is a bit long - but, it's URGENT that you read it ALL THE WAY TO THE END to learn more than you can ever imagine about what our sons and daughters, mothers and fathers, and friends and neighbors are being sent to fight and die for and about the underlying currents that are secretly but surely shaping world events.

On January 5th, US crude oil prices had already plunged 10% over three days and touched a low of $55 per barrel, on news available to insiders, but not yet known by the public at large.

OPEC was cheating on its pledge to cut its oil production to 26.3 million BPD in December. Instead, the cartel pumped 27 million BPD or 700,000 BPD above it’s agreed upon quotas.

Ironically, the two biggest cheaters in OPEC were the two most vociferous price hawks, Iran and Venezuela. After pledging to cut its oil output by 176,000 BPD in December, Tehran left its oil output unchanged at 3.83 million BPD, while Caracas actually increased its oil output by 20,000 BPD last month, after pledging to reduce output by 138,000 BPD. Riyadh cheated by 80,000 BPD last month. It’s hard to believe OPEC will meet its pledge to cut oil output by 500,000 BPD in February, when the December agreements have not been fully kept.

In case some readers missed it - IRAN and VENEZUELA just happen to be on the top of America's sh*t list. Now, you know why - because they're "CHEATING" or more accurately REFUSING TO GO WITH THE PROGRAM.

Also, the practice that the author euphemistically refers to as "pledging to reduce output" is also known as PRICE FIXING which is ILLEGAL in the United States.

But, apparently it's perfectly fine when American corporations conspire with others to fix prices OUTSIDE America's borders in order to FIX PRICES inside its borders.

However, the sudden plunge in crude oil prices to $55 per barrel, was all the more puzzling, when one considers that US commercial oil stocks had fallen from 341.1 million barrels on November 17th, to as low as 319.7 million barrel last week. The sharp drop in US oil supplies suggested that OPEC was honoring its pledge to cut output 4.3% in November, and to defend US oil prices at $60 per barrel.

THAT is what our troops are "DEFENDING" - not oil, but HIGH OIL PRICES.

Besides which, I don't see how he concludes that a drop in US oil reserves suggests that Saudi Arabia is 'honoring it's pledge'. To me, it suggests that US oil corporations have something up their sleeves. Why else would they fail to buy when prices are unusually low?

While the media focused on the balmy weather to explain the sudden 10% plunge of crude oil to as low as $55 /barrel on January 5th, what initially triggered the drop was a surprise move by Saudi Arabia to slash the price of Arabian Light, its finest blend, by $1.75 /barrel to a $7.50/barrel discount to West Texas Sweet, for its US customers, the deepest discount in 10-months.

Saudi Arabia also cut the price of Arab Light to Asian buyers by a more modest 10 cents and to European buyers by 20 cents from January. About half of the Saudi kingdom’s 7 million BPD of crude exports move to Asia. But why did Riyadh to decide to tip the delicate balance between fear and greed in the oil markets to the bearish camp, by slashing its US oil price by $1.75 /barrel on Jan 2nd?

It's unclear.

But, one thing is certain - Saudi Arabia gets its marching orders from Washington and Tel-Aviv. So, whatever their motive - it ain't good.

Persian Gulf oil ministers have carefully avoided mentioning a target price for their oil, but Kuwaiti Energy Ministry Undersecretary Issa al-Oun said on Nov 14th:

“The Gulf Cooperation Council states see oil prices between $55 and $60 a barrel as an acceptable level, but if they start to decline then there should be action.”

What is not known is whether al-Qun was referring to OPEC’s reference crude basket price, which closed at $51.25 on Friday, or West Texas Sweet which trades at a higher price.

Russian Bear Shuns OPEC, Pumps record barrels of Oil

So far, Russian kingpin Vladimir Putin hasn’t joined the OPEC cartel in cutting oil production, and instead, is pumping oil at full speed. Putin’s lack of cooperation on oil production is creating bitterness within the ranks of OPEC, and might explain why most members of the cartel are cheating on their quotas. Oil production in Russia increased 2.1% year-on-year to a near record 9.75 million BPD in December.

The last time Russia cooperated with OPEC to shore up oil prices was in December 2001, when US crude oil prices were trading at $18 per barrel. At that time, Moscow cut its output by 150,000 BPD, Mexico cut 100,000 BPD, Norway cut 200,000 BPD, and Oman cut its output by 40,000 BPD [All so that WE CAN PAY MORE - isn't that nice of them?]. OPEC slashed its output by a hefty 1.4 million BPD. So far, there is no such joint initiative on the table for 2007.

Largely due to booming crude oil and base metal prices, Russia's foreign trade surplus rose to $140.1 billion in the first ten months of 2006 from $117.2 billion in the same period a year ago. Oil accounted for 35.2% of Russia’s exports in the first 10 months of 2006. Russia also derives 15% of its export revenues from metals, such as iron and steel exports which earned $22.5 billion, and non-ferrous metal exports of $16.5 billion in 2006. Russia is the world’s fourth-largest steel maker, and the world’s top nickel and second-largest aluminum producer.

In Rotterdam, Russian Urals crude oil fell below $50 per barrel for the first time in eighteen months, and should slow the Kremlin’s massive build-up of foreign currency reserves, which hit a record $299.2 billion in December. Russia has the world's largest foreign reserves outside of Asia, and its holdings have grown by more than 50% from a year ago on the back of higher base metal, gold, and crude oil prices. Earlier this year Russia said the share of US dollars in its FX reserves had been cut to 50% and that of Euros increased to 40%, with the rest in yen and sterling.

Booming exports helped Russia’s economy expand by 7.3% in November from a year earlier, and 6.8% higher over the first 11 months of 2006. To fuel its booming economy, Moscow is diverting more of its oil production to meet domestic needs and exporting less outside of the CIS. Oil exports to countries outside the CIS fell to 4.16 million BPD in December, or 12% below the peak in June of 4.76 mil BPD.

With Russian oil exports outside the CIS declining for the past six months, the recent growth of Russia’s FX reserves is mainly linked to the appreciation of the Euro against the weakening dollar [in other words, we are financing it with a decrease in the value of our savings], said Russia’s central bank deputy Chairman Alexei Ulyukayev on Nov 30th. In October, Ulyukayev said the central bank had started to buy Japanese yen for its reserves, and also mentioned the Australian and Canadian dollars and the Swiss franc as possible candidates for future purchase [anything BUT the dollar].

Russia’s oil pipeline monopoly Transneft handles around 1.5 million barrels per day or a third of Russia’s exports, but was losing money due to the appreciation of the rouble against the dollar. But on Dec 1st, Moscow approved a request by Transneft to allow it to switch to roubles from US dollars when charging shipping fees toward Russia’s largest oil port of Primorsk and loading fees in the port [ordinary Americans still lose the value of their savings, but Russia protects itself].

Asian Oil Demand Stays Strong [Oil companies DON'T NEED US]

Despite cheating by OPEC and record high Russian oil output, strong oil demand from Asia is expected to put a floor under crude prices at some point. Asia imports about two-thirds of its 24 million BPD crude oil needs, most of that from the Middle East. China surpassed Japan in 2004 as the world’s second-largest oil consumer after the United States. China consumed 7.4 mil BPD of oil last month, compared to US demand of 20.7 mil BPD, which was 25% of global oil demand.

China imports 48% of its crude oil, a figure that is on the rise as domestic production stagnates and a booming economy fuels demand. On Dec 12th, the Energy Info Agency left its forecast for Chinese oil demand growth in 2007 unchanged at 500,000 barrels per day to 7.9 million BPD. US oil demand is expected to grow by 250,000 BPD to 20.9 mil BPD, with total world demand estimated at 86.5 mil BPD.

“Oil demand should be in part driven by the number of automobiles in emerging Asia surging from 60 million to more than 400 million by 2030,” predicted ExxonMobil chairman Raymond on Nov 4, 2004. “Natural gas demand in the Asian region will grow even more quickly, tripling in the next 25 years, in line with power consumption.”

Raymond cited an estimate by the IEA that said China would rely on imports for 80% of its oil and about 30% of its natural gas in 2030.

Saudi Arabia Oil Minister Ali al-Naimi made similar remarks on Sept 12th, 2006. “Over the past three decades, the developing countries of Asia, the Middle East and Latin America have accounted for half of the increase in global oil demand, and are expected to account for 75% of the 30 million barrels per day projected increase in world oil demand by 2025.

”The transportation sector is forecast to account for 60% of oil use due to the increase in vehicle ownership worldwide, which will grow from 135 vehicles per 1,000 inhabitants today to 190 vehicles by 2025,” Naimi predicted.

China’s crude oil imports soared by 16% or nearly 400,000 BPD last year to 2.9 million BPD, up from 2005’s tepid 3% rise. Liang Shuhe, director with the Chinese Foreign Trade Department said that China’s demand for crude oil would total about 290 million tons in 2006, of which 48% were imports. The fast growth of the economy forced China to depend more on imports because of the limited domestic production, and the steady increase in imports is likely to continue.

On the supply side, Asia is unlikely to pump more than 100,000 BPD of new crude from a handful of fields [no need to invade China], focusing instead its attention on Angola, which became China's biggest supplier last year and is due to become OPEC’s 12th member this year. Some 350,000 BPD of new Angolan crude is expected on stream in 2007.

Beijing's plans for its strategic oil stocks, whose capacity will reach 100 million barrels by 2008, will present more volatility for oil markets [on second thought, maybe they need to be 'liberated']. The 33 million-barrel tank farm in Ningbo has been filled to at least one-third capacity with Russian and Middle East crude. The 30% fall in oil prices to $56 /bl might spur China into action.

Global Oil Company shares Rattled by Crude Oil plunge [No More 'Mr. Nice Guy']

Traders in Oil company shares were completely blindsided by the 3-day rout in crude oil prices to $55 per barrel. The Amex Oil Index [^XOI] contains 12 global energy companies such as British Petroleum [BP] Chevron (NYSE: CVX - News), Exxon Mobil (NYSE: XOM - News), Sunoco (NYSE: SUN - News), Total (NYSE: TOT - News), Repsol (NYSE: REP - News), Conoco, Phillips (NYSE: COP - News), Hess (NYSE: HES - News), Occidental Pete (NYSE: OXY - News), Valero Energy (NYSE: VLO - News), Andarko (NYSE: APC - News), and had been climbing alongside a rising S&P 500 index in the fourth quarter, while betting that crude oil prices would stabilize between $60 and $64 per barrel, and would no longer pose a threat to profits.

The distortions of the global liquidity glut that pushed the S&P 500 to a 5 ½-year high had also pushed XOI far out of alignment with the price of crude oil, which was trading $15 per barrel below its peak of $76 /bl in August. The fourth quarter rally in the XOI index began on October 3rd just hours after Kuwait oil minister al-Sabah said OPEC would defend oil prices with supply cutbacks.

Interestingly enough, the XOI index topped out on Dec 14th, exactly the same day that OPEC pledged to lower its oil output by 500,000 BPD to 25.8 mil BPD in February. Since that day, the XOI index has tumbled by 8.5 percent. The latest slide in crude oil from a high of $64.15 /bl began six days later on Dec 20th.

If the latest plunge in crude oil to roughly $56 /bl is sustained over the year, Exxon Mobil would lose nearly $3 billion in profits, or $540 million for every dollar off the price of oil per barrel. Chevron and ConocoPhillips, the second and third-largest US oil companies, would lose about $330 million and $200 million respectively, for every dollar off the price of crude oil per barrel per year.

That's a lot of money - time to liberate some more Ay-rabs from them Islamofascists!

London “Sunday Times” says Israel plans to attack Iran

Crude oil briefly bounced $1.25 cents to $57.75 / barrel following an article in the “Sunday Times” of London, indicating that Israel has drawn up plans to destroy Iranian uranium enrichment facilities with a tactical nuclear strike.

Coincidence? Hardly.

The Times said:

“Israelis have become increasingly convinced that a “second holocaust” of the Jews is brewing, stoked by Mahmoud Ahmadinejad, the Iranian president and chief Holocaust denier, who has repeatedly called for Israel to be destroyed.”

But speculation of a future war between Israel and Iran is baseless. That’s the majority opinion of Tel-Aviv traders and the crude oil markets these days.

The Tel-Aviv-100 stock index rose to a record high of 945.5 last week, up 15% from a year earlier, close behind the MSCI Emerging market index which gained 19 percent. Israel’s economy expanded by a healthy 5% last year, losing 0.9% of growth due to $3.4 billion of damages from the summer war with Hizbollah.

It worked like a charm! Everyone got scared - israelis got rich!

The earliest clue of an impending war between Israel and Iran can be found in the Israeli shekel exchange rate. Yet the shekel gained 10% against the US dollar to a 5-½ year high in 2006.

The Bank of Israel lowered its overnight loan rate by 100 basis points to 4.50%, or 75 basis points below the US fed funds rate, in order to rescue the dollar.

Imagine that! israelis bilk billions from US taxpayers, yet the shekel is rescuing the dollar! How ironic!

Nearly $20 billion of foreign direct investment flowed into Israel last year, bolstering the shekel, led by a $4.5 billion investment from Warren Buffet.

But, wait - it gets even more interesting!

Israel cannot play Russian roulette and attack Iran, because its nuclear facilities are inhabited by Russian technicians, and Israel imports 60% of its oil from Russia.

Because Israel has limited fossil fuels, its energy supply from Russia is of extreme importance for the functioning of its economy.

Therefore, Ahmadinejad holds the trump card, while his chief ally, Russian kingpin Vladimir Putin controls most of Israel’s oil supply, and can bring the Israeli economy to its knees.

Tehran is rewarding Moscow with a contract for LUKOIL, to give it a role in producing oil from Azadegan, one of the largest unexploited oil fields in the world. Said Russia’s Atomic Energy Agency chief, Sergei Kiriyenko:

“LUKOIL has carried out some exploration at Azadegan and, according to a contract that will be signed in the future, Iran will allow the Russian party to participate in recovering oil in Azadegan directly.”

“Russia sees no political obstacles to putting the Bushehr nuclear power plant into operation as scheduled. It is Russia’s position that Iran has the right to civilian nuclear energy, in compliance with non-proliferation regulations,” Kiriyenko said on Dec 12th.

Russian Deputy Industry and Energy Minister Ivan Matyorov said Iran has also offered to cooperate with Russian oil and gas companies in exploring for new deposits, both on its own territory and in other countries.

“Iranians believe that Gazprom in particular is an effective world leader, and they would like to cooperate with it. Specifically, Iranian companies have extended their presence in Venezuela and Bolivia in this domain, and they would like to cooperate with Gazprom in these regions as well,” Matyorov said.

He said Russian state-controlled oil company Rosneft could soon start developing deposits in Iran.

Ahmadinejad holds another trump card over Israel. Some 12% of China’s crude imports come from Iran.

On Dec 20th, Iran and China’s CNOOC (NYSE: CEO - News), 0883.HK signed a $16 billion deal to develop Iran’s northern Pars gas field and build plants to produce liquified natural gas. CNOOC would have a 50% share of the produced LNG. Sinopec [0386.HK] (NYSE: SHI - News), is negotiating with Tehran to develop the giant Yadavaran oil field and to buy 10 million tons of natural gas per year for 25 years.

Sounds like a damn good reason to scream - "ISLAMOFASCISTS ARE IN CHINA!"

Why is Iran cheating on its pledge to OPEC?

Iran is home to approximately 10% of the world’s oil and is the second largest exporter in OPEC, producing 3.8 million BPD. At the same time, Iran sits atop the world’s second-largest reserves of natural gas.

Today, 85% of Iran’s export earnings, as well as half of its budget and a quarter of its economy is derived from energy exports. Despite oil exports of 2.5 million barrels a day however, Iran currently imports more than 40% of its annual consumption of gasoline from India, France, Turkey, and China, at an estimated cost of more than $3 billion annually.

Yet given a difficult investment environment and concerns over its nuclear program, Iran has been unable to upgrade its oil facilities, nor increase production capacity for the past few years. Oil production was stagnant last year, which resulted in the oil sector expanding by just 0.6% in real terms. Instead, Iran’s economy is being driven by higher government spending, which grew by 5.4% in real terms in 2006, the highest rate of growth in five years.

Strong government spending is eroding much of Iran’s oil revenue [meanwhile, America's domestic budget is shrinking]. While hydrocarbon revenue increased 28.3% last year, government expenditures grew a massive 39.6 percent. Tehran provides subsides for many staple items and housing, which total $25 billion a year. These subsidies are now costing the government roughly 15% of Iran’s GDP. Heavily subsidized gasoline is just 35 cents a gallon[!!!].

Oh, the irony!!!

The Iranian government susbsidizes gas for its people, while the American government holds its people hostage for the benefit of Big Oil! If anybody needs 'liberating' from 'facsists' - it's Americans!!!

The latest plunge in crude oil, perhaps inspired by Saudi Arabia, is likely to put a squeeze on Iran’s budget surplus, which could turn into a deficit if oil prices fall towards $45 per barrel.

That explains why Saudia Arabia is going along with the price cuts!

To finance the government’s subsidies, Iran’s central bank increased the broad money supply by 36% in 2006, sending inflation soaring to 14.6% in September. Tehran cannot afford to cutback on oil production and reduce its oil income, without cutting back on subsidies and risk riots in the streets.

Meanwhile, back in the wild, wild, West - Americans sit content, with a remote in one hand and a beer in the other, eager to consume whatever propaganda the media feeds them, while taking it up the backside at the pump.

Iran’s all-out commitment to nuclear invincibility is also worrisome to its Sunni neighbors. Jordan, Egypt, Saudi Arabia and other Sunni-ruled Arab states now fear that US troops might withdraw hastily, leaving an Iraq dominated by Iranian-backed Shi’ite militias. That in turn could lead to the emergence of a Shi’ite Crescent linking Iran, Iraq, and Syria with Hezbollah in Lebanon and Hamas in Gaza.

Bullshit, propaganda - the meat is in the markets.

While apparently ruling out the military option for 2007, the Europeans and the US are quietly engaging in economic warfare with Iran, by demanding that international banks and oil companies to pull out of dozens of Iranian projects, including development of Iran’s two massive new oil fields Azadegan and Yardavan that could expand Iran’s output by 800,000 BPD over the next four years.

US officials already have already warned that they will hold China accountable under Washington’s unilateral sanctions laws if Beijing proceeds with a $16-billion project to develop Iran’s North Pars gas field.

Japan’s INPEX had secured the right to lead the $2 billion-plus development of Azadegan with a 75% stake, but pulled out of the deal in October under heavy US pressure.

In late 2005, Dutch bank ABN Amro agreed to pay $80 million in fines stemming in part from improper transactions with Iran through its subsidiary in Dubai, United Arab Emirates. UBS Bank and Credit Suisse of Switzerland recently announced they were suspending most new business with Iran, and British-based HSBC said it would no longer accept dollar transactions from within Iran.

The United States is expected to announce sanctions against Bank Sepah, a big Iranian commercial bank, under a presidential order aimed at freezing the assets of proliferators of weapons of mass destruction. Bank Sepah, established in 1925 is the oldest of the Iranian banks, and has a large network of branches in Iran as well as offices in Paris, Frankfurt and Rome.

Can economic warfare succeed in toppling Iran’s Ayatollah Khameini before he gets the bomb in 2009?

If US military intervention against Iran has been ruled out for 2007, the big question is whether Saudi Arabia is behind the latest plunge in oil prices, to wreck havoc on Iran’s budget and economy? Meanwhile, Iran is banking on strong demand for crude oil from Asia to put upward pressure on the price, and there will be plenty of jawboning from Ahmadinejad.

So, there you have it, folks. The American public is being taking for a wild ride about military action and nuclear weapons in Iran, while Washington and Tel-Aviv execute a ruthless economic war against Iran - choking off its prospects of ever emerging as a first world nation and threatening to topple its regime through economic unrest at home.

Any military action in 2007 will more likely be against easier targets - Lebanon and Syria.

Of course, we must not lose sight of the broader war between Washington and Tel-Aviv on one hand, and Russia on the other.

It's a war being waged to CONTROL oil reserves so as to MAINTAIN high prices.

And it's a war in which NO PRICE - paid in the blood and tears of Americans - IS TOO HIGH to secure victory.

This MUST change. Pass it on.

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• Iran
• israel and oil
• monopoly
• Oil
• OPEC
• price fixing
• Russia
• US

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