Tuesday, May 15, 2012

Saudi Kingdom Conniving To Create Wahabbi Super-Caliphate To Rule Over Entire Middle East....


An Invitation to War; Zioconned Saudi Kingdom Conniving To Create Wahabbi Super-Caliphate To Rule Over Entire Middle East....

WRITTEN BY FELIX IMONTI;

Diplomatic Courier

92019003

The Saudis are making promises intended to convince Americans and Israelis that they have no reason to worry about the price and supply of oil. They are hoping that their pledges will encourage someone else to remove the leaders of Iran before Iran displaces the United States in the region.

Should there be a conflict with Iran, Saudi prince Ali al-Naimi pledged early in February that the price of oil would not exceed US$100 per barrel. He was speaking of West Texas Intermediate , which is an isolated American market. At the time, WTI was trading at just under $100 while Brent Crude, which makes up 60 percent of the world oil market, was trading $20 higher.

Six weeks after the Prince made the pledge on CNBC, he said at a forum of petroleum ministers in Kuwait that the current price near $125 for Brent Crude was not justifiable. He continues to stress that Saudi Arabia alone and in conjunction with other producers can satisfy any and all market demands.

He gave the same assurance during the Libyan civil war. The Prince said that Saudi Arabia could pump 12 million barrels a day and could supply the market for the next eighty-eight years, but there is no indication that they replaced the lost 1.3 million barrels per day of Libyan oil. Strategic petroleum reserves in the U.S. and else where had to be opened to avoid shortages.

At that time, they were pumping 9 million barrels. Today, they are producing 10.9 million. Using the Prince’s own figures, that leaves a surplus of 1.1 million barrels to cover any unforeseen eventuality.

Since January of 2008, Saudi policy – to function as a swing producer that serves to smooth price changes by altering production levels – has undergone a shift. The hardening position of the Saudis reflects their growing anxiety about their domestic problems. Over the last thirty years, the Saudi population has tripled; and the Kingdom suffers from a twenty percent unemployment rate, with youth suffering the worst effects. Worried that the unrest of the Arab Spring would spread to the Kingdom, King Abdullah increased the budget by US$130 billion to provide five hundred thousand low-cost houses and other social benefits.

Paying for the hefty increase in spending leaves little financial flexibility for the Saudis to lower prices, especially because 90 percent of the national revenue comes from the state-owned petroleum industry. According to the International Institute of Finance, the Saudis will need to get a minimum price of eighty-eight dollars per barrel to support their economy.

Other than Saudi Arabia, there are no producers with any surplus production of any consequence, which leaves the world oil market in a precarious position. How precarious was made evident at the beginning of March, when the Iranian news service reported that a pipeline in Saudi Arabia was on fire. Prices jumped several dollars, until the story was revealed to be fiction. That the story appears to have originated with the Iranian news service should be taken as a warning.

The false report, however, does indicate where oil production is the most vulnerable. An Iranian commando raid into Saudi Arabia would be far more effective at cutting the flow of oil than mining the Strait of Hormuz, and would not interrupt the commerce on the Persian Gulf. Even more vulnerable to Iranian sabotage are the oil fields of Southern Iraq, where oil production has been finally restored to 2.6 million barrels per day.

Iranian sabotage of the pipelines or other facilities would be a simple matter and would wipe out the total claimed surplus Saudi capacity. With so many possible threats, traders have driven up prices by fifteen percent since the beginning of the year, to between $115 and $125 per barrel for Brent Crude. According to the Bank of America, a price of $130 per barrel will be enough to move the world economy into a recession.

Why is the Prince so eager to convince the world that the supply is under control? The answer is the loss of the buffer zone along the Northern frontier since U.S. forces left Iraq.

Over the last thirty years, the two rivals have fenced through proxies. With a pro-Iranian regime ruling Iraq, They face the possibility of an Iranian army using Iraq as a bridge. They would be able to meet on a battlefield; and that has altered the geo-military reality to the advantage of Iran.

The threat from Iraq is added to the potential support by Iran of a Shia fifth column in the oil-producing eastern provinces next to Bahrain, where the 70 percent majority Shia population is revolting, and the support of a Hauthi movement in northern Yemen just across the southern border.

One can understand why King Abdullah has urged the United States “to cut off the head of the snake,” meaning Ayatollah Ali Khamenei. Cutting off the head of the snake is more than abolishing the development of nuclear weapons – the king wants regime change. The Saudis see Ayatollah Khamenei as Supreme Leader of fanatical, heretical Persian rivals for domination of the region.

A sign of the Saudi determination to have the Iranian regime removed came on December 5, 2011 when Prince Turki Al-Faisal threatened that the Kingdom would purchase nuclear weapons and begin building its own if the Iranians acquire the capacity or an actual weapon. The promise of a low oil price is the Saudi carrot; the threat to go nuclear is the stick.

One factor that is restraining those advocating war with Iran is the possibility of an oil shortage and its impact upon the world economy. Prince Ali al-Naimi is making a major effort to give the reluctant the assurance that it is safe to attack. Oil is being pumped at record rates and going into storage with 10 million barrels being held at Rotterdam, Sidi Kerir, and Okinawa. Another 33 million barrels is being held in tankers. If after all of this effort, his promise proves to be meaningless, who will remember or care that he made it?

Felix Imonti is the retired director of a private equity firm and currently lives in Japan. He has published a history book, Violent Justice, and articles in the fields of economics and international politics. He specializes in the Middle East.


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