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2004-06-04 Iraq-Jordan
Iraq, Iran and Saudi Arabia - Great Analysis!
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Posted by Anonymous4617 2004-06-04 4:18:51 AM|| || Front Page|| [3 views since 2007-05-07]  Top

#1  he maneuvered al-Sadr into rising
against the Americans at the same time as the Sunnis launched an offensive west of Baghdad,

I dont beleive this. while theres a kernel of truth in the notion that the Fallujah deal was to put pressure on Sistani, i see no evidence that Sistani wanted Sadr to rise, or that Sistani is as close to the Iranians as Stratfor has consistently maintained.

As for SF's claim that China is not the cause of rising oil prices, does SF have an explanation for rising steel or aluminum prices? Is AQ active in the many countries that export steel and aluminum?
Posted by Liberalhawk 2004-06-04 10:30:25 AM||   2004-06-04 10:30:25 AM|| Front Page Top

#2 LH,

An excellent observation. The situation in Iraq and Saudi is what is adding volatility to the oil market (vice aluminum or steel), but it is the strong demand pressure from China that has caused the supply shortage in the first place.
Posted by dreadnought 2004-06-04 10:48:52 AM||   2004-06-04 10:48:52 AM|| Front Page Top

#3 and of course, we are responsible for the Saudis struggling with the monster they birthed and nurtured...
Posted by Frank G  2004-06-04 10:53:37 AM||   2004-06-04 10:53:37 AM|| Front Page Top

#4 I'm gonna say this one last time... ;)

There is no oil supply shortage! The reason oil prices are high is because futures traders have bid them up on the notion that there MIGHT be a supply shortage in the future.
Posted by Damn_Proud_American  2004-06-04 11:41:01 AM|| [http://brighterfuture.blogspot.com]  2004-06-04 11:41:01 AM|| Front Page Top

#5 I agree that StratFor's analyses have been pretty spotty. They consistently overestimate Iran's influence on al-Sistani and underestimate Iran's direct efforts to foment trouble in Iraq. IMO, Iran's interest is a chaotic Iraq where the US is bogged down, not a stable, Shia-dominated Iraq where the Najaf Shia won't play ball with the Qom Shia. Other than al-Sadr, the Iraqi Shia leaders have shown very little willingness to do Iran's bidding and a lot of willingness to play ball with the US/UN. They realize that the most practical and legitimate way to achieve Shia control (if not dominance) is to let the democratic process come to fruition and allow their majority status to bear its own fruit.
Posted by Tibor 2004-06-04 11:48:24 AM||   2004-06-04 11:48:24 AM|| Front Page Top

#6 This iranian born french sees eye to eye with Tibor.
Posted by frenchfregoli 2004-06-04 12:53:00 PM||   2004-06-04 12:53:00 PM|| Front Page Top

#7 Al-Sistani believed that by controlling the Shia during the Sunni Ramadan offensive of October-November 2003, the Shia had entered into an agreement with the United States that the sovereign government of Iraq would pass into Shiite hands as rapidly as possible.

Dream on, sucker!

Al-Sistani badly miscalculated. The United States did not conclude that it needed a deal with the Shia. It concluded instead that the Shia -- including Chalabi and al-Sistani -- were completely undependable allies.

A whopping BGO (Blinding Glimpse of the Obvious).

By April, the United States had another important consideration on its plate: the deteriorating situation in Saudi Arabia. The United States was the primary cause of that deterioration. It had forced the Saudi government to crack down on al Qaeda in the kingdom, and the radical Islamists were striking back at the regime.
EMPHASIS ADDED

This is pure banana oil. The House of Saud has spent decades painting themselves and their entire nation into a sociopolitical corner. Content with their vampire's feast upon ever-plentiful petrodollars, the royals never even bothered to industrialize Saudi Arabia or properly educate their citizenry (religious indoctrination does not count for sh!t).

The Saudi government is now confronted with an increasingly assertive terrorist infrastructure of their own making and a nation that has little other income stream than the oil beneath their sands. What oil there is in the pipelines and refineries is almost entirely out of their control because they have never bothered to constructively encourage technological literacy within their borders and remain utterly reliant upon foreign expertise to keep their inbound revenue flowing.

The Iranians had a number of mutually supporting interests. First, they wanted a neutral or pro-Iranian Iraq in order to make another Iran-Iraq war impossible. For this, they needed a Shiite-dominated government. Second, they were interested in redressing the balance of power in the Islamic world between Sunnis and Shia, in particular with the Saudi Wahhabis. Finally, they wanted -- in the long run -- to become the dominant power in the Persian Gulf. Their relationship with the United States in Iraq was the linchpin for all of this.

All the more reason to oust the Shia controlled elements in the new Iraqi government. Such meddling as we have seen from Iran is a huge red flag that had better be noticed.

The United States did not lighten up at all on demanding full cooperation on al Qaeda. The Saudis supplied that. But the United States did not want oil shipments disrupted. In the end, the survival or demise of the House of Saud does not matter to the United States -- except to the degree that it affects the availability of oil.

It remains to be seen whether Saudi Arabia even realizes this. Too long have they fed at the trough without looking up from their gorgings.

The obvious danger is an Iranian-underwritten rising in southern Iraq that spills over into Saudi Arabia. The United States has shut off its support for such an event, but the Iranians have an excellent intelligence organization with a strong covert capability. They are capable of answering in their own way.

Just one more reason why America needs to consider a decapitating strike on the Guardian Council when it is in full session. There are few other avenues towards dismantling the mullah based power structure in Iran. The confusion and complications (i.e., nuclear power weapons program) they continue to sow must be laid at Iran's door.

#5 ... They realize that the most practical and legitimate way to achieve Shia control (if not dominance) is to let the democratic process come to fruition and allow their majority status to bear its own fruit.

This is one of the more concise summations of Shia strategy in Iraq. The potential for an Iraqi Shia majority voting into power a theocratic tyranny must be avoided at all costs. While there are few ways to dissuade those used to centuries of religious government, a sufficiently empowered minority (i.e., the Kurds) must be levered into Iraq's legislative body to effectively form a veto block for such a geopolitical nightmare.
Posted by Zenster 2004-06-04 1:22:18 PM||   2004-06-04 1:22:18 PM|| Front Page Top

#8 Ledeen was saying on a local radio station this morning (KSFO) that the rise in oil prices is due to the speculation/intel that the Saudi government is going to fall and fall quickly. DPA was right on target, Ledeen just supplied the underlying reasoning.
Posted by remote man 2004-06-04 1:35:39 PM||   2004-06-04 1:35:39 PM|| Front Page Top

#9 Zenster, my point is not that the Shia-dominated Iraqi government will become a theocracy. In fact, there is ample evidence that the opposite is true -- the Iraqi Shias are quite secular, and are certainly not enamored of the Iran model, especially since everyone knows how unpopular the Mad Mullahs are. In my view (through rose-colored glasses), the fruit to be borne of the Iraqi democratic process is a secular state whose dominant ethnicity happens to be Shia. That's why it is so important to stop al-Sadr. If he offs al-Sistani and some of the other Grand Ayatollahs, he could create real problems.
Posted by Tibor 2004-06-04 2:07:14 PM||   2004-06-04 2:07:14 PM|| Front Page Top

#10 i expect something in between Zenster and tibor. It seems to me that while SOME Iraqi Shia are secular - including upper class elements like Chalabi and Allawi, but also an urban working class secular element, traditionally organized by the (now reformed) Iraqi Communist Party, most Iraqi Shia, ARE pretty religious. OTOH it also seems like some the ayatollahs have looked at Iran, and seen what full fledged theocracy does to the popularity of Ayatollahs.
So I see Sistani et al opposing full clerical rule, but probably still pushing for "Sharia-lite" at least muslim family law applied to muslims. The secular shia might cut a deal with them, or might ally with the Kurds and Sunnis instead. And there is a minority that DOES support Sadrs vision of an Islamic state, and theyll be a problem for years, kinda like the Communists in western europe during the cold war.
Posted by Liberalhawk 2004-06-04 2:19:52 PM||   2004-06-04 2:19:52 PM|| Front Page Top

#11 [Off-topic or abusive comments deleted]
Posted by JERKFACE101 TROLL 2004-06-04 2:38:04 PM||   2004-06-04 2:38:04 PM|| Front Page Top

#12 Thank you for elucidating, Tibor. I remain concerned that your spectacles are nonetheless overly roseate. After such lengthy and brutal oppression at the hands of Saddam, one can only hope that the Shias have learned secularism's value. Sadly, I still see the common obsession with theocratic rule as a big threat to the emergence of a functional Iraq. This is one case where I definitely hope that I'm wrong.
Posted by Zenster 2004-06-04 3:07:48 PM||   2004-06-04 3:07:48 PM|| Front Page Top

#13 well once the mulla's in iran is taken out it will not matter. i believe there will govt (in iraq and ira) that will fall in the middle.
Posted by Dan 2004-06-04 5:42:49 PM||   2004-06-04 5:42:49 PM|| Front Page Top

#14 DPA there is most definitely a supply shortage of oil, which is not the same as saying there is not enough oil at particular point of time. I wont go into a long explanation on the role of speculators in markets, but essentially they make them more efficient. High prices will prevent there being not enough oil by curbing demand and more importantly increasing production. If there were no speculators, then you would likely find that there was not enough oil and your local gas station was dry.

The Saudis etc. blame speculators to deflect blame away from the real cause which is OPEC.
Posted by Phil B  2004-06-04 6:20:58 PM||   2004-06-04 6:20:58 PM|| Front Page Top

#15 Phil, the price of oil at this point in time is not supply and demand driven. It's derivative driven. That's the simple truth.

You're saying that there isn't a supply problem because high prices are lowering demand. My point is that there's not a supply problem at far lower prices than we have now.
Posted by Damn_Proud_American  2004-06-04 6:46:54 PM|| [http://brighterfuture.blogspot.com]  2004-06-04 6:46:54 PM|| Front Page Top

#16 The House of Saud has spent decades painting themselves and their entire nation into a sociopolitical corner.

I still believe the root of the Saudi problem is the succession fight. AQ vs. the Saudi government is a proxy for factions of the Saudi "royal" family. Yes, it almost certainly has gotten out of hand. That doesn't mean that wasn't the original intent.
Posted by Robert Crawford  2004-06-04 7:26:05 PM|| [http://www.kloognome.com/]  2004-06-04 7:26:05 PM|| Front Page Top

#17 #13 well once the mulla's in iran is taken out it will not matter. i believe there will govt (in iraq and ira) that will fall in the middle.

Here's hoping. Unfortunately, Iran's interference represents one of the biggest roadblocks to success right now. There is no short term solution for eliminating their negative effect on the situation short of blowing the Iranian mullahs straight to hell.

Internal insurrection is insufficiently well armed or organized enough to accomplish the task and merely bombing Iran's atomic weapons program into rubble will not put an end to their constant interference.

Some way of polarizing the Qom - Najaf Shias and thereby eliminating any potential collaboration between them would seem best. Does anyone have a read on how to go about doing this?

Per the oil issue, I tend to agree with Phil B's analysis, save for the fact that China's artificially pegged currency and intentionally skewed foreign trade deficits allow them an exaggerated degree of demand that a properly regulated (read: legitimately operated) economy would most definitely not.

Just one more reason why China needs to be slapped back into line. Sadly, neither America nor Europe have any political backbone to do so right now and the long term repercussions of this will be truly devastating.
Posted by Zenster 2004-06-04 7:41:26 PM||   2004-06-04 7:41:26 PM|| Front Page Top

#18 Robert Crawford, the Saudi succession fight looks to me a bit like the Iran-Iraq war: no good guys to be found.
Posted by someone 2004-06-04 7:51:31 PM||   2004-06-04 7:51:31 PM|| Front Page Top

#19 Phil, the price of oil at this point in time is not supply and demand driven. For anything traded in a market the price is supply and demand driven. There is a supply problem and substantially its called OPEC. I didn't understand the comment about derivatives.

And Zenster China's artificially pegged currency actually suppresses its demand for oil because it makes oil more expensive for them.
Posted by Phil B  2004-06-04 8:02:36 PM||   2004-06-04 8:02:36 PM|| Front Page Top

#20 And Zenster China's artificially pegged currency actually suppresses its demand for oil because it makes oil more expensive for them.

But what they lose in profit they make up for in volume. The insanely disproportionate trade imbalance gives them money enough to afford all the oil they want. Do you disagree?
Posted by Zenster 2004-06-04 9:17:20 PM||   2004-06-04 9:17:20 PM|| Front Page Top

#21 For anything traded in a market the price is supply and demand driven. There is a supply problem and substantially its called OPEC. I didn't understand the comment about derivatives.

That's only true in a world without derivatives (options). Derivatives allow for the equivelant effect of an artificial inflation of or reduction in supply on the price of a commodity (or any equity for that matter).

The problem is that derviatives allow you to leverage vast quantities of supply with little capital. If you want to read a very extreme example of the influence that derivatives can have far beyond the traditional supply and demand aspects of a market read the story of Long Term Capital Managment.
Posted by Damn_Proud_American 2004-06-04 9:36:59 PM||   2004-06-04 9:36:59 PM|| Front Page Top

#22 But what they lose in profit they make up for in volume. The insanely disproportionate trade imbalance gives them money enough to afford all the oil they want. Do you disagree?

No, the reason they have the distorted trade balance is because the exchange rate artificially depresses all imports including oil. You have the cause and effect the wrong way round.
Posted by Phil B  2004-06-04 11:25:38 PM||   2004-06-04 11:25:38 PM|| Front Page Top

#23 DPA re derivatives - Essentially options allow you to trade future price movements. They have no effect on actual supply.
Posted by Phil B  2004-06-04 11:29:21 PM||   2004-06-04 11:29:21 PM|| Front Page Top

#24 Phil B: I'm not sure whether their credit policies are allowing them to buy more oil (and steel and aluminum) in spite of the exchange rate.

The credit policies, i.e. who gets loans and who doesn't, is acting as a de facto controlled economy bureau; by providing more credit for companies buying steel and oil than for other things lets them concentrate their limited foreign exchange purchases in what they consider to be important areas.

Or so I'm guessing. I have to think.
Posted by Phil Fraering 2004-06-05 12:48:35 AM|| [http://newsfromthefridge.typepad.com]  2004-06-05 12:48:35 AM|| Front Page Top

#25 Phil hopefully you'll catch this even though it's the next day but...

Options allow you to leverage your capital, thus reducing supply. For example... If I bought the right to buy 100 barrels of oil at 40 dollars (assuming that oil is trading at 38.50) in a few months it might cost me a few bucks per barrel. Now the person that sold me those options can't afford to sell his barrels in the mean time because if oil goes to 50 he goes bankrupt selling to me at 40. Therefore I've leveraged 200 dollars to reduce the supply of oil by 4000 dollars. This is simplified but effectively this is how leverage screws up traditional supply and demand. The fact that the guy who sold the oil won't sell therefore drives up the price... because he won't sell.

Thus derivative traders can screw with the price of commodities beyond simple supply and demand... at least in the short term. In the long term supply and demand rules.
Posted by Damn_Proud_American 2004-06-05 1:23:14 AM||   2004-06-05 1:23:14 AM|| Front Page Top

#26 DPA, Your point seems to be that options take oil of the market in order to fulfill future/options contracts. The only reason you would do this is to avoid being forced to pay a higher price on the delivery date. The existence of futures and options solves this problem. I.e. futures and options avoid the need to keep oil in storage in order to avoid the risk of price movements.

The rise in futures/options markets has resulted in a very substantial decline in oil kept in storage for precisely this reason.

In your example the seller solves his problem by buying an offsetting futures/option contract such that any price movement will have no net effect.
Posted by Phil_B 2004-06-05 1:40:00 AM||   2004-06-05 1:40:00 AM|| Front Page Top

#27 Off-topic or abusive comments deleted]
Posted by JERKFACE101 2004-06-04 2:38:04 PM||   2004-06-04 2:38:04 PM|| Front Page Top

14:38 JERKFACE101
08:04 Anonymous5089
01:40 Phil_B
01:23 Damn_Proud_American
01:18 Igster
01:04 ed
00:48 Phil Fraering
00:25 rex
23:49 Edward Yee
23:29 Phil B
23:25 Phil B
23:17 smn
23:08 Super Hose
23:08 .com
23:04 smn
23:02 Atomic Conspiracy
23:02 Super Hose
22:59 smn
22:59 Lucky
22:56 Super Hose
22:54 Frank G
22:48 Super Hose
22:44 Super Hose
22:42 Frank G









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