Crude Oil Prices, Iran, U.S. covert operations and an Indian Pipeline
That’s a lot of title to swallow, but it’s such an interesting puzzle. The media tends to simplify things and lately that has manifested itself in the reporting on the booming oil industry. Oil prices are at all-time highs, producers are defending the price of crude oil, countries where oil is in high demand are complaining, but one topic is deafeningly quite - the covert U.S. operations in and about Iran and the Iranian progress toward mitigating U.S. influence in the region.
What could Iran possibly do to undermine U.S. influence? Well sure, we all know Iran is responsible for thousands of Iraqi civilian and U.S. military deaths and injuries. But did you know that Iran is working to open a new oil Bourse (a Bourse is a market like a stock exchange)? The Iranian Oil Bourse (IOB) will compete with WTI, NYMEX and IPE. Why is this significant and why would anyone want to trade oil on an Iranian Bourse? Easy - Dollars…or Euro’s, rather. The IOB will be the only oil market that trades barrels of oil in Euro’s. Many oil producing nations have been struggling to get out of the declining Dollar, in favor of other stronger currencies like the Euro. The IOB provides that opportunity.
This is a crushing blow to the already declining U.S. Dollar. If oil prices are in Euro’s, that means the Fed isn’t printing Benjamins to pay OPEC, and as a result oil producing nations aren’t buying U.S. treasury bills, propping up our burgeoning deficit. It’s all a delicate balance, and the IOB threatens to spoil that.
Oh, there’s more! You may be aware of the January 31st Internet outage in the mid-east. I was surprised that it was even reported. Internet outages seem to be the least of the worries in that region, but there is a sinister conspiracy theory lurking beneath the murky waters of the straight of Hormuz.
The IOB was all ready to get going, but just days before the scheduled opening, poof went the backbone of the new exchange - the Internet. The culprit? Cut Internet lines under the sea, thus delaying the inevitable opening of the OIB until February 17th.
There’s yet another front that Iran is fighting as the antagonist in the current War on Terror via the price of crude oil. In addition to Iran diversifying its accepted payment method into Euro’s, it is now building a direct pipeline to India to supply that booming (and soon most populous) civilization with natural gas.
The U.S. has strong diplomatic ties with India, and Pakistan (through which the pipeline would be built), and is pressuring both parties to nix the deal to bring billions more in revenues to one of the two remaining Axis in the Axis of Evil.
India seemed reluctant to quickly agree to pouring billions into the the Iranian economy until the threat from Pakistan came to build the pipeline to China. This threat of losing precious fuel to China helped India quickly give in and agree to this agreement frowned upon by the U.S. because of it’s inevitable negative impact to our interest in Iranian containment and curtailment.
Never without alternatives, the U.S. still hopes that the alternative of bringing Turkmenistan gas through Afghanistan and Pakistan seems to languish on the back burner as a less attractive alternative to the Iran deal. It seems that the goals of both keeping Iran out of the deal for now (until after a regime change) and simultaneously diminishing Russian influence by propping up an ex-Soviet state with transport revenue isn’t as attractive to them as it is to us, thanks to the doubts about the alternative’s (”TAPI”) output.
The failure of U.S. diplomacy in this Iran/India/Pakistan/Turkmenistan conundrum shows diminishing U.S. clout in the region. The bright news is that it shows positive collaboration between feuding neighbors India and Pakistan.
The bottom line - despite the best efforts of the American media to cast doubt on the administrations commitment to foreign policy, the U.S. government is working on many fronts and in many capacities to address multiple critically important strategic objectives such as maintaining the Dollar, dealing with Iran, curtailing the rising price of crude oil and maintaining diplomatic relevance in the mid-east.
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