Thursday, December 07, 2006

–And stranger still:

Looks like the dust up in Doha has emboldened diplomats everywhere, because now they are kicking ass at the UN, where they seem to be shitting out resolutions about as fast as they can, and all over the world. The National Security Council declares a trade embargo on the United States; OPEC switches to Euros; hundreds of millions of dollars worth of crude oil on its way to the Unites States is re-directed to CHINA!

Stupid diplomats are going to freeze themselves out of New York this winter and will have to move to St. Barts. Or maybe that's the plan.

Siraj!


OPEC DUMPS DOLLAR – SWITCHES TO EURO

Dollar Expected to Crash as U.S. Economy Heads for Tailspin

Wednesday, December 6, 2006

On the heels of India’s President Dr. A.P.J. Abdul Kalam address to the United Nations on Monday, which resulted in the National Security Council declaring a trade embargo on the United States, OPEC announced a switch from U.S. Dollars to Euros, a move long supported by Venezuelan President Hugo Chavez Frias.

Venezuela is the only South American member of OPEC.

Chavez Frias’ tactics have until now given the US pretext to cold-shoulder the Venezuelan leader for supposed links with Cuba's Castro and Libya's Khadaffi. Now that OPEC is switching to the Euro, and with Pan Moslem Coalition forces said to be gathering in Puerto Cabello, Carabobo, the U.S. will likely do an about step and intensify diplomatic talks with their South American oil producing neighbor.

OPEC sources claim that Euro conversion across the Middle and Far East is the only logical step left to them to counteract the United States export of ‘Crusader culture’ around the world.

The currency switch will not in and of itself cause a disruption in America’s acquisition of oil, as sufficient Euros can be had in a simple banking transaction. What is more problematic is what effect the embargo will have on the U.S. economy, if both trade and petroleum are curtailed.

Point in case:

On the heels of the UN decision, two major shipping groups, Norwegian Odfjell SE group and Saudi Aramco-owned Vela International Marine have ordered more than 90 of their tankers combined to be redirected from US and European ports and instead turn to various points in Asia. Vela Supertanker Turais Star alone is said to be carrying $100 million in crude oil, and that is now destined for China.

Odfjell's president and chief executive Terje Storeng said: the re-routing by thousands of miles would be at a significant extra cost, but that his new customers expressed "support and contribution" exponentially above market prices in the west.

Another problem is that as the U.S. acquires Euros, the dollar will most certainly –and quite dramatically– decline against the EU currency. Some financial experts say it is even likely to crash, as the price at the pump jumps to well over five dollars a gallon. Trucking and Freight companies can be expected to be among the first to lay off employees, followed by subsequent spiral of goods and services throughout the economy.

International finance experts predict that as the dollar falls, lenders are most certainly going to want to dump the currency back in the US, thereby contributing to the crash, as banks simultaneously trade their dollars out for Euros.

Any blow to the American economy will of course produce a severe ripple effect across all international markets. However, financial reporters suggest Coalition member countries, lead by India, Indonesia and Malaysia began stockpiling Euros, shortly after the 7/27 attacks, as an important hedge in their foreign exchange reserves, perhaps anticipating this move earlier than any could have expected.

Another likely scenario is that with U.S. troops already on the ground in Iraq, the Americans will make a robust effort to maintain their current control of the oil fields there. Iraq’s reserves are estimated at between 113 and 200 billion barrels. Only Saudi Arabia is said to have more.

The currency switch, in tandem with global sanctions against the U.S., will mean it will become exceedingly difficult if not impossible for the United States to actually transfer any oil pumped out of the ground in Iraq, –indeed from any of America’s traditional energy suppliers– and get it back to North America.

To the west and north are Coalition partners Syriah, Jordan and Turkey; to the east is Iran, and to the South the Indian Ocean whose shipping lanes are currently held in check by ASEAN regional military forces, with supplementary, if limited, assistance by Gulf and African nations along their respective shores. However minimal, such aid has managed to defer burgeoning plans to establish a U.S. Africa Command to oversee military operations on the African continent.

The United States continues to have a strategic if nominal presence in the region, in the form of a manned military base on the atoll of Diego Garcia, located 1000 miles off India’s South Coast. Officially a supply station, the base also contains a satellite and communications facility. However, Coalition forces are said to have recently and effectively closed off naval and air access to the island and in fact are expected to assume control over the facility should tensions with the Americans further escalate.

It is apparent that moving forward the U.S. will have to fight for Iraqi oil in order to get it, but with troops holding off insurgencies in Afghanistan and Iraq, and America’s heretofore lack of a mandatory draft, experts say the Pentagon's available military reserves are spread quite thin.

The United States can certainly defend itself against one country –even several– but not against half the world, as now appears to be the case, and not while her traditional European and Pacific allies are suddenly claiming neutrality, despite NATO Agreements, in an obvious and some say practical attempt to protect their own energy supplies.

Russia's President Putin says the largess of the Muslim population in his country prevents him from pursing any action that can be construed as aiding those who harbor terrorist groups. Even American allies such as England and France are saying much the same thing.

Prime Minister Tony Blair, while Great Britain is not affected by the embargo, has nevertheless said his government will continue its push to secure new gas reserves, as much as can be locally produced, and thereby amplify green energy development.

Meanwhile, representatives from China’s embassy in Saudi Arabia say their country welcomes unfettered reserves.

Compound limited military resources; a severe shortage of costly fuel; a trade embargo and a stock market crash, and you have a perfect storm of distractions to keep the American Government busy enough to overlook a well fed, well fueled, well stocked and heavily manned military force pulling into a U.S. harbor, and then proceeding to hike up across the Appalachian mountain chain in what is excepted to be the largest and most expensive manhunt in human history, if it actually happens.

The United States has certainly prepared for a potential energy crisis, but U.S. strategic oil reserves only hold about 57 days of U.S. supply. If the U.S. cannot find a way out of this situation soon, it could be in big trouble and suffer a bitterly cold March in 2007.



www.strategicfueldaily.com/OPEC/