Arabs Threaten with Price Hikes and Chemical Weapons, the USA Threatens with War and Russian Oil

Americans and Russians are getting ready for the joint oil summit. A suggestion from Russian oil giant LUKOIL is expected to be the major sensation of the summit. LUKOIL will present a project to build an up-to-date oil terminal at a Murmansk port. Experts believe that the oil terminal project has already become a symbol of Russian and American relations. The new terminal will allow Russian oil to be delivered directly to the USA. Russian oil manufacturers are about to face the perspective of breaking into one of the most solvent and richest world markets.

ARABS THREATEN WITH PRICE HIKES AND CHEMICAL WEAPONS, THE USA THREATENS WITH WAR AND RUSSIAN OIL

Russia has a little something to offer American investors

World politics is smothered in blackmail. Influential Arab figures warn the USA against its war against Iraq. Arabs claim that oil will allegedly become three times as expensive: up to $100 per barrel. However, Americans pay no attention. They are preoccupied with something else: Tony Blair’s propaganda turned out to be be a flop yesterday. The military campaign continues. American politicians are getting ready for the Russian-American oil summit. The summit is to take place in Houston on October 1, 2.

The Daily Telegraph of London reported that former oil minister of Saudi Arabia and former OPEC head Ahmed Saki el-Jamani warned the global community of the possibility that oil prices might triple. He claimed that oil price might make up $100 per barrel. He is certain that Saddam Hussein will dare to use chemical weapons against neighboring countries in the case of American aggression. Arab oil manufacturers in the area of the Persian Gulf will suffer a lot of losses. Oil deliveries from Saudi Arabia and Kuwait will stop, and nothing will hold oil prices back.

Ahmed Saki el-Jamani used to be the head of OPEC in the 1970s. He already threatened the West with a reduction of oil deliveries. Experts said that the oil crisis of that time hampered the growth of developed countries. They managed to recover from that recession only due to the economic rise that was caused by the collapse of the USSR. On the other hand, the price of crude was $40 per barrel during operation Desert Storm.

As is expected, LUKOIL’s President Vagit Alekperov is to announce the Murmansk terminal project. The Russian initiative will surely become the highlight of the summit, taking into consideration the fact that other Russian oil giants, such as Sibneft, Yukos, and TNK, have also shown great interest in the project.

Experts believe that Russia is unable to offer anything else to American investors at the moment. LUKOIL estimates that the project will cost 1.5-2.6 billion dollars. The company also calculated that the construction of just the terminal will cost $300 million.

If the terminal in Murmansk is built, Russia will be able to deliver up to 50 million tons of oil to American and European markets yearly. Virtually, this will be 50% of current Iraqi exports.

My best guess:

US forces will seize 80%-90% of the country very quickly, including the oil fields. There will be some holdouts in a few cities that will have to be dealt with by siege and penetrating ordnance, but the allies will resume operating the oil fields ASAP to generate funds for restructuring Iraq. This will make the remnants irrelevant. We will publicize that initial use of chemical or bio weapons is considered a war crime in international law, and EVERY person involved in their use will be tried in the field by a military court, be allowed one appeal, and receive their sentence immediately. We will also act to remove the threat or retaliate, immediately and appropriately.

The price of oil will spike, but recover and trend lower when the Iraqi oil fields are captured with little damage shortly after hostilities start. In addition, Russia will immediately ship as much as it can get out of the ground to take advantage of the initial spike. And if the price spike holds for any significant amount of time, Bush will use the strategic petroleum reserve to manage it.

The stock market, which is driven entirely by emotion in the short term, but by fundamental value over time, will fall when the bombs start but recover shortly thereafter due to the removal of uncertainty, the recovery of rational pricing for oil, and the successes of the early part of the war. This pattern will also occur if and when Iraq makes the mistake of using chemical or bio weapons - including the recovery afterwards, because these events have nothing to do with the American economy.

And in general, the war, like all wars, will stimulate the economy by increasing economic activity. Eventually, this effect will overcome all of the emotional reactions.

I think.

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