Posts Tagged ‘russia’

oil rigs     The global oil price has fallen 40% since June from $115 to below $60. 40% of the oil in the world is produced by the (OPEC) Organization of Petroleum Exporting countries which consist of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela. They have failed to come on a consensus on curbing the production limits even though the demand is low. The oil prices is determined using the demand and supply and also partly by the expectation and the demand is closely associated with the economic activity in the world. There are basically three major reasons for the slump in oil prices firstly due to low economic activity in the world, increased efficiency and switching to other fuels, secondly the countries which are in turmoil like Libya and Iraq which produce about 4m barrels a year combined has not reduced its production and thirdly the major reason is America has become the largest oil producer in the world which in turn imports very less oil so there is a lot of surplus oil in the market. The Saudis and other powerful oil producing gulf countries have decided not to sacrifice their market share to restore the prices. They can reduce the production sharply but which will benefit the countries which largely depend on oil for their economy like Iran and Russia. Saudi Arabia can tolerate lower oil prices quite easily. It has $900 billion in reserves. Its own oil costs very little to get out of the ground.  This mainly affects the most vulnerable bits of the oil industry which include American oil companies which borrowed heavily on the expectation of continuing high prices and also on high-cost projects involving drilling in arctic and other expensive oil fields like North Sea. But the greatest loss is for the countries which depend on high oil price to pay for the foreign adventures and for social programs like Russia which is hit by the western sanctions like travel ban for its officials, freezing of its assets in US and other EU countries, also transaction ban of its energy firms and its two banks and Iran which is paying Assad govt to keep its government steady.

Advertisements

ImageWHY THERE IS AN INTERNAL CONFLICT IN SYRIA?

The Syrian civil war, also known as the Syrian uprising or Syrian crisis, is an ongoing armed conflict in Syria between forces loyal to the Ba’ath government and those seeking to oust it. The conflict began on 15 March 2011, with popular demonstrations that grew nationwide by April 2011. These demonstrations were part of the wider Middle Eastern protest movement known as the Arab Spring. Protesters demanded the resignation of President Bashar al-Assad, whose family has held the presidency in Syria since 1971, as well as the end of Ba’ath Party rule, which began in 1963.

In April 2011, the Syrian Army was deployed to quell the uprising, and soldiers fired on demonstrators across the country. After months of military sieges, the protests evolved into an armed rebellion. Opposition forces, mainly composed of defected soldiers and civilian volunteers, resisted without central leadership. The conflict is asymmetrical, with clashes taking place in many towns and cities across the country. In 2013 Hezbollah entered the war in support of the Syrian army. The Syrian government is further upheld by military support from Russia and Iran, while Qatar and Saudi Arabia transfer weapons to the rebels. By July 2013, the Syrian government controls approximately 30–40 percent of the country’s territory and 60 percent of the Syrian population

In June 2013, the death toll surpassed 100,000 according to the United Nations.

In addition, tens of thousands of protesters have been imprisoned and there are reports of widespread torture and terror in state prisons. International organizations have accused both government and opposition forces of severe human rights violations. Chemical weapons  or WMD (Weapons of Mass Destruction) have been used in Syria on more than one occasion, triggering strong international reactions

REPERCUSSIONS OF LOOMING WAR

In an anticipation of the war in Syria, the global oil market started to shiver. A barrel of oil has recently jumped up to $115, which, according to experts, is not a limit. Some analysts give quite gloomy forecasts.

 According to some experts, if US declared war against Syria, Iran can close the Strait of Hormuz by sinking several cargo ships at its narrowest point. Such an act would immediately cut the volume of oil transportation by 20 percent. At the same time, the Egyptian Suez Canal will become highly dangerous to navigation too. Oil tankers will thus have to go around the Horn of Africa, increasing the length of the route by two weeks and significantly raising the cost of transportation.

 As a result, prices on gasoline will increase significantly. Experts predict a rise in 75-100 percent during two or three months after any type of attack on Syria. Some analysts don’t agree, indeed because Syria does not affect the oil market directly. The peak of oil production in the country was registered about 15 years ago. Since 2011, the export of hydrocarbons has been virtually stopped – the country consumes all it makes. To crown it all, Syria is dangerously close to major oil transportation routes.

 The risk for oil transportation routes explains surging oil prices on stock exchanges. Some economists believe that the price will reach $150. However, such a rise prices is only possible if the Syrian conflict escalates into a more substantial one, with the participation of other countries in the Middle East, and if the Strait of Hormuz is eventually blocked.

 “Syria is not a key player on the oil market. Rather, the market fears destabilization of the geopolitical situation in the Middle East. If Syria accounts for about 2/10 of the world’s oil production, the Middle East accounts for 30 percent. Many are concerned that other countries will be involved in the conflict – Iran, Egypt and others. Therefore, prices will rise,” some analysts say.

 Against the background of the current situation, a rise by 75-100 percent is out of the question, of course. First and foremost, such rapid growth will kill all possible production everywhere – the world economy will falter.

PROBABLY WHY US IS INTERESTED IN SYRIA

Ever since the alleged proof has arisen claiming that President Bashar al-Assad was responsible for the chemical attacks against civilians living on the outskirts of Damascus, US President Barrack Obama has been trying to gain support for a military strike into Syria.

Delays on such an action, due to a lack of foreign support and Obama’s desire to seek approval from Congress before making any calls to arms, have prevented oil prices from soaring excessively.

The U.S. government’s Energy Information Administration reports that as of January 2013 Syria’s proven oil reserves stood at 2.5 billion barrels, a total larger than all of Syria’s neighbors except for Iraq, a rich prize to whoever finally winds the civil war. Assad’s government is not noted for being friendly to Western energy interests. Under his father, Hafez al-Assad, in 1964 Syria passed legislation that limited licenses for exploration and investment to the Syrian government, a situation that continues to this day.

 In addition, the Syrian oil is classified as heavy hydrocarbons (like the Russian Urals). The game is not worth the candle, because these huge reserves would have little effect on reducing the cost of oil.

 Anyway, as history shows, the actions of the United States in oil-rich regions only lead to complications. This was the case in Libya, where the richest deposit on the African continent is located. A member of Libya’s Parliamentary Committee on Energy, Sliman Kajam said that the official production of black gold dropped to 150,000 barrels a day. Prior to the “democratization” of Libya, the daily production was evaluated at 1.5 – 1.7 million barrels a day.

 In addition, the level of oil production in such countries as Saudi Arabia and Iraq are getting closer to their peak. In general, the current level of hydrocarbon prices adequately reflects the balance of supplies and production.

 According to many experts, the aggravation of the situation in Syria will make investors move their capitals from emerging markets to developed ones.  As the emerging economies are more susceptible to fluctuation in oil and it adversely affects their growth rate as seen in India and some of the other nations which in turn brings about a rapid change in their currencies.

 While no one can watch events in Syria without cringing, where the civil conflict which ignited in March 2011 has caused more 100,000 deaths and produced more than 2 million refugees, the answer should not be a replay of March 2003, where a Western-led coalition invaded Iraq on the bogus pretext of non-existent weapons of mass destruction. It is time for the United Nations, rather than Washington and London, to take the lead on events in Syria. No one in either Britain or the United States has made a credible case for strategic Western interests being at risk there, and Parliament evidently remembers the old adage “once bitten, twice shy” from a decade ago. Unless the Obama administration can make a valid case to the war-weary American people on better evidence than that proffered thus far, there would seem little to be gained by the American people for intervening, unless of course, you’re looking that those 2.5 billion barrels of oil reserves.

The number 007 has always been referred in conjunction with James Bond, the iconic character created by Ian Fleming. There are quite a few theories as to why the number 007 was connected with James Bond; one such popular theory was that Bond’s number “007” comes from the English spy and polymath John Dee, who was the first British secret agent.

John Dee would sign his letters to Elizabeth I with 00 and an elongated 7, to signify they were for her eyes only. The other factor was that Bond was first sent to Russia on a mission and that the ISD code for Russia was 7; the 00 stood for an “Agent with a license to kill.