OK…it is 3Am where i am right now…can’t sleep and severally jet-lagged…so lets post something at GS!
I wanted to share my thoughts on global politics from a different perspective…nothing new here by the way
Everyone is talking about how the World (especially the MidEast) is collapsing and things are just “crazy”… It is not that crazy. Yes, it is Horrific. But, (humanity aside) it is somewhat predictable and rational.
If you want to truly understand what is happening, you must understand the lifeblood of the global economy: Oil.
Here’s a brief explanation:
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First, put things in perspective - global oil supply is roughy 90 million barrels per day (bpd), at $100/bbl, it generates over $3 trillion per year of revenue. Saudi Arabia alone claims over 10% of this. This map makes it clear: Countries - U.S. Energy Information Administration (EIA)
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Also, understand where the rest of the world’s oil is: Countries - U.S. Energy Information Administration (EIA) a very different picture from where this oil is consumed: Countries - U.S. Energy Information Administration (EIA)
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Next, understand OPEC’s role. OPEC members are limited in the amount of oil they can produce. So, with demand constant (current estimate is ~1% global increase per year), if non-OPEC oil production increases, OPEC members will have to reduce their output to maintain a high oil price.
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Next, understand the dynamics within OPEC. This year, OPEC will produce roughly 30 million bpd (1/3 of global demand). This “call on OPEC” is a fixed total for all OPEC member countries - they must share this pie.
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That leads to the power struggle within OPEC countries. If a country increases its production (and exports), it forces others to decrease their exports
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Most OPEC countries are already either producing at their OPEC-mandated production ceiling (i.e they cannot export more even if they had the capacity), or are at full capacity. The exceptions are: Iraq, Libya, Iran, and Saudi Arabia. It gets interesting…
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Libya’s production has declined from about 1.5 million bpd to only 0.2 million due to instability. Similarly, instability in Iraq is limiting production to 3 million bpd even though it has the potential for over 8 million by 2018. Iran, on the other hand has been limited by international sanctions and Saudi is not limited at all - they are the only country in the world with a significant amount of spare production capacity and hence filling the gap being created by iran, Libya and Iraq’s inadequacies
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Be. Very. Clear: The chaos that is being spread throughout the region is not entirely ideological and or religious. It is a battle for control.](http://l.facebook.com/l.php?u=http%3A%2F%2Fwww.globalresearch.ca%2Fwas-the-iraq-war-to-grab-oil-or-to-raise-oil-prices%2F5329126&h=3AQExNaH0&enc=AZMnSLtrHD2ZuzGccbA6UObHtJOmlFiIO1AepfersmA5bLlqDD9OQMf91Evf7vixRL3BWGsWCfMMACsBLr_QtYjGdNK6BI1Ph7b11HRVJqufFtxMewMsjx0HCtAQccErDSs&s=1)
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And the situation is changing … U.S. crude oil output is surging and surging fast. Iraq, long sidelined by Saddam-era sanctions and post-invasion setbacks, will be producing more and more in coming years. Iran, subject to tough sanctions that have dried up its market share, has made diplomatic progress with the USA. That has raised hopes in Tehran that it will soon be able to sell more of its crude. And in Libya, officials have said they are closing in on a deal with striking workers who have shut down terminals, essentially strangling exports from that North African oil heavyweight.
All of this means that Saudi will need to cut down on its production once Iran/libya/iraq start producing up to their potential because as i said before total OPEC pie is fixed …remember how passionately saudis criticized USA on Iran…they want uncertainty in iraq, libya and iran and they hate US increased oil output into the market because that means opec will cut down on it production to keep oil prices high
Lastly, understand that the players in this game are not few. The entire world is affected by the price of oil. If it drops too low, the largest corporations in the world as well as some countries will quickly go bankrupt. If it is too high, food prices will rise, cost of living will become unbearable, and the poorest people in the world will suffer and revolt (we have seen this several times over the last few years). As weird as it sounds, there is wisdom and benefit to controlling prices.
Actions and consequences in this global market are very complex and intertwined and the game has been ongoing for a hundred years. For further information watch the 8-part video series on “The Prize” (the prize - YouTube - especially: http://www.youtube.com/watch?v=IIJxBrHcSUo) and then read “The Quest” (The Quest: Energy, Security, and the Remaking of the Modern World: Daniel Yergin: 9780143121947: Amazon.com: Books).
Once you understand oil, you can then dig deeper to understand the connections between oil and the global financial markets, especially currency. Yes, even the global financial crisis traces its roots back to oil: http://www.youtube.com/watch?v=IWq6yEqgeLA
