EU oil embargo on Iran takes effect. Gulf braced for backlash, Hormuz closure

[Shah-i-Kot]

http://debka.com/article/22149/EU-oi...ormuz-closure-


EU oil embargo on Iran takes effect. Gulf braced for backlash, Hormuz closure

DEBKAfile Special Report July 1, 2012, 9:58 AM (GMT+02:00) Tags: oil embargo European Union Iran nuclear Gulf Arab states Hormuz US Fifth Fleet


Repaired Saudi-Iraq pipeline bypasses Hormuz

The European oil embargo taking effect Sunday, July 1 blocks the sale to European Union members of 1 million, or one third, of Iran’s daily output of 3.3 million barrels a day. EU insurance firms, the biggest in the world, henceforth withhold cover from governments and firms operating tankers which carry Iranian oil.
This sanction was threatened in January if diplomatic negotiations in the interim failed to persuade Iran, the world’s fourth largest oil producer, to halt work on developing a nuclear weapon.
Three rounds of talks by six world powers (US, Russia, UK, France, China and Germany) with Iran have since ended in impasse. A fourth at a technical level is scheduled for Tuesday, July 3, in Istanbul.
Braced against potential reprisals from Tehran, Saud Arabia and fellow Gulf nations have placed their armies on alert. Completing a deployment begun last Thursday for possible intervention in Syria, Saudi Arabia has massed units on its borders with Jordan, Iraq and Kuwait. The United Arab Emirates sea, air and special forces are on a state of readiness, as are US Fifth Fleet vessels in Gulf waters.
While not anticipating full-scale war, they are acutely apprehensive of possible Iranian strikes against Gulf oil fields, export terminals, pipelines or tankers either by covert Al Qods Brigades squads or local Shiite saboteurs.
Tehran has repeatedly threatened to treat an oil embargo as an act of war and close the strategic Strait of Hormuz to Gulf shipping in response.
Two days before the oil embargo went into effect, Saudi Arabia and the UAE activated two extra oil pipelines bypassing Hormuz and providing alternative routes for their oil to continue to flow to export markets if the Straits are blocked.
The Saudis repaired and enlarged the disused “Iraq Pipeline in Saudi Arabia” –IPS, a 25-year old pipe running 750 kilometers from eastern Saudi oil fields to the Yanbu refineries and export terminal complex on the Red Sea. Riyadh is keeping its volume a trade secret. However international oil experts estimate its capacity at around one-fifth of the Saudi production of around 9.5 million bpd.
The UAE’s 380-kilometer long Habshan-Fujairah pipeline is brand new. Operating from June, it is able to carry 1.5 million bpd of this group’s total 2.5 million bpd output out to the Gulf of Oman port of Fujairah.
American and French forces went on standby at this port since Saturday. Tehran could attack both of these pipelines as one form of reprisal for the tough, new sanction.
Friday, June 29, a senior Revolutionary Guards Corp general announced that missiles with a range of 300 kilometers were to be installed on Iranian warships on duty in the vicinity of the Hormuz Straits.
debkafile’s military sources are looking at next Tuesday, when nuclear talks are due to resume at a technical level, as a critical moment for a possible Iranian response to the oil embargo. Tehran may make its attendance at the Istanbul meeting conditional on the lifting of the oil embargo. This would effectively wind down the international effort to reach a nuclear accommodation with Iran by diplomacy and open the door to other options.
Iranian lawmakers Saturday dismissed the EU oil embargo as “very little and insignificant” and declared that economic sanctions and Western pressure would have “no effect on Iran’s determination on its path toward development and progress.” The Iranian Majlis’ Economic commission will announce its “scientific and pragmatic policies in the coming days.”

[Shah-i-Kot]

The Iranians are getting desperate, especially now when Iraq and Saudi Arabia have reopened one of the biggest oil fields in the world and looked away from Iran.

A war might unfortunately be on the horizon. Not exactly what we Arabs need or the Iranians for that matter. There has been enough of wars and conflicts.

I would say that Iran is one of the most independent countries within that region. Saudi Arabia on the other hand, not so much.

The actual reason there is this threat of war hovering over Iran is due to its effort to sell its oil in currencies other than the US dollar, effectively moving many nations away from trading in the US dollar. While the nuclear program is obviously one of the concerns, this is central to it too.


Saudi Arabia as well as the rest of the GCC nations that produce oil have mostly faithfully kept to the 1970s OPEC agreement to sell oil ONLY in the US dollar reserve.

http://www.atimes.com/atimes/Middle_East/NA19Ak04.html

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Follow the money
That Iranian isolation theme only gets weaker when one learns that the country is dumping the dollar in its trade with Russia for rials and rubles - a similar move to ones already made in its trade with China and Japan. As for India, an economic powerhouse in the neighborhood, its leaders also refuse to stop buying Iranian oil, a trade that, in the long run, is similarly unlikely to be conducted in dollars.

India is already using the yuan with China, as Russia and China have been trading in rubles and yuan for more than a year, as Japan and China are promoting direct trading in yen and yuan. As for Iran and China, all new trade and joint investments will be settled in yuan and rial.

Translation, if any was needed: in the near future, with the Europeans out of the mix, virtually none of Iran's oil will be traded in dollars.

Moreover, three BRICS members (Russia, India and China) allied with Iran are major holders (and producers) of gold. Their complex trade ties won't be affected by the whims of a US Congress. In fact, when the developing world looks at the profound crisis in the Atlanticist West, what they see is massive US debt, the Fed printing money as if there's no tomorrow, lots of "quantitative easing", and of course the Eurozone shaking to its very foundations.

Follow the money. Leave aside, for the moment, the new sanctions on Iran's central bank that will go into effect months from now, ignore Iranian threats to close the Strait of Hormuz (especially unlikely given that it's the main way Iran gets its own oil to market), and perhaps one key reason the crisis in the Persian Gulf is mounting involves this move to torpedo the petrodollar as the all-purpose currency of exchange.

It's been spearheaded by Iran and it's bound to translate into an anxious Washington, facing down not only a regional power, but its major strategic competitors China and Russia. No wonder all those carriers are heading for the Persian Gulf right now, though it's the strangest of showdowns a case of military power being deployed against economic power.

In this context, it's worth remembering that in September 2000 Saddam Hussein abandoned the petrodollar as the currency of payment for Iraq's oil, and moved to the euro. In March 2003, Iraq was invaded and the inevitable regime change occurred. Libya's Muammar Gaddafi proposed a gold dinar both as Africa's common currency and as the currency of payment for his country's energy resources. Another intervention and another regime change followed.

Washington/NATO/Tel Aviv, however, offers a different narrative. Iran's "threats" are at the heart of the present crisis, even if these are, in fact, that country's reaction to non-stop US/Israeli covert war and now, of course, economic war as well. It's those "threats," so the story goes, that are leading to rising oil prices and so fueling the current recession, rather than Wall Street's casino capitalism or massive US and European debts. The cream of the 1% has nothing against high oil prices, not as long as Iran's around to be the fall guy for popular anger.

As energy expert Michael Klare pointed out recently, we are now in a new geo-energy era certain to be extremely turbulent in the Persian Gulf and elsewhere. But consider 2012 the start-up year as well for a possibly massive defection from the dollar as the global currency of choice. As perception is indeed reality, imagine the real world - mostly the global South - doing the necessary math and, little by little, beginning to do business in their own currencies and investing ever less of any surplus in US Treasury bonds.

The US can always count on the Gulf Cooperation Council (GCC) - Saudi Arabia, Qatar, Oman, Bahrain, Kuwait and the United Arab Emirates - which I prefer to call the Gulf Counter-revolution Club (just look at their performances during the Arab Spring). For all practical geopolitical purposes, the Gulf monarchies are a US satrapy.

Their decades-old promise to use only the petrodollar translates into them being an appendage of Pentagon power projection across the Middle East. Centcom, after all, is based in Qatar; the US Fifth Fleet is stationed in Bahrain. In fact, in the immensely energy-wealthy lands that we could label Greater Pipelineistan - and that the Pentagon used to call "the arc of instability" - extending through Iran all the way to Central Asia, the GCC remains key to a dwindling sense of US hegemony.

If this were an economic rewrite of Edgar Allen Poe's story, "The Pit and the Pendulum", Iran would be but one cog in an infernal machine slowly shredding the dollar as the world's reserve currency. Still, it's the cog that Washington is now focused on. They have regime change on the brain. All that's needed is a spark to start the fire (in - one hastens to add - all sorts of directions that are bound to catch Washington off guard).

Remember Operation Northwoods, that 1962 plan drafted by the Joint Chiefs of Staff to stage terror operations in the US and blame them on Fidel Castro's Cuba. (President John F Kennedy shot the idea down.) Or recall the Gulf of Tonkin incident in 1964, used by president Lyndon Johnson as a justification for widening the Vietnam War. The US accused North Vietnamese torpedo boats of unprovoked attacks on US ships. Later, it became clear that one of the attacks had never even happened and the president had lied about it.

It's not at all far-fetched to imagine hardcore full-spectrum dominance practitioners inside the Pentagon riding a false-flag incident in the Persian Gulf to an attack on Iran (or simply using it to pressure Tehran into a fatal miscalculation). Consider as well the new US military strategy just unveiled by President Barack Obama in which the focus of Washington's attention is to move from two failed ground wars in the Greater Middle East to the Pacific (and so to China).

Iran happens to be right in the middle, in Southwest Asia, with all that oil heading toward an energy-hungry modern Middle Kingdom over waters guarded by the US Navy.

So yes, this larger-than-life psychodrama we call "Iran" may turn out to be as much about China and the US dollar as it is about the politics of the Persian Gulf or Iran's non-existent bomb. The question is: What rough beast, its hour come round at last, slouches towards Beijing to be born?

[Shah-i-Kot]

The Iranians are getting desperate, especially now when Iraq and Saudi Arabia have reopened one of the biggest oil fields in the world and looked away from Iran.

A war might unfortunately be on the horizon. Not exactly what we Arabs need or the Iranians for that matter. There has been enough of wars and conflicts.

Also, I will add that Iran has severely miscalculated the Syrian uprising. Saudi Arabia is simply supporting it out of practically no choice at all. On the other hand, the Shiite clergies (all the way to the top) credibility has gone completely out the window with their solid support for the Assad regime and by process the massacre of Syrian people that he is responsible for.

It will cost them dearly in the long run in regards to relations with predominantly Sunni Muslim countries.


Saudi Arabia as well as the GCC nations figure that if they support the Syrian resistance, then they will avoid a similar uprising to occur in Saudi Arabia. The irony is that the Saudi regime warned the Saudi clergy to stop issuing calls for war against Assad.


What I think will happen is Syria like Egypt will move on a path of self-determination. No where can a system last which empowers a Shiite minority to rule over a Sunni majority.

Saudi Arabia and Turkey will most likely give heavy weapons and also join the war in Syria against the Assad regime.

However, no nation can stop the tide of change that is sweeping the whole region.


This is a fact. End result will be that whatever Saudi Arabia does to show they are on the side of the uprisings will not matter at all.