August 2014

Iraq_HeaderAugust 2014

Iraq: Why Bomb Now?Justin Raimondo
Two reasons: The Kurds – and the Israelis

So we return to the original question: why now? The answer is the central axiom of real estate: location, location, location. ISIS was getting close to Kurdistan, and eyeing Erbil, the capital of the Kurdistan Regional Government (KRG).

The feisty Kurds have taken advantage of the chaos spread by ISIS to seize disputed Kirkuk, which the Kurds consider their Jerusalem. Aside from the symbolic value of this prize, Kirkuk is also the site of oil fields worth a substantial amount of moolah. But before we segue into the familiar mantra about how this is a “war for oil,” let’s step back and look at the larger picture – because it’s really much worse than that…

…Yes, John Judis is right to say that oil is a factor, but this is just a portion of the truth. The larger truth encompasses both military and domestic political reasons – Washington wants Kurdistan as a possible launching site for a military campaign against Iran if such becomes (in their view) necessary. And then there are the politics of the matter.

The U.S. Airstrikes in Northern Iraq Are All About Oil
By John B. Judis

If the Islamic State were to take over Erbil, they would endanger Iraq’s oil production and, by extension, global access to oil. Prices would surge at a time when Europe, which buys oil from Iraq, has still not escaped the global recession. Oil prices have already risen in response to the Islamic State’s threat to Erbil, and on Thursday, American oil companies Chevron and Exxon Mobile began evacuating their personnel from Kurdistan. But oil traders are predicting that American intervention could halt the rise. “In essence we find U.S. air strikes more bearish than bullish for oil as the act finally draws a line for IS and reinforces both the stability in south Iraq and in Kurdistan,” Oliver Jakob, a Swiss oil analyst, told Reuters.

U.S. Actions in Iraq Fueled Rise of a Rebel
Baghdadi of ISIS Pushes an Islamist Crusade

U.S. Seen as Biggest Oil Producer After Overtaking Saudi Arabia

“The U.S. increase in supply is a very meaningful chunk of oil,” Francisco Blanch, the bank’s head of commodities research, said by phone from New York. “The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”

U.S. oil output will surge to 13.1 million barrels a day in 2019 and plateau thereafter, according to the IEA, a Paris-based adviser to 29 nations. The country will lose its top-producer ranking at the start of the 2030s, the agency said in its World Energy Outlook in November.

“It’s very likely the U.S. stays as No. 1 producer for the rest of the year” as output is set to increase in the second half, Blanch said. Production growth outside the U.S. has been lower than the bank anticipated, keeping global oil prices high, he said.

The Rise of the Petroyuan and the Slow Erosion of Dollar Hegemony
by Flynt Leverett and Hillary Mann Leverett, August 05, 2014

China has long incorporated financial instruments into its efforts to access foreign hydrocarbons. Now Beijing wants major energy producers to accept renminbi as a transactional currency – including to settle Chinese hydrocarbon purchases – and incorporate renminbi in their central bank reserves. Producers have reason to be receptive. China is, for the vastly foreseeable future, the main incremental market for hydrocarbon producers in the Persian Gulf and former Soviet Union. Widespread expectations of long-term yuan appreciation make accumulating renminbi reserves a “no brainer” in terms of portfolio diversification. And, as America is increasingly viewed as a hegemon in relative decline, China is seen as the preeminent rising power. Even for Gulf Arab states long reliant on Washington as their ultimate security guarantor, this makes closer ties to Beijing an imperative strategic hedge. For Russia, deteriorating relations with the United States impel deeper cooperation with China, against what both Moscow and Beijing consider a declining, yet still dangerously flailing and over-reactive, America.

On Soldiers and Moral Principles
by Justin Pavoni, August 07, 2014

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