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How the Uprising in Syria Could Affect the Global Oil Market

In surveying the multiple, uprisings, insurgencies, insurrections, confrontations and what have you currently going on in the Middle East, it is hard to believe that all this turmoil will not eventually find its way to our local gas pumps. In the last week the overall situation clearly has taken a turn for the worse with large numbers of Syrian insurgents infiltrating Damascus and Aleppo for the first time accompanied by the spectacular bombing of a security meeting that killed four of the regime's top leaders. As the 16 month uprising, that to date has killed some 20,000 people, grinds towards a bloody conclusion, the Assad government has pulled out one of its last cards which is the large stockpile of chemical and biological weapons that it has accumulated with the help of the Russians as a deterrent against the Israelis.

Now such weapons are virtually useless in fighting urban insurgents, but the threat of turning some of them over to any of the numerous jihadist groups running around the Middle East carries a lot of weight. Weapons of mass destruction in the hands of a national government against which it is easy to retaliate is one thing, in the hands of stateless militants in a self-martyring frame of mind is something entirely different. The Middle East and much of the world would never be the same should nerve gas canisters rather than bombs become the weapon of choice to express dissatisfaction or score political points.

Until now the US and other western powers have been reluctant to become militarily involved in yet another Middle Eastern conflict. Should it appear, however, that the Assad government is losing control of its chemical and biological weapons, intervention, at least by Israel and likely a wider circle of Western powers, would be inevitable. The ramifications of such a foreign military intervention into the Syrian situation would be widespread.

The next ominous development was the recent bombing of a bus filled with Israeli tourists in Bulgaria. Although the Bulgarians are withholding judgment as to the sponsor of the plot until the investigation is complete, the Israelis were quick to blame Iran and their Palestinian associates, Hezbollah. If Iranian sponsorship is established, the bus bombing indicates that after the failure of a string of plots to assassinate Israeli diplomats, Tehran has turned to attacking soft targets such as Israeli tourists on the way to a Bulgarian beach.

Although the Iranians may see this attack as retaliation for what is widely assumed to be Israeli assassinations of Iranian nuclear scientists, the assassination of civilian tourists, rather than Israeli officials who are actively working against Iranian interests, represents a new level of confrontation. Israel will of course retaliate at a time and place of its own choosing; however, the longer this goes on of course the more dangerous it becomes and the possibility of more open hostilities increases.

A third new element in the Middle Eastern brew was a round of sectarian bombings carried out by the Sunni-dominated Al Qaeda in Iraq and aimed at 40 Shiite power centres. The bombings and attacks which killed and wounded hundreds were the worst in many years and raise issues whether the new Iraqi government can survive without outside help. Al Qaeda actually announced that the attacks were in retaliation for the suppression of the Sunni majority by the Shiite-aligned Assad government in Syria. Al Qaeda's purpose in all this is to ignite a civil war in hopes of bringing down the Shiite government in Iraq that was brought to power by the American invasion.

These attacks may be the first major manifestation of the Syrian uprising spreading across borders in neighbouring countries. With torrents of refugees flowing away from the fighting in Syria and various Jihadist groups traveling back and forth across the porous borders, the full impact of the Syrian uprising has yet to be seen. Moscow continues to warn the West, that while the Assad government may not the greatest, the anarchy that will follow the down fall of Assad will be far worse.

Unlike other Middle Eastern uprisings of late, the Syrian situation has a larger element of centuries old Sunni-Shiite confrontation. This brings Iraq, Iran, Bahrain and even a bit of Saudi Arabia into the issue. The spectre, however remote, of a more generalized Sunni-Shiite confrontation is always there and Al Qaeda is doing its best to exploit it.

Now none of these developments by themselves represent an immediate threat to Middle Eastern oil exports. Taken together, however, the deteriorating security situation is a major cause for concern. Iran is still making threats about blocking the Straits of Hormuz, largely because they don't have anything else to make threats about. Tehran's economy continues to deteriorate under the weight of the various sanctions with no clear end in sight. Recent negotiations have seen little progress.

Should Assad fall, Iran will lose its only true ally in the Middle East. This could push the Iranians closer to the Shiite-dominated government in Baghdad, which is facing insurrections from its own Sunni minority who are used to running things as well as the Kurds who want to be an independent country. There is no other term for all this than "a can of worms." It is going to be a long hot summer in the region with the likelihood that things will get a lot worse before fall comes.

By. Tom Whipple




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