Oil prices have been given a convenient reprieve on the eve of OPEC's decision as to whether it will extend the supply cuts at a time when demand growth is slowing. Thanks to alleged attacks on oil tankers in the Gulf of Oman, not only are the speculators once again redirecting their attention from demand and trade wars, but insurance prices are bound to skyrocket and help push oil up for a longer period - even if speculators have a very short attention span for geopolitical provocations.
The Tanker Incident: The Hidden Truths Behind Conflict Escalation
As expected, and despite actual intelligence or evidence of any kind, the Trump administration is squarely blaming Iran, with Israeli media most vociferously jumping on the bandwagon.
Trump's 'expert take' on this can be summed up in a way that no Western world leader would even conceive of doing; not even George W. Bush. As statements of major foreign policy consequences are typically delivered on Twitter during this administration, Trump said it was the government's "assessment" that Iran was behind the attack. An "assessment", in this world, means absolutely nothing and is not based on intelligence. It is based purely on political capital.
The fact is that there is no evidence of Iranian involvement either in this attack or in the sabotage of tankers, which was horribly overplayed in the media, last month.
The only truths we have to work with here are the following:
- Early Thursday, a…
Oil prices have been given a convenient reprieve on the eve of OPEC's decision as to whether it will extend the supply cuts at a time when demand growth is slowing. Thanks to alleged attacks on oil tankers in the Gulf of Oman, not only are the speculators once again redirecting their attention from demand and trade wars, but insurance prices are bound to skyrocket and help push oil up for a longer period - even if speculators have a very short attention span for geopolitical provocations.
The Tanker Incident: The Hidden Truths Behind Conflict Escalation
As expected, and despite actual intelligence or evidence of any kind, the Trump administration is squarely blaming Iran, with Israeli media most vociferously jumping on the bandwagon.
Trump's 'expert take' on this can be summed up in a way that no Western world leader would even conceive of doing; not even George W. Bush. As statements of major foreign policy consequences are typically delivered on Twitter during this administration, Trump said it was the government's "assessment" that Iran was behind the attack. An "assessment", in this world, means absolutely nothing and is not based on intelligence. It is based purely on political capital.
The fact is that there is no evidence of Iranian involvement either in this attack or in the sabotage of tankers, which was horribly overplayed in the media, last month.
The only truths we have to work with here are the following:
- Early Thursday, a Norwegian-owned tanker and a Japanese-owned vessel underwent apparent attacks while transiting through the Strait of Hormuz in the Gulf of Oman.
- The Norwegian tanker was carrying Qatari ethanol to Taiwan; the Japanese vessel was carrying methanol from Saudi Arabia to Singapore.
- The Norwegian ship experienced three explosions, while the Japanese ship caught fire.
- Both the US Navy and the Iranian naval forces responded to distress calls from the vessels, while the Iranian naval forces rescued crew members from both.
- The attacks were well-planned and well-coordinated, as well as being extreme precision attacks, clearly designed to cause minimal real damage. They were designed to be highly visible, but not to destroy vessels or cargo, or to take lives.
- The Japanese ship had a hole caused by an unidentified type and make of artillery shell, which was discovered on the ship, according to the ship's owners. The methanol cargo was not harmed. The ship is not in danger of sinking.
- The Norwegian tanker reported three explosions onboard, and no reports of incoming artillery or torpedoes. A US navy source reported seeing an unexploded limpet mine on the side of the vessel, which could account for the nature of these explosions. Limpet mines are attached magnetically. However, the ship's owner in the case refutes this account entirely.
In this case, the weaponry tells us nothing. Limpet mines are naval weapons, but anyone can get their hands on them, and in the era of globalization, they change hands many times over. The US has released images it claims proves that Iran was behind what was a mine blast on the Norwegian ship; but, again, the owners of the ship - meaning eyewitnesses - refute this.
Even our deepest sources inside royal circles in Saudi Arabia do not believe that this was a state actor attack perpetrated by Iran. That sentiment, however, will never be made public as it is not in the interests of either Saudi Arabia or the UAE to pin this attack on anyone but Iran or its Houthi allies from Yemen. The Saudis and the UAE have high-level back channels with Iran, as we have mentioned before.
Nor would Iran attack a Japanese ship at exactly the time that the Japanese prime minister was visiting Tehran. There is absolutely no benefit in such an escalation, in such a manner, for Iran.
Always look to the beneficiaries, and not to the media espousing unintelligible statements from world leaders with clear agendas.
It is highly irresponsible of the Trump administration to lay the blame squarely on Iran for these alleged attacks. The media has forgotten conveniently that there is still no conclusive evidence that Iran was involved in last month's attacks, either.
There are many beneficiaries in this game, from Israel and even Russia to the Saudi-UAE band and the Trump administration. We know without a doubt from our assets in Riyadh that MBS and MBZ are both attempting to escalate tensions without having them escalate to the point of actual conflict. This is a difficult balance to maintain, especially with MBS and his itchy trigger finger, which worries MBZ, his UAE mentor.
But the precision of this attack is what is most telling, which was accomplished with a fair amount of finesse that did no major damage in the end. It was meant to be visible and specifically to escalate tensions.
At least two high-level intelligence consultants for major hedge funds tell us that the nature of the attack, the motives and an assessment of historical precedents would more readily indicate Israeli intelligence involvement, which does not always suggest involvement at the political level.
Both the Mossad and AMAN (Israeli military intelligence) have been masters of sabotage when it comes to Iran. Together with American intelligence, Israeli intelligence has launched a number of sabotage operations aimed at taking down Iran's nuclear projects, including sabotage of equipment and even through the Stuxnet computer virus. The Mossad has also taken out key Israeli scientists in its sabotage operations.
The Israeli intelligence apparatus is keen to ensure that tensions remain escalated with Iran and that Trump does not become complacent, as he did soon after last month's attacks on four oil tankers in the same region. Those attacks, for which accusations that Iran was involved have not been proven, were followed by high-level rhetoric coming out of Washington, but then a clear pullback and cool-down when the trade war with China quickly took center stage again. There will be more such attacks if Trump fails to get the world on board with this Iran narrative, though the next round of precision attacks may be different in nature.
Oil speculators are already growing skeptical after the attacks: While oil prices shot up on news of the tanker attacks, by Friday morning they were paring some of those gains on the poor oil demand picture. They are still focusing more on fundamentals, and the trade war with its threat of global recession is still the key factor. But the fact is, if certain forces desire conflict with Iran, they will force it, with or without evidence. It seems fairly easy to get the media on board with this in 2019.
The Renewables Frontline
The next "fracking" might be for geothermal energy, according to a report just released by the US Department of Energy. What they're eyeing is the enormous energy capacity found in "enhanced geothermal systems", which are trapping hot water and gases under bedrock that would need to be "fracked" to release the energy. Advancing a technique specifically for these 'trapped' geothermal systems could produce 45 gigawatts of electricity by 2050. That means a potential gain of 60 gigawatts of electricity overall in the sector by 2050. And that 2050 timeline prediction is actually based on the DoE's understanding of some pretty big impediments to all of this happening, from the high capital cost of geothermal power plants to bureaucratic red tape when it comes to federal lands and insufficient mapping of areas for geothermal well drillings. Read the full GeoVision report here.