• 15 hours Oil Prices Rise After API Reports Major Crude Draw
  • 16 hours Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 16 hours Gazprom Speaks Out Against OPEC Production Cut Extension
  • 16 hours Statoil Looks To Lighter Oil To Boost Profitability
  • 18 hours Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 19 hours Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 20 hours Whitefish Energy Suspends Work In Puerto Rico
  • 21 hours U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 1 day Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 4 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 5 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 5 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 6 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 6 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 7 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 7 days Lower Oil Prices Benefit European Refiners
  • 7 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 8 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 8 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 8 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
Alt Text

Kurdistan Proposes Immediate Ceasefire With Iraq

The Kurdistan Regional Government has…

Alt Text

Kurdistan Ready To Hand Over Oil For 17% Of Iraqi Budget

The Kurdistan Regional Government has…

The Continuing Saga of Iran's Nuclear Build-Up

The Continuing Saga of Iran's Nuclear Build-Up

History was made about ten days ago in Vienna at a meeting of the International Atomic Energy Agency when China and Russia voted along with the United States to sanction the Islamic Republic of Iran over its continued pursuit of nuclear energy. Iran, it is believed, intends to develop the technology to produce weapons of mass destruction. So say Western nations. Iran, of course denies all such accusations, claiming its nuclear program is intended solely for peaceful purposes.

What is “historic” in this context is the fact that both Russia and China saw eye to eye with the United States over Iran; indeed a diplomatic first. But what remains far from being historic in this case is the reason that pushed Russia, China and the United States to agree – for once -- over a major issue in foreign politics: simply put it has to do with oil; oil from Iran.

Or more precisely, the threat that the flow of oil from Iran could stop or be seriously hampered if Iran were to pursue its nuclear program.

The answer is the Israel factor.  Israel sees Iran acquiring nuclear weapons as nothing less that an existential threat.  Whether the threat is real or imaginable is actually irrelevant in this case, what matters is that Israel considers itself under attack, or liable to attack, and the survival of its people in question.  And when a country considers an issue to be affecting its very existence, all discussion is worthless. What counts is action.

The Jewish state fears that it is only a matter of time before Iran, once it has nuclear weapons, will be tempted to use them against Israel. Israel believes (and one may add, with good reason) that if Iran were to develop weapons of mass destruction it could deploy them against Israel, or, possibly pass on some of the components of a nuclear weapon to one of its Arab proxies. Those groups in turn could “weaponize” the nuclear material and deploy it against Israel.

Is this paranoia on Israel’s part? Hardly. Israel has good reason to worry. It has one such group on its northern border, Hezbollah, and another, Hamas on its southern border.

While both borders are well defended, and protected by armed troops and all sorts of fancy electronic gadgetry, both the frontier with Lebanon and the one with Egypt are far from impenetrable. Hamas has a huge network of secret tunnels it has burrowed under the frontier post through which it smuggles everything it needs in from Egypt.

And doubtlessly, Hezbollah must be emulating Hamas, although the Lebanese Shiite group has no reason to cross the border into Israel, unlike the Palestinians in Gaza.

Indeed, there is no need to develop long or intermediary range rocket mechanisms and then incorporate nuclear warheads on them in order to strike at an enemy, although Iran is developing the Shahab and the newer Zelzal missiles as well. But as a number of military specialists confirmed, you don’t really need rockets to deploy nuclear material.

Though not as easy to deploy, a “dirty bomb” timed to explode in a crowded area around the morning or evening rush hour will cause a high number of casualties and contaminate a radius around the explosion site for about 100 years. Not to mention the psychological effect it would have on the economy.

The size of the contaminated zone depends on a number of factors; how powerful is the explosive charge used in the dirty bomb? How high is the wind? How much nuclear material is being used? And so on.

A dirty bomb is a conventional explosive (TNT or semtex, for example) bomb that is wrapped in nuclear material. Of course that is easier said than done. The bomb along with the nuclear material, have to be smuggled into the country. As we pointed out in a previous paragraph, such a task is not impossible.

Alright.  Getting back to the point: In the event that Iran goes ahead with its nuclear program a strike by Israel could lead to the closure of Hormuz, the world’s most important oil chokepoint, through which 16.5-17 million barrels of oil (based on the first half of 2008) passes on a daily basis according to the U.S. Energy Information Agency. This figure represents roughly 40 percent of all seaborne traded oil, or 20 percent of all the oil worldwide.

At its narrowest point the Strait of Hormuz is only 21 miles with the shipping lanes only two-miles wide. The vast majority of the oil that passes through these Straits is going to Asian markets, with China and Japan among the principal buyers. More than 75 percent of Japan’s oil goes through Hormuz.  In the event of Hormuz being closed the Gulf oil would have to use alternate routes which would be longer and more costly. The result would be higher costs at the pump.

According to official U.S. figures alternate routes include the 745 miles-long Petroline, also known as the East-West Pipeline, which traverses Saudi Arabia from Abqaiq to the Red Sea. The East-West Pipeline has a capacity to move five million-bbl/d. The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to Petroline to the Red Sea, has a 290,000-bbl/d capacity. Other alternate routes could include the deactivated 1.65-million bbl/d Iraqi Pipeline across Saudi Arabia (IPSA), and the 0.5 million-bbl/d Tapline to Lebanon. Oil could also be pumped north to Ceyhan in Turkey from Iraq.

By. Claude Salhani




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News