The horizon is not so far as we can see, but as far as we can imagine

Category: Oil

The West Drives Iran Into China’s Arms

China started exporting petrol to Iran recently.  Petrol is one of the main things Iran needs from the outside world.

Meanwhile, the West, and the US in specific, seems determined to impose sanctions if Iran doesn’t give up its nuclear program, a program that Iran insists is for civilian purposes.

If the West does  impose “draconian sanction” they will shove Iran firmly into China’s orbit unless China is onside with the sanctions.  It is unlikely China will be.  China has very consistently supported the individual sovereignty of various countries the West tries to use sanctions against (both Burma and Sudan, among others), and they are willing to back it up with large amounts of aid, not out of the goodness of their hearts, but for cold hard pragmatic reasons.

One major arm of China’s foreign policy is to lock up as much access to natural resources as possible and helping Iran is part of that policy.

The Chinese think long term and strategically about these issues.  America and the West in general are being driven by irrational hysteria on this issue, and short term thinking in general.

The evidence that Iran is working towards a nuclear bomb is scanty though not nonexistent, and even if they had nuclear weapons the only thing it would change is the ability of other nations to threaten them with armed force.  Tehran’s leaders are not insane, they would be no more likely to use nuclear weapons than any other country which has them, and probably less likely than some.  Nuclear weapons, including weapons provided to terrorists, come with “return addresses” —they have distinctive signatures which can be used to figure out where they came from.  If Iran were to use a nuke in any way against outsiders, other nuclear powers would respond and wipe the country off the map.

Iran probably isn’t working on nukes.  Even if it is, its getting them doesn’t particularly matter.  And the West’s preoccupation with the Iranian nuclear program is only driving them into the arms of the Chinese.

Oil And Other Commodity Prices Continue To Rise

Image by Yuan2003

Image by Yuan2003

From the FT:

In energy markets, Nymex May West Texas Intermediate rose $1.64 to $51.02 a barrel while ICE May Brent added $1.36 at $52.95 a barrel.

Copper pushed above the $4,500 mark, rising 2.8 per cent to $4,505 a tonne, helped by a fall of 7,425 tonnes in London Metal Exchange stocks which have dropped below the 500,000 tonne level.

Expect this to continue, you can’t pump all this money into the world economy without it going somewhere, and specifically, as speculators are bailed out, they don’t really have a lot of places to put their money except oil.  The “buy up trash and game Geithner’s plan” play isn’t available to everyone, after all.

$52.95 is not cheap oil, especially in a down economy like this one.

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