John Ransom

Global politics is mostly about resource sharing, like oil. The free flow of oil is the main strategic reason that the US is involved in the Middle East, North Africa and Central Asia. That’s not a bad thing; it’s just a reality.

And until the mean Greenies can make an economy that runs on water, that’s not going to change, no matter how many withdrawals and retreats Obama orders from around the world.

Think the “end” of the Iraq War as announced by Obama is the beginning of peace? Not so fast. In fact, it could be the beginning of bigger and worse war.

“'Peace, peace,' they say, when there is no peace,” writes Jeremiah 6:14. Perhaps Jeremiah was thinking of Obama.

From Agence France Presse:

No oil will be permitted to pass through the key oil transit Strait of Hormuz if the West applies sanctions on Iran's oil exports, Iranian Vice President Mohammad Reza Rahimi warned on Tuesday.

The threat was reported by the state news agency IRNA as Iran conducted navy wargames near the Strait of Hormuz, at the entrance of the oil-rich Gulf.

"If sanctions are adopted against Iranian oil, not a drop of oil will pass through the Strait of Hormuz," Rahimi was quoted as saying.

"We have no desire for hostilities or violence... but the West doesn't want to go back on its plan" to impose sanctions, he said.

"The enemies will only drop their plots when we put them back in their place," he said.    

Because a case in point of war maquerading as peace can be found in Iran’s threat to close down the Strait of Hormuz. Iran is responding to the West’s threat to shut down Iranian oil shipments to get Iran to back off their nuclear weapons program.

According to the Center for Strategic and International Studies, 40 percent of the world’s oil supply, or 17 million barrels per day, travels through the Strait of Hormuz. And while alternate routes can be found to ship oil, the alternate routes can only carry about one-third of the oil that would normally go through the Straits or about 5 million barrels per day. The supply deficit would be about 12 million barrels per day- or two thirds of the entire daily demand by the United States of about 18-19 million barrels.

In that scenario, if spot prices for oil stopped at $200 per barrel, I’d be surprised. Think more like $250 to $300.  

John Ransom

John Ransom’s writings on politics and finance have appeared in the Los Angeles Business Journal, the Colorado Statesman, Pajamas Media and Registered Rep Magazine amongst others. Until 9/11, Ransom worked primarily in finance as an investment executive for NYSE member firm Raymond James and Associates, JW Charles and as a new business development executive at Mutual Service Corporation. He lives in San Diego. You can follow him on twitter @bamransom.