Is Iran Playing the Oil Card? If so, why?

seahorse · Expert Joined: Oct 15, 2004 Posts: 2089 Location: Arkansas

Is Iran using the oil weapon? Oil prices rose to their highest level ever yesterday after it was reported Iran may cut their production and further reports that Iran is doubling its oil held in tankers and not shipping it (driving up tanker costs). News stories here:

BBC

Iran doubles oil stored in tankers:

BBC

Iran has long threatened to play "the oil card" in its stand off with the West, but why play it now? One possibility is its in response to recent comments by U.S. Sec of Defense Gates and US Chairman of of the Joint Chiefs of Staff, Mullen, keeping all options on the table, but it seems more is going on here, and I can't put my finger on it. For example, why store oil in tankers driving up tanke cost when its cheaper just to not pump the oil?

jlw61

seahorse · Expert Joined: Oct 15, 2004 Posts: 2089 Location: Arkansas

One of the big impediments to a US attack was the supposed "devastating effect" an attack would have on the world economy by increasing oil prices. Thus, Iran has supposedly always had a trump card, its "oil card." So why play it now? I don't know, but it seems that by witholding tanker shipments it is being played and not just threatened.

So, how will the US respond? With Iran playing the oil card, it seems to chip away at any reluctance to attack. For example, the US has wargammed several scenarios of rising oil prices caused by various things. Here's a report of at least one "wargaming" the economics exercise.

Heritage Foundation

IslandCrow

I heard reference to this on some financial tv (internet version) which said that the oil was being stored in tankers because no one wanted to buy that grade of oil, and that as the tankers are full there is nowhere else to store it and so production must be cut.

From this I guess that they are trying to sell a lot of "heavy" oil.
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RSB · Tar Sands Joined: May 13, 2008 Posts: 28

According to this Bloomberg article:

theozarker

If these are sitting in the strait of Hormuz, what would happen to the strait if we attacked and the Iranians just blew up these tankers? Would it do enough damage to shut the strait?

Linda
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roccman

Saddam Hussein lit Kuwaits fields on fire as they retreated in GWI...

Stocking oil has many advantages from their perspective:

1) It keeps people guessing (ala this thread)
2) They could be used to block sea lanes
3) They could be used for emergency supplies in the event of an attack...(why would the US bomb tankers in the PG?)
4) They are effecting tanker pricing currently
5) They can.

If I am Prez of Iran - and have a few billion tons of steel sitting off my porch with guns pointed at me...I too am hedging.
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"... hope is a rotten-thighed whore" Niko Kazantzakis

We are going back to roccland - me

mmasters

Iran is a puppet controlled by forces that control Russia. The oil card is about global domination.
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roccman

Cid_Yama

5 days supply makes a nice strategic reserve in case of 'unforceen circumstances'. Ready to ship at a moment's notice as well. In other words a 'Mobile Strategic Reserve', which could be sold all at once to another country if someone else needed it. You could also use it to cover an ally's contracts, if an ally suddenly needed it. (for instance, if Venezuela were suddenly blockaded).
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Dreamtwister · Fission Joined: Feb 06, 2006 Posts: 2093

canis_lupus

If you spin the chessboard around for a moment and look at the West from their perspective...they've got nothing to lose and everything to gain.

In a way, it is almost like economic terrorism (hear me out before the flames start) -- by rattling sabers, goading the West into sailing their hardware around offshore, keeping the word 'war' in the papers, talking about cutting production, continuing with their nuclear program all continues to hold/drive prices up, and it costs them nothing.

It affects John and Mary Sixpack who read about it in the paper and wonder how they are going to afford gas at all if we do attack Iran and begins to take the edge off any support the next president would have to go in Iran and kick ass.

It's a great play for them.

If no one wants those tankers, there is a scrap shortage right now. I'm sure there are many scrapyards that would gladly take them.

BigTex

gollum

How dare these wretches withhold our oil, the nerve.

gollum

How dare these wretches withhold our oil, the nerve.