For those wondering why oil and petrol jumped last week here is the best explanation I can see.
From the SMH it appears unless Iran gives up the nuke research we are in for more instabiliity and fear on supply.
Bring on the Hybrids, Peter 147
All eyes on Iran for a fix on oil price
By Brad Foss and George Jahn in Vienna
January 24, 2006
A SURGE in oil prices last week to almost $US70 a barrel due to concerns about the resumption of Iran's nuclear program only hints at what may lie ahead.
Prices could soar past $US100 a barrel, experts say, if the UN Security Council authorises trade sanctions against Iran, which the West accuses of trying to make nuclear bombs, and the country curbs oil exports in retaliation.
A sharp global economic slowdown could follow.
That is the dilemma the United States and European nations face as they decide whether to act. But Iran would also pay a hefty price if the petrodollars that now represent 80 per cent of export revenues are reduced, potentially stirring civil unrest.
Iran, the No.2 oil producer in the Organisation of Petroleum Exporting Countries, exports roughly 2.5 million barrels per day - 1 million barrels more than excess production capacity worldwide. It also controls the Strait of Hormuz, a critical shipping lane in the Middle East.
"Even if Iran pulled a small amount of its oil off the market, say it pulled a half million barrels a day, I could see oil prices literally jumping over the $US100 per barrel mark," said James Bartis, a senior researcher at Rand Corp.
But others say prices would probably not climb much higher than $US75 a barrel before strategic reserves would be released and demand would begin to wane as global economic activity slowed.
So who would be hurt more? The US and other nations say it would be Tehran and argue against succumbing to economic blackmail in any case.
The US Department of Energy estimates that oil exports finance about half of the Iranian Government's budget.
And while high oil prices have boosted the annual growth rate to about 5 per cent, Iran has never really recovered from its 1980-88 war against Iraq and trade restrictions on sensitive technologies.
For weeks Iran's state television has sought to show a people united behind the leadership, showing passers-by on Tehran streets expressing their support for the country's strivings for nuclear independence.
Oil consuming nations, meanwhile, have at least one ace up their sleeves - crude reserves.
The US and other members of the International Energy Agency have a combined 1.48 billion barrels of oil in their emergency stocks.
That's equivalent to about 600 days of Iran's net oil exports of 2.4 million barrels per day.
OPEC might be able to add 1.5 million barrels per day to world production, mostly from Saudi Arabia. Russia is another potential source.
From the SMH it appears unless Iran gives up the nuke research we are in for more instabiliity and fear on supply.
Bring on the Hybrids, Peter 147
All eyes on Iran for a fix on oil price
By Brad Foss and George Jahn in Vienna
January 24, 2006
A SURGE in oil prices last week to almost $US70 a barrel due to concerns about the resumption of Iran's nuclear program only hints at what may lie ahead.
Prices could soar past $US100 a barrel, experts say, if the UN Security Council authorises trade sanctions against Iran, which the West accuses of trying to make nuclear bombs, and the country curbs oil exports in retaliation.
A sharp global economic slowdown could follow.
That is the dilemma the United States and European nations face as they decide whether to act. But Iran would also pay a hefty price if the petrodollars that now represent 80 per cent of export revenues are reduced, potentially stirring civil unrest.
Iran, the No.2 oil producer in the Organisation of Petroleum Exporting Countries, exports roughly 2.5 million barrels per day - 1 million barrels more than excess production capacity worldwide. It also controls the Strait of Hormuz, a critical shipping lane in the Middle East.
"Even if Iran pulled a small amount of its oil off the market, say it pulled a half million barrels a day, I could see oil prices literally jumping over the $US100 per barrel mark," said James Bartis, a senior researcher at Rand Corp.
But others say prices would probably not climb much higher than $US75 a barrel before strategic reserves would be released and demand would begin to wane as global economic activity slowed.
So who would be hurt more? The US and other nations say it would be Tehran and argue against succumbing to economic blackmail in any case.
The US Department of Energy estimates that oil exports finance about half of the Iranian Government's budget.
And while high oil prices have boosted the annual growth rate to about 5 per cent, Iran has never really recovered from its 1980-88 war against Iraq and trade restrictions on sensitive technologies.
For weeks Iran's state television has sought to show a people united behind the leadership, showing passers-by on Tehran streets expressing their support for the country's strivings for nuclear independence.
Oil consuming nations, meanwhile, have at least one ace up their sleeves - crude reserves.
The US and other members of the International Energy Agency have a combined 1.48 billion barrels of oil in their emergency stocks.
That's equivalent to about 600 days of Iran's net oil exports of 2.4 million barrels per day.
OPEC might be able to add 1.5 million barrels per day to world production, mostly from Saudi Arabia. Russia is another potential source.
