Blood Shed Boosts Oil Price

The biggest potential losers in the still-roiling revolutions of the Middle East and North Africa are the people themselves. Many are democrats at high risk of being overwhelmed over time by new dictators and organised religious extremists. But the uncontested winners are already quite clear: those who own, sell, and bet on oil. In the last month alone, oil prices have leaped almost 10 per cent, even with only tiny dips in supply.

While these revolutions have produced daily thunderclaps worldwide about a new democratic future for the Middle East, power structures remain largely intact. Almost every country in the region looks as if it’s marking time, waiting. So far, those who took to the streets succeeded only in ousting their unwanted masters — Hosni Mubarak in Egypt and Zine Al Abidine Ben Ali in Tunisia — and not in really changing the power status quo ante. In Yemen, the established leadership does look shaky. In Libya, where the media proclaimed the rebels as victors last week, it seems like a standoff with Col. Muammar Gaddafi.

In Tunisia, where it all began, the revolutionaries are awaiting elections. The once banned Islamist party Al Nahda has just been legalised. In Egypt, the protesters still find themselves in the strong grip of the military. Elections are set for September, and the military, as well as the Muslim Brotherhood, can be expected to top the parliamentary polls. In Bahrain, the huge Shia majority took to the squares  — only a causeway away from the Saudi Arabian oil jackpot. To date, the revolutions have generated far more drama and hope than real change.

The fighting in Libya has understandably monopolised attention, though its international importance is modest. Its normal output of oil sits at only one per cent of daily global consumption. But watch out: legions of neoconservatives are demanding military action against Gaddafi, though his Arab neighbours say, “stay out.”

Israel is the biggest strategic loser. The Jewish state has relied on Arab regimes to subdue the anti-Zionist sentiments of their peoples. And Israel can’t do anything to fix its plight. Times are not at all conducive for new talks with Palestinians. The United States is also a loser, but it need not be a big one. Washington’s power depends on whether the revolutions peter out or launch new anti-American rulers. Whatever happens, Washington will confront greater anti-Americanism. Counterterrorism operations and anti-Iran diplomacy will suffer.

Turkey will be a model for Arab nations lucky enough to democratise. Its foreign policy balances between the United States and the states of Islam and is also now somewhat anti-Israel. Internally, Turkey balances between an Islamic and a secular state. The country has internal stability and a promising economy.

Conventional wisdom holds that Iran has won the lottery. But don’t bet on it. Iranians are Shias and Persians; the revolutionaries are mostly Sunnis and Arabs. These groups don’t particularly care for one another. Most important, Arab revolutionaries must surely despise Iranian leaders who beat and slaughtered Iran’s freedom fighters a mere two years ago. It’s quite possible that the revolutionary fervour will tire amid economic shortages and other burdens, and fade. Or the revolutions could erupt once again, forcing profound recalculations of US policy. But two things are certain: the oil barons and traders will get richer, and most people worldwide will scramble against higher oil and food prices and declining economies.

Four Factors In Oil Price’s Climb

Oil markets churned on Friday as traders tried to figure out how oil’s price would be affected by four different international events: the situation in Libya, violence flaring up in Yemen, the continuing nuclear drama in Japan, and the Chinese government’s decision to raise interest rates.

With so much uncertainty, many traders decided to lighten their positions going into the weekend – but others decided that oil prices will rise, so increased their position. The result was high volume with little price movement. By 1 p.m., the price of oil was very slightly down at $100.69 per barrel on the New York Mercantile Exchange in New York.

Oil prices have stayed around $100 per barrel for the past two weeks, reaching a high of $105.44 on March 7. International developments appear to have stalled oil’s rising prices as market analysts try to decipher the impact of recent events.

“There is so much happening, there is so much more historic up-and-down risk than I have ever seen before,” says Phil Flynn, senior market analyst at PFG Best Research in Chicago.

Oil reaches $100 a barrel: Five winners, five losers

 

Libya

Many traders kept their eyes on the shifts taking place in Libya. Shortly after the UN authorized military action against Col. Muammar Qaddafi, the Libyan foreign minister declared a unilateral cease-fire.

“It reminds me of Saddam Hussein (former leader of Iraq), who knew how to game the UN diplomatic corps,” says John Kilduff, an energy analyst and founder of Again Capital, a New York-based hedge fund that focuses on energy. “It will maintain the uncertainty.”

Did the UN make the right decision?

No matter what happens in Libya over the short term, Mr. Flynn expects Libyan oil will remain off the markets. “To me, if Qaddafi does miraculously stay in power, the world will hit him with sanctions and no one will be able to buy their oil.”

Before the uprising, Libya was pumping about 1.65 million barrels of oil – mostly light crude – each day, most of it going to European nations where it was made into low-sulfur diesel and gasoline.

Oil analysts believe most of the Libyan production has been made up by Saudi Arabia.

“They had been increasing their production even before the Libyan revolution,” says Erik Kreil, an analyst at the Energy Information Administration in Washington.

Although much of the Saudi crude was geared more towards industrial uses, the Saudis have indicated they will blend whatever mix their customers want, says Mr. Kreil.

IN PICTURES: Qaddafi burns oil pipelines in Libya

 

Yemen

Although Yemen is not a significant producer of oil, news of violence in the country’s capital, Sana, was also roiling the oil markets.

“It’s another problematic nation in the region,” says Kilduff. “It borders Saudi Arabia and is important from a regional perspective.”

 

China

In another development watched by the oil markets, China’s central bank raised reserve requirements, in an effort to slow inflation. This will slow oil demand to only a minor degree, says Donald Straszheim, senior managing director at ISI Group, which does China research, in Santa Monica, Calif.

Mr. Straszheim estimates China currently imports about 5 million barrels of oil per day. China’s strong economic growth in recent years has increased its demand for oil about 500,000 barrels of oil per day, each year.

“If the economy grows more slowly, which I think it will, that will lower annual demand growth to 400,000 barrels of oil a day, which in the broad scheme of things is just a rounding error,” he says.

 

Japan

Oil traders are also watching the events in Japan. If emergency crews cannot stop the release of radiation from the damaged reactors, it would lower demand for oil, says Flynn since it would delay reconstruction after the earthquake and tsunami. On the other hand, if the Japanese are finally able to gain control over their nuclear reactors, it would add pressure on the price of oil to rise, Flynn says.

 

Gaddafi, A Killer Since Past

On Dec. 21, 1988, Moammar Gaddafi killed Theodora Cohen. That’s one way of putting it. Cohen was one of 259 passengers and crew on Pan Am Flight 103. I remember her for obvious reasons and also because, to paraphrase the writer Erich Maria Remarque, the death of one woman is a tragedy, the death of millions is a statistic. Gaddafi has his statistics, but it is tragedy we are talking about today. There is much more to come.

Gaddafi’s agents also blew up the La Belle nightclubin what was then West Berlin. It was a hangout for American servicemen. Gaddafi supported other terrorist activities. He praised the killing of Israeli athletes at the 1972 Munich Olympics as well as theassassination of Anwar Sadat. He killed dissidents in Libya and sent agents to kill them overseas, too. If he wins the current civil war, he will kill his enemies. A bloodbath is coming.

How do I know? I don’t. I can only look at the past — at what Gaddafi has done — and conclude that he will do the same in the future. He can be stopped, though. When President Ronald Reagan retaliated for the La Belle attack by bombing Libya, Gaddafi got the message and quieted down. When Gaddafi saw that America went after Saddam Hussein’s (suspected) weapons of mass destruction, he rid himself of his own. He even paid reparations for the Pan Am 103 bombing. Moammar Gaddafi is a madman, but not mad.

In calling for the imposition of a no-fly zone over Libya, various American politicians and others have mixed their historical metaphors to make their point. They cite America’s refusal to stop the genocide in Rwanda and our tardy response to the slaughter of civilians in the Balkans. However, Libya is — or has been — different. This is a civil war of some kind — the people vs. the government. No genocide has been ordered and no genocide has yet been carried out. Libya is not Rwanda. Libya is not the Balkans.

But it could be. And to preclude that possibility it would be productive if the Obama administration got its marbles out of its mouth. Its pronouncements thus far have been all over the lot: Gaddafi must go . . . but not if he really doesn’t want to. In a Post interview, Ben Rhodes of the National Security Council propounded what the Wall Street Journal has rightly called “The Obama Doctrine.” It goes like this: You first.

Amazingly, the White House wants to wait on nearly everyone to do almost anything — the United Nations, NATO, “multilateral organizations and bilateral relationships,” in the words of Rhodes. This is a highfalutin way of saying that first we’re gonna have a meeting and then break into committees and then report back here sometime soon . . . the good Lord willin’.

This is very nice — very un-George W. Bush-like, and that is somewhat the point. But Obama has taken prudence to the point of procrastination. The international community can almost never agree on anything. It always looks to U.S. leadership. President Nicolas Sarkozy of France established diplomatic relations with the Libyan rebels, but the world hardly noticed or cared. It’s the United States that matters. We have the bucks. We have the expertise. We have the military. We lead, they follow. This may not be as it ought to be. It is, however, how it is.

Gaddafi is no mere desert provincial. He underwent military training in Britain and Greece. He undoubtedly has taken the measure of Obama and found him a muddled puddle. Gaddafi himself is just the opposite. He is bold. He was just 27 when he took over his country. He is infused with megalomania. Among his many titles is King of Kings of Africa. He wears many crowns. Shakespeare knew the type. Uneasy lies his head.

It is not too late for NATO to impose a no-fly zone over Libya. (Even the Arab League has called for it.) Such a move would not necessarily amount to a slippery slope. No U.S. troops went to Bosnia until a truce was negotiated. It remains urgent to get Gaddafi’s attention and let him know that the United States will not permit him to slaughter his opponents as Hussein did the Shiites and Kurds — to the everlasting shame of the inert George H.W. Bush.

Obama and Gaddafi are a mismatch. The president is a thinker; Gaddafi is a killer. Unless Obama and the West do something, there’s a bloodbath coming. Just ask the Cohens. Gaddafi killed their daughter.

 

Pan Am Flight 103

EU Moot In Limbo Over Libya Action

A European Union crisis summit on Libya has opened in Brussels, the Belgian capital, with countries divided over a British-French push to prepare for military action and formal recognition of the opposition seeking to oust Muammar Gaddafi.

David Cameron, the British prime minister, and Nicolas Sarkozy, the French president, are urging partners to recognise the Libyan National Council, set up in Benghazi last month.

But Germany has said it wants Europe to listen to the opinions of Libya’s neighbours and the Arab League before it decides whether to recognise the rebel body.

“I would first like to know how the countries in the region and the Arab League see it before we in Europe once more form
our own definitive opinion before everyone else,” Guido Westerwelle, Germany’s foreign minister, said on Friday.

He also expressed concern over plans for a no-fly zone over Libya, a move spearheaded by Britain and France.

“A no-fly zone is not putting up a traffic sign, but intervening with bombs, rockets, weapons,” he said. “If it doesn’t work, do we go further, with land forces?”

‘Gaddafi must go’

Sarkozy met with leaders of the Libyan opposition on Thursday evening, in what was the first high-level meeting between a foreign head of government and the rebels’ National Council.

Faced with the aggressive assault by Gaddafi’s forces, the Libyan opposition is frustrated that NATO is still debating the imposition of a no-fly zone.

The French and British leaders issued a letter late on Thursday night saying that they wanted action to be taken against Gaddafi’s government, including an arms embargo, an expansion of the sanctions already in place.

“Colonel Gaddafi must go, his regime is illegitimate, what he is doing to his people is completely unacceptable,” Cameron told Al Jazeera ahead of the EU meeting on Friday.

Read more of our Libya coverage

Angela Merkel, the German Chancellor, added her voice to the calls for Gaddafi to step down on Friday.

Battles in the north African nation are raging as rebels pile on pressure on the international community to impose a no-fly zone over Libya to cripple Gaddafi’s air force.

There will be no concrete discussion of the no-fly zone in the EU meeting, however, Al Jazeera’s Alan Fisher reported from Brussels.

While several world powers have backed such a measure, the logistics are yet to be worked out with Hillary Clinton, the US secretary of state, saying such a move should be driven by the United Nations and not the United States.

On Thursday, Anders Fogh Rasmussen, NATO’s secretary-general, said that “further planning will be required” if a no-fly zone were to be enforced, under the UN’s mandate.

Unconfirmed reports from the French government suggest Sarkozy supports targeted air strikes against strategic targets in Tripoli, though EU has no capacity to order military action.

“Nicolas Sarkozy will be working behind the scenes saying if this goes to the United Nations, we expect Europe to speak with one voice,” Fisher said.

‘Nation will not bear both of us’

Jakob Kellenberger, the president of the International Committee of the Red Cross (ICRC), on Thursday warned that Libya was in a state of “civil war”, and appealed for aid workers to be given greater access to the country.

James Clapper, the American director of national intelligence, gave a controversial analysis of the Libyan crisis, predicting that Gaddafi would be likely to retain control of at least part of the country in the long-term, given his superior weapons and manpower.

“Over time I think the regime will prevail,” Clapper told the armed services committee on Thursday.

“With respect to the rebels in Libya, and whether or not they will succeed or not, I think frankly they’re in for a tough row,” he said.

Some senators called for Clapper to be fired because of his comments.

Amid such discussions, Gaddafi has launched his own diplomatic effort, sending emissaries to Brussels and Cairo.

Opposition forces have vowed to continue fighting against Gaddafi, regardless of a no-fly zone.

“If they implement a no-fly zone we will ask for other things. Even if they do not implement it, we will fight,” Iman Bugaigis, a media officer with the rebel February 17 Coalition, told reporters in Benghazi.

“There is no return for us. This nation will not bear both of us. It is us or his [Gaddafi’s] family. After what happened
in Zawiyah, how can we live with this person?” she said.