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3/21/15

Middle East: "Its all about oil stupid " - The Middle East Oil/Nuclear Puzzle  - by Pepe Escobar

"It's all about oil stupid"
US Secretary of State John Kerry may be starting to enjoy the brinkmanship, as he says it’s “unclear” whether the US and Iran would reach a political framework nuclear deal before the end of this month.
Loud applause may be heard in corridors ranging from Tel Aviv to Riyadh. 

As negotiations resume in Lausanne, the fact is a potential nuclear agreement between Iran and the P5+1 (US, UK, France, BRICS members Russia and China, and Germany) is bound to open the possibility of more Iranian oil exports – thus leading oil prices to fall even further. As of early this week, Brent crude was trading at $54.26 a barrel.

Assuming the US and the EU nations that are part of P5+1 really agree to implement the suspension of UN sanctions by the summer (Russia and China already agree), not only will Iran be exporting more energy – that should take a few months - but also OPEC as a whole will be increasing its oversupply.

The EU badly wants to buy loads of Iranian energy – and invest in Iranian energy infrastructure. Beijing, a key yet discreet member of the P5+1, is also watching these developments very carefully.

Whatever happens, for China this is a win-win situation, as Beijing keeps actively building up its strategic petroleum reserves profiting from low prices. And even as oil prices also remain under pressure from the strong US dollar – which makes oil way more expensive if you are paying with a different currency – that’s certainly no problem for China, with its mammoth US dollar reserves.

The oil price war essentially unleashed by Saudi Arabia has hit Iran with a bang. The country may be down, but not out. There were no good options for Tehran except to try to keep its market share by offering the same discounts – especially to Asia - the Saudis are offering.

Note EU-Digest: ISIS, Israel, Palestine are all "side-shows" in the unfolding Global Energy reshuffle.   Republican Congressional leader Boehner's visit to Israel therefore mainly has to do with the Republican's trying to block the 5 + 1 nation Iran nuclear agreement  on behalf of their "financial backers, US based global oil corporations who will be losing a lot of money if the Iran deal gets signed and Iran starts competing on the world market again. The EU which is a part of the negotiating group with Iran is already banking on the possibility an agreement will be reached and only a few days ago approved the establishment of an EU Energy Group, 

In case a deal is reached among the 6 negotiating countries and the Republicans block approval of  the deal in the US Congress, thereby depriving the American taxpayers in paying less for their energy, it is probably very likely that the deal will then go for approved to the UN, because the agreement is one which includes 6 different countries. At that point the present US Obama Administration, which does not need a mandate from the US Congress to vote yes or no on any UN resolution, can endorse the agreement in the interest of the US economy.

As the Chinese would say: "these are interesting times  ! "

EU-Digest


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