Jan 05 2012
Iran – Playing Chicken?
Iran – Playing Chicken?
I have now read more, and thought more about, Iran’s current ongoing threats and their possible significance in the overall scheme of current potential world political and economic events. My views on January 5, 2012 with respect to Iran’s ongoing threats and actions, particularly those related to the Strait of Hormuz are as follows:
- in many respects, it strikes me that Iran is playing a game of chicken with the United States in particular, but with the rest of the world in general. I think this because from what I can gather, about 50% of Iran’s annual revenues come from the 2 million barrels per day of oil Iran sells to the rest of the world. Closing the Strait of Hormuz presumably would cause significant disruption to Iran’s own revenue flows;
- Iran may be prepared to play this game of chicken because its current leaders may believe that if the Strait is closed for any length of time the West in particular has more to lose than Iran does, and as a result may in the end ‘give in’ to Iranian threats. I don’t see this happening as America, even as politically polarized as it is, is in my view very unlikely to give into aggressor threats of any kind;
- China and Russia, who have been giving an element of political support to Iran in recent months, would themselves feel negative affects from a closing of the Strait. Any such aggressive action by Iran may harm Iran’s relations with those two countries;
- in the event the U.S. and others put anti-Iranian economic sanctions in place against Iranian oil in an attempt to curtail Iran’s alleged nuclear armaments program, Iranian leaders who are threatening to close the Strait and promote other retaliatory acts may be painting themselves into a corner – such that not to make good on those threats may cause those Iranian leaders to lose face both in Iran and the rest of the world;
- should Iran attempt to close the Strait it likely would not be successful in doing that given the strength of the U.S. Merchant Marine ships and forces already in the area. Nonetheless there could be a large amount of environmental damage caused from any such activity;
- any military action arising as a result of an Iranian attempt to close the Strait might well cascade into broader military actions; and,
- any disruption of oil flow through the Strait would in all probability lead to higher world oil prices, which in turn would lead to further pressures on the economies of Europe and the United States.
I think what currently is transpiring in Iran is potentially very important in world economic terms. Accordingly, you can expect further commentaries on this in upcoming e-mails.
The two articles I read prior to writing this commentary are:
- a CNN article published on the Brookings Institution blog titled ‘Dangerous Mix: Arabian Oil and U.S. sanctions’ – reading time 5 minutes; and,
- an article that was reported on the OilPrice blog written by Brian Westenhaus of the ‘New Energy and Fuel Blog’ titled ‘How Iran’s Saber Rattling Could Affect Oil Prices and the Environment’ – reading time 4 minutes.
I suggest you consider reading one or both of these articles. I suggest you read the Brookings article if you read only one of them.
Labour Disruption/Strikes Ahead?
A recent article has prompted me to reflect on the possibility of increased labor disruption and strikes ahead in many developed countries in 2012 and beyond. Frequently I have said in these e-mails that it is not possible to take things away from people and leave them happy.
The referenced article specifically focuses on the United Kingdom as a place where early in 2012 confrontations between …..continue reading.
Commentary reading time 3 minutes. Referenced article(s) reading time 3 minutes.
Silver Video Worth Watching
I found a recent video to be an interesting overview of a number of production and usage statistics on silver. I think the charts and pictures shown are quite well done. That said, there is a great deal of information covered …..continue reading.
Commentary reading time 2 minutes. Referenced video watching/listening time 4.5 minutes.
So, What Do Bears Do?
A recent 9 minute video is an interview of Dylan Grice who is with Societe Generale. The video is titled ‘Long View: What do bears invest in’ (now). The reason I suggest you take the time to watch and listen to this video has to do with the fact that the Mr. Grise is a European who is largely focused on euro zone issues. As I see it, it is one thing for …..continue reading.
Commentary reading time 1 minute. Referenced video watching/listening time 9 minutes.
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