Thursday, March 26, 2015

Bacon Out of the Fire?

A few headlines from the Middle East:

Saudi's Bomb Rebels

Iran objects to the intervention

U.S. Aids Shia in Iraq

There seems to be an intensification of the conflicts in the oil patch.

The U.S. is reluctant to go back into the middle east in force.

The U.S. does not depend on oil imports like we did in decades past. If we import oil/energy it is from Canada and Mexico. We are not dependent on the middle east for oil.

The U.S. oil and gas producers are having a hard time being profitable with world and U.S. oil prices at the low levels of recent months. A disruption of Saudi supply would help U.S. producers if world prices rise. Some Canadian and Mexican oil could be diverted and raise U.S. prices.

The increasing tension between Iran/Shia and Saudi Arabia/Sunni may be increasing. And recent reports are of these nations buying large amounts of weapons.

Arms purchases

Regional Buildup

"The recent upgrades to military infrastructure and equipment, however, may not relate solely to Israel or Iran, both of whom have been quite stable in recent years, but may relate to a significantly decreased presence of the US Fifth Fleet in the region."

I am surprised that there is not more buying of the U.S. oil and gas producers. We may get our bacon pulled out of the fire by our producing rivals. It costs money to wage war. If one country attacks another, and those countries primary sources of revenue is oil, an attack on a rivals production will crimp their income as well as raise the price of surviving production.

The timeline may be months or years, but I the U.S. does not have the interest in the region that we did in times past and that will surely influence our desire for interventions.


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