New Iraq-Iran alliance in boosting oil output to challenge reigning Saudi Arabia will be game changer

Iraq and Iran plot oil revolution in challenge to Saudi Arabia
Iraq's goal of pumping 9m barrels a day of crude could be a game changer for oil prices and British companies

By Andrew Critchlow
The Telegraph
Jan 28, 2014

Iraq sets its sights on the top spot of Middle East oil producers

Iraq is poised to flood the oil market by tripling its capacity to pump crude by 2020 and is collaborating with Iran on strategy in a move that will challenge Saudi Arabia's grip on the Organisation of Petroleum Exporting Countries.

"We feel the world needs to be assured of fuel for economic growth," Hussain al-Shahristani, Deputy Prime Minister for Energy in Iraq told oil industry delegates attending a Chatham House Middle East energy conference.

Al Shahristani said on Tuesday that Iraq plans to boost its capacity to produce oil to 9m barrels a day (bpd) by the end of the decade as Baghdad rushes to bolster its economy, which is still shattered by war and internal conflict. Iraq was producing 3m bpd in December, according to the International Energy Agency.

Iraq's intention to challenge Saudi Arabia's status as the "swing producer" in the OPEC cartel could see a dramatic fall in oil prices if Baghdad decides to break the group's quotas and sell more of its crude on the open market.

"It's very difficult to predict actual world (oil) demand by 2020 because the world economy is unpredictable," said Mr al-Shahristani.

British oil giants BP and Royal Dutch Shell are also poised to benefit from Iraq's ambitious production plans. Both companies are already managing two huge oil fields in southern Iraq which are vital if Baghdad is to achieve its goal.

However, even if Iraq is able to achieve its target of boost production capacity it is unlikely to be able to put in place sufficient pipeline and port infrastructure to export the additional crude.
Iraq's main export terminal for loading oil tankers at Al Faw near Basra will require billions of pounds worth of improvements in addition to the refurbishment of its pipeline network.

Iraq's ambitious plan could see it clash increasingly with the regime in Saudi Arabia, which has used its influence in OPEC over the last decade to keep oil prices above $100 a barrel. Saudi itself is now under pressure to boost output to maintain market share. The kingdom pumped 9.8m bpd in December up by about 100,000 barrels from the previous month.

Experts say that attention within OPEC, which pumps 30% of the world's crude, could increasingly focus on compliance with more of the group's members tempted to pump more barrels to protect their share of the market as the cartel grapples with the rise of US shale oil production.

OPEC agreed in early December to renew for six months its 30M bpd output cap for the first half of the year to keep prices above $100. However, quotas have in the past proved difficult for OPEC as a group to enforce without any binding penalties for over-producing. Since its restoration to OPEC following the 2003 Gulf War, Iraq has been excluded from the group's quota system to allow its economy to recover but pressure is mounting for it to comply this year.

The International Monetary Fund this week warned that Iraq's weak economy remains vulnerable to fluctuations in oil markets. Crude oil exports account for 93% of government revenues. The IMF estimated that Baghdad required an average oil price of $106.1 per barrel in 2013 to balance its budget, up from $95 in 2011 because of higher spending.

Despite Mr al-Shahristani's hopes for boosting Iraq's energy sector there are severe concerns over security amid fears the country may again be slipping toward a civil war between Sunni and Shia Muslim factions.

In a further challenge to Saudi Arabia, which is mostly closed to international oil companies, Mr al-Shahristani revealed that Baghdad is working with Iran to help it attract investment ahead of the possible lifting of sanctions. Oil companies are understood to be queuing up to win Iranian oil deals.

"Iran has been in touch with us," said Mr al-Shahristani. "They want to share our contracts model and experience."

Combined, Iran and Iraq hold greater reserves of oil than Saudi Arabia and the potential with the help of international investment to match its capacity to produce oil, which currently stands at around 12.5m b/d of crude.

© Copyright of Telegraph Media Group Limited 2014

Move over dollar, euro; here comes the yuan

As Greenback Sinks, Dubai’s Chief Economist Calls For Chinese ‘Redback’

A.M. Freyed
Infowars.com
June 7, 2012

Time for dollar, euro to step aside — the redback cometh… Yuan finally set to emerge on a global scale with China hot on heels of US as world’s second largest economy. There are increasing calls for the yuan to become an international payment, investment and reserve currency. The move towards yuan internationalisation requires domestic structural reforms and financial market development. China’s 12th five year plan objectives provide for gradual capital account convertibility and removal of internal financial distortions. This requires interest rate liberalisation and the development of money market instruments and debt capital markets: the “Redback Market”. – GulfNews

So this is the real reason that US pols keep calling for a floating yuan …

In fact, this Gulf News story (excerpted above) tips us that US proposals for the yuan to float has little to do with US “competitiveness” – as often reported in the mainstream media – and everything to do with building blocks for a global currency.

“Competitiveness” is a kind of justification hiding a larger intention. The idea, perhaps, is to gradually replace the dollar as the world’s reserve currency with a basket of currencies.

The International Monetary Fund’s underdeveloped SDRs may provide a worldwide currency basket – at least that seems to be the plan. Perhaps some other global currency is secretly being developed, or perhaps there may be a partial reversion to a planned gold standard … But no matter what, the idea seems to be to advance China’s currency and make it powerful throughout the world.

This is the perspective of Dr Nasser Saidi, Chief Economist of Dubai’s International Financial Centre. He knows what he is talking about, no doubt. In fact, these funny little countries – Dubai, Qatar, etc. are being groomed by the elites to help amalgamate Eastern and Western financial systems.

The top money-men of the Arab Emirates have the ears of the power elite and vice versa. They are important in the larger scheme of things as the elites continue to create their new world order.

The idea is to construct an intermediate system that allows the Western banking powers to pursue business-as-usual in the Muslim world. But in order to get from here to there, a more broadly inclusive basket of currencies needs to be developed.

Right now, the SDR is basically offered to central banks and their governments as a way to adjust reserves and diversify currencies away from the dollar. The IMF itself supports SDRs and provides pricing for them on a regular basis.

The SDR basket is made up of the euro, Japanese yen, pound sterling, and U.S. dollar – but there are plans to incorporate more currencies into the basket over time, including the yuan.

All part of the apparent planned demise of the dollar and the rise of a true global currency. These currencies are not to be subservient to the US dollar in the long run. Just as Western economies are gradually unraveling, so BRIC and developing countries are seen to be rising.
Why is there a need for a basket of reserve currencies? Because the same elites that are planning a world currency are also planning for global government. And you can’t have global government with national currencies.

The BRICs, EU, US, Asia and South America are all being reconfigured to support a world monetary authority. Almost every day there are steps being implemented to create a further convergence of monetary systems …

• According to a recent Reuters article, “The euro needs a master plan and a ‘collective determination’ to rescue the euro.” That’s the perspective of Christine Lagarde, who proposes a “comprehensive set of principles to enforce over time.”

• According to the Gulf News, “India has set up a Gulf unit to track tax evaders. India is posting eight senior IRS officers abroad, including one in Abu Dhabi.” The idea is to pursue unreported funds abroad flowing out of Switzerland and into the Middle East.

• According to Bloomberg, (as previously reported in these pages) Qatar has been picked to provide the QIBOR (a replacement for the staggering LIBOR) providing a daily reference point for banks borrowing unsecured funds from other banks. Total amount of funds affected? Up to US$90 trillion.

These are just three reported examples among hundreds of the homogenization that is being pursued by the powers-that-be. Whether it is the euro itself, Indian income taxes or British-oriented banking facilities in Qatar, the West’s financial system is gradually being imposed and expanded worldwide.

The plan is doubtless to expand the current (and growing) economic chaos until people are willing to accept almost any solution to recreate some level of prosperity – even the “Redback.”


For additional links see www.AmericanFreed.com.