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

The declining power of the `ol American greenback...should we start panicking?

12 Reasons Why Gold Should Bounce Sharply Higher in 2014 
(Lorimer Wilson)
Munknee.com

edited excerpts by Jason Hamlin (goldstockbull.com) from his original article entitled: 12 Reasons Why Gold Will Rebound and Make New Highs in 2014.

[...]

#4 – Dollar Losing Status as World Reserve Currency

   The exorbitant privilege of being able to print the world reserve currency is coming 
   to end.

   --“It is perhaps a good time for the befuddled world to start considering building a de-   
   Americanized world,” said a statement by Xinhua, the state news agency of China — which 
   holds some $1.3 trillion in Treasury bonds.

   --“The United States will inevitably lose its reserve currency monopoly,” wrote economists 
   Hélène Rey of the London Business School.

   --Pierre-Olivier Gourinchas of the University of California, Berkeley, and Emmanuel Farhi of 
   Harvard University said. “It can only be a matter of time before the world becomes multipolar.”

   --The IMF echoed this sentiment, stating how “reserves concentration in the government debt 
   of one country introduces idiosyncratic risks to the international monetary system.

   Several nations now have bi-lateral trade agreements that bypass the dollar.

   --China has made arrangements to swap Yuan’s for for local currencies with Japan, Russia, 
   Australia, Iceland, South Korea, Malaysia, Brazil, India and South Africa. The BRICS nations 
   are emerging as a powerful economic force and they are intent on conducting affairs without 
   use of the U.S. dollar.

   --The growing rift with Saudi Arabia threatens the petrodollar.

   --Oil-rich countries that have attempted to sell their oil in currencies other than dollars include 
   Iraq and Libya, both bombed into submission.

   --Iran is now trading oil for gold, bypassing the U.S. petrodollar. This is likely the real reason 
   they are now in the crosshairs of the U.S. military.

   --Syria is seen as a stepping stone to attacking Iran, but widespread opposition from ally 
   countries and citizens alike stopped the recent war momentum.

   --As the influence of the petrol-dollar continue to wane, so too will the power of the U.S. dollar 
   as the world reserve currency. Without the ability to deficit spend and export our inflation, it   
   will come home to roost and the dollar will suffer or even collapse as have other debt-ridden 
   fiat currencies throughout history....

[Click here to read the full article]

Related articles:
--Learn how the 'petro-dollar' got started

Billions of petrodollars flood into Egypt post military coup, so who needs democracy anyway?

I was never a Muhammed Morsi fan but to uproot a democratic institution without following the normal and proper conventions of a government is just ludicrous, and it goes to show that the Egyptian military is an institution beholden NOT to the people as they Egyptian people might think, but in reality to a 'foreign' entity. The sooner the people realize this, the better they can control the outcome. The Egyptian army has always protected itself at any cost and will do the bidding of others as its strings are pulled to and fro. No matter what else occurs in Egypt in terms of a government, the military will always be there as a watchdog ready to obey it`s master`s orders. And of course, lets not forget it`s military financing and budget...that it`s wholly dependent on. Finally, what can one say about the Persian Gulf nations...no self identity whatsoever. They who hate and abhor democracy, pumped into Egypt a staggering $12 billion all in a single month, chump change when compared to what was 'given' to Cairo post-Mubarak.

Its funny in retrospect when you think to President Obama`s 2009 Cairo speech, where he declared, “No system of government can or should be imposed upon one nation by another,..."

Our wise Founding Father George Washington`s farewell address sums up accurately our current state of affairs concerning our diplomatic and military commitment to virtually the entire world. “Nothing is more essential,” Washington said, “than that permanent, inveterate antipathies against particular nations, and passionate attachments for others, should be excluded.”

“The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave,” he added. “It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest.” What ominous words from our founding father, who sadly is ridiculed by our government officials as being 'un-American.'

Egyptian army’s financial coup: 12 billion petrodollars from Saudi, UAE, Kuwaiti fans
DEBKAfile
July 10, 2013

In a dazzling display of monetary muscle, Saudi Arabia and the United Arab Emirates poured $8 billion in a single day into the coffers of Egypt’s army rulers in cash, grants, loans without interest and gifts of gas, a dizzying life-saving infusion into its tottering economy. Forking out sums on this scale in a single day – or even month - is beyond the capacity of almost every world power – even the US and Russia - in this age of economic distress. The Arab oil colossuses managed to dwarf Iran’s pretensions to the standing of regional power.
Tuesday, July 9, just six days after the Egyptian army overthrew the Muslim Brotherhood president Mohamed Morsi, a UAE delegation of foreign and energy ministers and national security adviser landed in Cairo. They came carrying the gifts of $1 billion as a grant and $2 billion in long-term credit.

In well-orchestrated moves, Saudi Arabia then stepped forward with a $5 billion package, of which a lump sum of $2 billion was drafted to Egypt’s state bank that day, followed by another $2 billion as a gift of Saudi gas, and a further $1 billion for propping up the sagging Egyptian currency.

The delivery by two Arab governments to a third of financial assistance on this scale and on a single day is unheard of in the Middle East, or, indeed, anywhere else.

As they celebrate Ramadan, 84 million Egyptians can start looking forward to a square meal at the end of their month of fasting.

This river of largesse was the outcome of a development first revealed by DEBKAfile last week: The Egyptian military high command was not working alone when its operations headquarters put together the July 3 takeover of power from the Muslim Brotherhood; it was coordinated closely down to the last detail with the palaces of the Saudi and UAE rulers and the operations rooms of their intelligence services.

The last DEBKA Weekly issue 594 (July 5) carried details of the military-intelligence mechanism at work between the three governments.

The coming issue, out next Friday, July 12, offers further revelations of how this mechanism is designed to shore up Egypt’s post-coup regime and restore the strife-torn country, the most populous in the Arab world, to its traditional eminence. Cairo is assigned a lead role in a Sunni Muslim bloc stretching from the Gulf to Cairo (with room for quiet collaboration with Israel) to withstand the challenges posed by the alliance of Russia, Iran, Syria and the Lebanese Hizballah.

The petrodollar shower for Egypt did not end with the $8 billion from Saudi Arabia and the UAE: Kuwait has pledged another $5 billion - later amended to $4 billion - in a secret communication to Riyadh. It will be released after the sheikhdom's parliamentary elections on July 27, and so raise total Gulf Arab bounty to Egypt to the staggering total of $12 billion.
Friendly assistance on this scale tends to diminish the relevance of Washington’s dilemmas over the continuation of its $1.3 billion aid package to Egypt after a military coup, of which $700 million is due this year.

The suggestion that US aid may be used to hasten Egypt’s “swift return to a democratically elected civilian government” loses its force when Saudi Arabia and the UAE have both guaranteed to make up any shortfalls in US aid to Egypt.

On June 26, Syrian Deputy Prime Minister Kadri Jamil boasted that Moscow, Beijing and Tehran were contributing half a billion dollars per month to Syria’s war chest. “It’s not so bad to have Russia, China and Iran on your side,” he gloated.

Egypt can now boast to have far outstripped Syria in foreign support - $12 billion in a single month, compared with a mere $6 billion in a year.

Precious Islamic archaeological relics being dismantled & demolished in Saudi Arabia

The photos Saudi Arabia doesn't want seen – and proof Islam's most holy relics are being demolished in Mecca
Archaeologists fear billion-pound development has led to destruction of key historical sites
by JEROME TAYLOR
THE INDEPENDENT
March 15, 2013

The authorities in Saudi Arabia have begun dismantling some of the oldest sections of Islam’s most important mosque as part of a highly controversial multi-billion pound expansion.

Photographs obtained by The Independent reveal how workers with drills and mechanical diggers have started demolishing some Ottoman and Abbasid sections on the eastern side of the Masjid al-Haram in Mecca.

The building, which is also known as the Grand Mosque, is the holiest site in Islam because it contains the Kaaba – the point to which all Muslims face when praying. The columns are the last remaining sections of the mosque which date back more than a few hundred years and form the inner perimeter on the outskirts of the white marble floor surrounding the Kaaba.

The new photos, taken over the last few weeks, have caused alarm among archaeologists and come as Prince Charles – a long-term supporter of preserving architectural heritage – flew into Saudi Arabia yesterday for a visit with the Duchess of Cornwall. The timing of his tour has been criticised by human rights campaigners after the Saudis shot seven men in public earlier this week despite major concerns about their trial and the fact that some of the men were juveniles at the time of their alleged crimes.

Many of the Ottoman and Abbasid columns in Mecca were inscribed with intricate Arabic calligraphy marking the names of the Prophet Muhammad’s companions and key moments in his life. One column which is believed to have been ripped down is supposed to mark the spot where Muslims believe Muhammad began his heavenly journey on a winged horse, which took him to Jerusalem and heaven in a single night.

To accommodate the ever increasing number of pilgrims heading to the twin holy cities of Mecca and Medina each year the Saudi authorities have embarked upon a massive expansion project. Billions of pounds have been poured in to increase the capacity of the Masjid al-Haram and the Masjid an-Nabawi in Medina which marks where Muhammad is buried. King Abdullah has put the prominent Wahabi cleric and imam of the Grand Mosque, Abdul Rahman al-Sudais, in charge of the expansion while the Saudi Binladin Group – one of the country’s largest firms – has won the construction contract.

While there is little disagreement over the need to expand, critics have accused the Saudi regime of wantonly disregarding the archaeological, historical and cultural heritage of Islam’s two holiest cities. In the last decade Mecca has been transformed from a dusty desert pilgrimage town into a gleaming metropolis of skyscrapers that tower over the Masjid al-Haram and are filled with a myriad of shopping malls, luxury apartments and five star hotels.

But such a transformation has come at a cost. The Washington-based Gulf Institute estimates that 95 per cent of Mecca's millennium-old buildings have been demolished in the past two decades alone. Dozens of key historical sites dating back to the birth of Islam have already been lost and there is a scramble among archaeologists and academics to try and encourage the authorities to preserve what little remains.

Many senior Wahabis are vehemently against the preservation of historical Islamic sites that are linked to the prophet because they believe it encourages shirq – the sin of idol worshipping.

But Dr Irfan al-Alawi, executive director of the Islamic Heritage Research Foundation which obtained the new photographs from inside the Grand Mosque, says the removal of the Ottoman and Abbasid columns will leave future generations of Muslims ignorant of their significance.

“It matters because many of these columns signified certain areas of the mosque where the Prophet sat and prayed,” he said. “The historical record is being deleted. A new Muslim would never have a clue because there’s nothing marking these locations now. There are ways you could expand Mecca and Medina while protecting the historical heritage of the mosque itself and the surrounding sites.”

There are signs that King Abdullah has listened to concerns about the historical destruction of Mecca and Medina. Last October The Independent revealed how new plans for the masjid an-Nabawi in Medina would result in the destruction of three of the world’s oldest mosques on the west hand side of the main complex. However new plans approved by King Abdullah last week appear to show a change of heart with the bulk of the expansion now slated to take place to the north of the Masjid an-Nabawi.

However key sites are still at risk. The Independent has obtained a presentation used by the Saudis to illustrate how the expansion of Mecca’s main mosque will look. In one of the slides it is clear that the Bayt al-Mawlid, an area which is believed to be the house where Muhammad was born in, will have to be removed unless plans change.

The Independent asked the Saudi Embassy in London a number of questions about the expansion plans and why more was not being done to preserve key historical sites. They replied: “Thank you for calling, but no comment.”

Zionist ally and Israeli lobbyist U.S. Senator Joe Lieberman in Saudi Arabia "adamant" for more "substantive military aid" to terrorists in Syria

US Senator, Saudi King Discuss Syria Crisis
Al-Manar/AFP
5/1/2012

Photo credit: Al-Manar/AFP

US Senator Joe Lieberman discussed Syria crisis with Saudi King Abdullah and other senior officials during a visit to the Kingdom.

Lieberman also met with Saudi Foreign Minister Prince Saud al-Faisal, Defense Minister Prince Salman bin Abdul Aziz -- who recently held talks at the Pentagon with Defense Secretary Leon Panetta to discuss the Syria crisis -- and General Intelligence chief Prince Muqrin bin Abdul Aziz.

"The senator is traveling in the Middle East this week, focused on the continuing crisis in Syria and other issues related to US national security in the region," Lieberman aide Whitney Phillips told AFP.

It is the second trip to the region in three weeks for Lieberman, who chairs the Senate Homeland Security Committee and also sits on the Armed Services Committee.
The Senator has advocated further US intervention in Syria, including the arming of Syrian opposition groups against the regime of President Bashar al-Assad.

And while he stressed he wanted "no (US) boots on the ground" in Syria, he was “adamant” about the need to provide more “substantive military aid”.

"At some point we simply have to say, 'we're going to help them, we're going to give them weapons to defend themselves,' and that will make them strong and more organized", Lieberman said last week at the Brookings Institution, a Washington think tank.

On Sunday he was in Qatar, where he met with the Minister of State for Foreign Affairs Khaled al-Attiyah, Phillips said.

Continued Saudi protests in Riyadh...but did you know? No of course since main-stream media willingly ignores it

Saudis demonstrate in Riyadh in support of Abha protests
Press TV
Thu Mar 15, 2012 6:18PM GMT

Demonstrators rally in Saudi Arabia’s Eastern Province to protest 

against the regime’s suppression of protesters. (File photo)

Saudi people have taken to the streets of Riyadh in a show of solidarity with student protests staged in the southwestern city of Abha, Press TV reports.

Tensions were high in Saudi Arabia on Thursday as protesters defied tighten security measures in the capital to condemn the moral police's last week attack on female protesters.

The demonstrators said they had come out to voice their solidarity with the student demonstrators demanding a better educational system.

On March 7, Saudi forces attacked a gathering of nearly 1,000 female students of King Khalid University in Abha, Asir Province.

An epileptic student reportedly died of a head injury she sustained in the attack, which left at least 50 students injured and caused one of the protesters to suffer a miscarriage.

Nearly 30 university professors resigned following the brutal crackdown, which caused outrage across the country and also prompted protests in several areas, including the capital Riyadh.

The Saudi government is facing growing calls for justice, freedom of expression and release of political prisoners.

Several people have been killed since anti-regime protest erupted in the Persian Gulf powerhouse in March 2011, while many more injured or detained.

In late February, protest rallies were held across Eastern province, which remains the scene of regular anti-government protests, to demand the prosecution of those who opened fire on demonstrators.

Saudi security forces broke up the rallies by using force and arrested several demonstrators, part of the government's intensified confrontation with reform-seeking protesters since the start of 2012.

MRS/JR/IS

While the world focuses on Syria and Iran, they turn a blind eye to Saudi Arabia

Saudi security forces attack, beat female protesters in Abha
Press TV
Wed Mar 7, 2012 4:56PM GMT

Saudi security forces have reportedly attacked and beaten female students in the southwestern city of Abha, protesting against injustice and inequality.

Activists say female students of King Khalid University in Abha staged a protest gathering on Wednesday to express their anger about discrimination and mistreatment by security officials at the university.

Female protesters hold pictures of men said to be held prisoner 

without trial during a protest rally in Qatif to demand their release, 

and the withdrawal of Saudi troops from neighboring Bahrain, 

April 14, 2011. Credit: Press TV

Related:
Saudis rally against Riyadh suppression of protests in east

Saudi police arrested 25 protesters in one week: Activists

Saudi forces open fire on Qatif protest

They also denounced lack of facilities some of them very basic like chairs.

Meanwhile, Saudi human rights campaigner Mohammed Albajady is still on hunger strike to protest his detention of nearly one-year without trial. Activists say he refused to eat 16 days ago.

Saudi Arabia is facing growing unrest and people have been demanding justice and release of political prisoners since last year. Anti-government protest rallies are mostly held in the Kingdom's Eastern Province but despite a violent crackdown on demonstrations, it appears that the protests are now spreading across the country.

Saudis have held peaceful demonstrations in Eastern Province, mostly in Awamiyah and Qatif, since February last year on an almost regular basis, demanding reform, freedom of expression and the release of political prisoners.

Protesters also want an end to economic and religious discrimination against the oil-rich region. Several demonstrators have been killed and dozens of activists have been arrested since the beginning of protests in the region.

On February 23, protest rallies were held across the province to demand the prosecution of those who opened fire on demonstrators one week earlier. Saudi security forces broke up the rallies using force and arrested several demonstrators.

Riyadh has intensified its crackdown on protesters since the beginning of 2012.

HM/HGH