Potential conflict between Iran and West has been speculators fantasy in pushing petroleum prices higher. However, the consequences of conflict or even extended uncertainty could have a very different impact as the presumed crisis continues. Petroleum and its refined product prices are already a drag on global economic recovery – largely pushed higher by financial speculation rather than any current or imminent shortages or even sustained demand. OPEC and the other oil producers are more than prepared to continue producing and exporting at these levels, and the only real debate is not how much but who gets what share. A cut-off of Iranian oil by Tehran would not harm impact the market as much as speculated, especially with Libyan and Iraqi oil coming back and new producers as Brazil delivering significant new fields. Further, Tehran could not afford the loss of revenues, economically and in terms of internal politics. The real danger is if the US and allies try to cut off Iran’s exports through sanction and/or blockade. Then Iran could retaliate by shutting off the Strait of Hormuz through which much oil from Saudi Arabia and other Gulf (GCC) countries flows through (as much as 40%). However, the greatest danger to consumers and the global economy may be the now extended speculation on the risk of conflict. Stranglehold on Key Oil Export Route? Whether Iran could maintain such stranglehold is highly doubtful. Further, any short-term disruption would cause prices to spike for a moment but then to start a prolonged drop. The globe would probably experience a recessionary shock similar to or worse than the 1970’s “Arab Oil Embargo,” (which coincided with other factors as well as contributed to “stagflation”). However, a few things would evolve very differently along with an overall drop in petroleum demand. Alternatives/conservation technology would be accelerated and new routes for export would be developed. A prolonged and insurgency conflict involving Iran undoubtedly would not offer a quick fix for oil exports, but the industrialized world is in a much better position today than almost 4 decades earlier to deal with a petroleum cut-off shock. Squeezing But Not Shutting-off Iran Oil: The most likely scenario is that Washington and allies will try to narrow the scope of potential buyers for Iranian oil. China, India and Russia are not likely to go along with any oil export embargo on Iran. What that would translate is potentially lower prices for Iran oil but not less petroleum delivered on global basis. In fact if China, India or even Russia (Moscow traders as middlemen) exploit Iran’s situation and demand lower prices for Iran oil, this could have a knock-off effect globally – it is already recognized that at least 30-40% of the barrel price is a political or "terror premium” linked to potential conflict and cut-off of oil supplies. Speculators' not Political Premium Added to Price of Petroleum: Ironically, the greatest threat to global economic development may be the speculation that is currently facilitated by the potential scenarios of conflict. The threat of conflict has allowed speculation to play a dominant role. This has been going on for most of the last decade – 9/11. If not conflict with Iran then Libya or Nigeria or Venezuela etc with each rolled out on stage to justify highly volatile markets that benefit speculative investments as much or more than oil exporters – and they do not have to produce even one barrel of oil to realize immense profits. The impact on growth has been significant, but the cost of volatility may be even higher. It is my contention that more than any other bubble, the “oil bubble” of 2008 had exceeded by increases in price more than any other – by far more than home price rises – and was as responsible as any in triggering the “bursting” and collapse. (See above chart where Petroleum price spike in 2007-2008 exceeded even 1970's rise in real $ terms then triggered by Arab Oil Embargo and later hyper-inflation). It is also the factor that adds the greatest degree of uncertainty for consumers and industry today – certainly more than financial. environmental and/or consumer protection regulation. However, this uncertainty/risk comes from predatory practices within the market and is particularly hurtful not only regarding petroleum but food and other essential commodities. Read: - “Commodity Price Record Volatility Spikes/Speculation (for Last Decade)” - diplomaticallyincorrect.org/films/blog_post/commodity-price-record-volatility-spikes-speculation-by-ambassador-mo/43092 By Ambassador Muhamed Sacirbey














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 “International Financial Crisis Channel” - diplomaticallyincorrect.org/c/international-financial-crisis