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How The Attack On Saudi Oil And Refineries Threatens World Peace And Oil Prices

How The Attack On Saudi Oil And Refineries Threatens World Peace And Oil Prices

I first looked at the swarm attack against Saudi Oil infrastructure and thought, “Why should I be concerned, these people have been attacking each other since the day Mohammad died, so why the concern now?” The problem is oil. It is not who is the most radical or the least; it has more do with the fact that oil is an international commodity. An attack on Saudi Arabia shakes the foundations of the energy field, prices go up, even in places like the US where our production is secure, and we are oil independent for the first time in well over 70 years.

The problem isn’t just what we are going to see at the gas pump, rather we will see this from grocery shopping to heating cost, with winter around the corner this could be a issue.

Consumers around the world could see costs rise for products ranging from gasoline and diesel to home heating costs and airfares after this weekend’s attacks caused a spike in global oil prices. As the cost of transportation rises, that could mean shipments of other goods, such as groceries, could also increase in the coming months.

The other problem comes from the fact that Saudi, for years the largest oil producer, even while the US and Russia can and do produce a great quantity of oil, Saudi has one ability that no other nation has – the ability to quickly with little warning or turn around ramp up production in a significant way.

So how will this effect us? The most noticeable will be the prices at that pump, an increase of up to 25 cents is expected over the next month. Yesterday U.S. gasoline and diesel futures contracts on the New York Mercantile Exchange rose more than 10%.

Prices for fuel, especially diesel, which fuels heavier-duty vehicles such as trucks and farming equipment, are expected to rise. That will affect transportation costs for companies to ship products. Consumers, therefore, could see costs increase for items at their local grocery stores like fresh produce, which often has to be shipped from other regions.

Fuel price increases are expected throughout the world’s major economies, with countries in Asia particularly sensitive to spikes because of their energy-intensive manufacturing industry, said John Kilduff, a partner at Again Capital in New York.

This could push towards Iran’s favor, with the embargo from the US against Iranian oil, China, India, Turkey, Italy, and Japan, just to name a few are still purchasing Iranian oil. With the spike of crude, this will increase profit for Iran, thus the whole attack works in their favor.

What can be done? The first thing is, in spite of the howling you hear from the left, is to aid Saudi Arabia in protecting their air spaces. We could talk to Israel about the possibility of aiding in this, with the relationship with them and Saudi Arabia on the rise, maybe it would be a good idea to work something out so Saudi Arabia could get some Iron Dome batteries to protect their oil fields and refinery.

We also need to decide if Saudi Arabia is worth aiding, we may not like their domestic policies, but like it or not, they are a ally of the US and the West, they have worked with the West for years keeping the price of oil down.

We next need to put maximum pressure on our allies to stop purchasing Iranian oil, shut down their ability to ship this oil, they then will find no matter what the price of crude is, it will not benefit them.

Image result for iranian nuclear facilities centrifuges

Last, we need to ask, “Do we want Iran to have the Bomb?” I think not; they have a habit of supplying every terrorist in the region, what would prevent them from supplying on to Assad, or Hezbollah, or maybe the Houthi’s to use against Saudi Arabia? If this happened with Assad or Hezbollah, they would not hesitate to try to use this against Israel, if they gave one to the Houthi’s, and they fired one against Saudi Arabia? Even if it is intercepted the price of crude could double in a very short period, if it successfully were used, you would see the world go into an energy crisis due to the price of crude jumping to astronomical amounts.

We need to look at the possibility of a move to reduce Iran’s ability to produce nukes, this would be dangerous and costly, but the alternative is having them fire one off at Israel, this would cause the whole area to lie in desolation. Contrary to popular thought with some, this has little to do with Israel, more it is about continuing a safe and uninterrupted flow of oil from the region.

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