OIL

UN Impotence and the Price at the Pump

Given the release of the National Intelligence Estimate (Nov/07) we advised that the course of least resistance for petroleum prices over the intermediate term was higher; how much higher we had no idea, but certainly substantially higher. Crude was then in the neighborhood of $84, last $145.

The NIE, which claimed that Iran halted nuclear activities in 2003 through at least mid-2007, was a hatchet job cooked up by ex State Dept employees to do harm to the Administration. And it was false. But false or not, this gave instant motivation to Israel to institutionalize something that earlier had been only an outlier - a military strike on Iranian nuclear facilities.

China and Russia pursue their selfish interests, leaving the world’s welfare up to the US. The NIE was a gift, allowing both as members of the Security Council to bow out of tougher UN sanctions, free to further pursue their business interests with Iran. Only under such a flaccid organizational structure would such a thing be possible, but either way, Israel understood the consequences.

Until the day that the US abandons the UN for perhaps a stronger NATO, or, simply goes it alone with tougher sanctions, Israel understands that it too must go it alone, knowing the effective sanctions that we have advised for example are not in the cards, at least for now.

It is the perceived tensions surrounding this potential conflict which are primarily driving oil prices. Tag this event the November release of the NIE.

Robert Craven