Oil price rises sharply after Opec meeting collapses in disarray

• Proposal to increase production rejected by 6 of 12 members
• Analysts foresee Opec's power base weakening

Gas prices rising wikimedia image

Terry Macalister and Heather Stewart
Guardian

Hopes that Opec would bring relief to motorists and wider western economies from soaring energy prices were today dashed when a crunch meeting of the oil cartel broke up in disarray without the expected agreement to increase crude output.

Political turbulence in North Africa and the Middle East undermined the usual consensus at the meeting in Vienna and led to speculation that new internal rivalries could split the group, leading to even more market chaos.

Saudi Arabia, the world's largest oil producer and influential Opec dove, was outmanoeuvred by Iran, Venezuela, Libya and others, later describing the summit as "one of the worst meetings we have ever had".

The price of Brent crude soared a further $1.65 to $118.43 a barrel as an expected Opec agreement to raise its production quotas by about 1.5 million barrels a day failed to materialise.

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Libyan rebel group sells first oil to U.S.

Dees Illustration

Jamie Crawford
CNN

Washington (CNN) -- The rebel government in control of the eastern part of Libya has made its first sale of oil from territory it controls, the State Department confirmed Wednesday.

Tesoro, a U.S. oil refiner, entered into a deal May 25 with the Transitional National Council based in Benghazi, Libya for 1.2 million barrels of Libyan crude oil, the State Department said in a written statement. The shipment was scheduled to arrive aboard the MT Equator, a Liberian-flagged tanker, at the Single Point Mooring in Hawaii on Wednesday. The dollar value of the deal is not known.

U.S. support for additional oil sales with the TNC will continue as a means to support additional revenue streams for the Libyan people, the statement said.

The sale was made possible following an April announcement by the Office of Foreign Assets Control at the Treasury Department that established a new licensing policy with Libya. That action was taken to ease barriers to certain oil related transactions with the TNC, in place because of wider U.S. sanctions on Libya.

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Food prices set to double by 2030, aid group says

"Now we have entered an age of growing crisis, of shock piled upon shock: vertiginous food price spikes and oil price hikes, devastating weather events, financial meltdowns and global contagion,"Oxfam said in a report.

MSNBC/Reuters

LONDON — Food prices could double in the next 20 years and demand in 2050 will be 70 percent higher than now, U.K. charity Oxfam said on Tuesday, warning of worsening hunger as the global food economy stumbles close to breakdown.

"The food system is pretty well bust in the world," Oxfam Chief Executive Barbara Stocking told reporters, announcing the launch of the Grow campaign as 925 million people go hungry every day.

"All the signs are that the number of people going hungry is going up," Stocking said.

Hunger was increasing due to rising food price inflation and oil price hikes, scrambles for land and water, and creeping climate change.

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US Senate blocks bill targeting oil firm subsidies

© AFP/Getty Images/File David Paul Morris

AFP

WASHINGTON (AFP) - The US Senate defeated a bill taking aim at some $2 billion in annual subsidies to some of the world's largest and most profitable oil companies amid deep voter anger at high gasoline prices.

Lawmakers voted 52-48 to end debate on the measure, falling short of the 60 required and effectively killing a proposal that the White House's Democratic allies had portrayed as a belt-tightening step in cash-strapped Washington.

Democrats planned to revive the proposal -- which would have affected oil giants BP America, Chevron, ConocoPhillips, ExxonMobil and Shell -- as part of broader spending-cut talks ahead of a vote on raising the US debt ceiling.

Exxon CEO Estimates Oil Should Cost $60-70 Per Barrel (Video)

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US House votes to boost oil, gas drilling

Sun sets behind two under construction
offshore oil platform rigs in Port Fourchon
© AFP/File Saul Loeb

AFP

WASHINGTON (AFP) - Amid a political war over painfully high gasoline prices, US President Barack Obama's Republican foes on Thursday pushed a bill to boost offshore oil drilling through the House of Representatives.

One year after a massive oil spill caused by an explosion on an offshore drilling rig devastated the Gulf of Mexico, more than 30 Democrats joined Republicans to approve the legislation by a 266-149 margin.

Obama's foes charged his energy policies doomed US voters to high gas prices that threaten the fragile US recovery, while Democrats accused Republicans of favoring profits for Big Oil over environmental concerns.

The Roller Coaster Ride of Oil Continues

Dees Illustration

Greg Hunter
USA Watchdog

Gas prices 2011! Oil prices are on the rise.  The price per barrel rose again yesterday, and so did gas prices.  According to AAA, the national average price of unleaded gasoline added a penny, climbing to $3.879 per gallon.  It is already more than $4.00 a gallon on the east and west coast, and don’t expect the price to go down before it goes way up.James Howard Kunstler has researched and written books on fictional depictions of the post-oil American future.   Kunstler forecasts very tight oil supplies, with dreadful consequences for our society.   In his latest article, Kunstler takes the President to task for blaming the recent price spike on “speculators,” while turning a blind eye to the crooked bankers who brought down the world economy in 2008.  Please enjoy this excellent post.  –Greg Hunter–

“The Banana Peel of Destiny”
By James Howard Kunstler

That was a cute move by President Obama last week, calling out the “oil speculators” with a memo to his Attorney General, Eric Holder.  The President proved a few weeks ago, in his energy speech to the nation, that he doesn’t understand how these resources are produced and traded. Consequently, the people he addressed remain clueless, but ticked off nonetheless. And the logic of politics now compels Mr. Obama to call out the dogs on…people who make money trading paper claims on oil?

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Wall Street Behind High Food-Oil Prices Causing Global Instability (Video)

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Energy, food costs push up US consumer spending

Groceries Wikimedia Commons

AFP

WASHINGTON (AFP) - US consumer spending rose in February, outpacing income growth, as Americans faced higher costs for energy and food, official data showed Monday.

Consumer spending rose 0.7 percent from January, more than double the 0.3 percent increase in January, the Commerce Department reported.

It was the strongest increase since October and topped forecasts for a 0.5 percent rise.

"The problem isn't that consumers aren't spending, they are," RDQ Economics analysts told clients. "But spending gains are being soaked up in higher prices for food and energy."

Oil rises sharply as West continues Libya assault

Oil rose sharply on Monday after continued air strikes on Colonel Gaddafi's military sites in Libya increased fears of a supply disruption.

AFP image

Garry White
Telegraph

Brent crude for May delivery leapt $2.21 to $116.14 by the afternoon as Gadaffi vowed to repel attacks from UN-mandated nations using missiles and warplanes against military installations.

The Libyan leader responded by saying: “We will not leave our oil to America or France or Britain or the enemy Christian states. We will fight for every inch of our land and liberate every inch of it.”

This suggested Libyan forces may sabotage crude installations, and some traders worry a cornered Gaddafi could lash out in a last stand that disrupts regional tanker shipments.

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US welcomes Arab League backing of no-fly zone

Arab League Secretary General Amr Mussa
© AFP Aris Messinis

AFP

WASHINGTON (AFP) - The United States welcomed Arab League support for a no-fly zone over Libya on Saturday, saying it signaled "unified" international pressure on Moamer Kadhafi's regime to halt the violence.

It stressed it would maintain its posture of support for the Libyan opposition, and that Washington was preparing for "all contingencies" in the North African nation where rebels have been battling regime forces for weeks.

"We welcome this important step by the Arab League, which strengthens the international pressure on Kadhafi and support for the Libyan people," White House spokesman Jay Carney said in a statement.

"The international community is unified in sending a clear message that the violence in Libya must stop, and that the Kadhafi regime must be held accountable."

After crisis talks in Cairo the Arab League urged the United Nations to slap a no-fly zone on Libya and said Kadhafi's regime had "lost legitimacy," in a boost for rebels fighting to unseat the strongman. Washington joined Britain in welcoming the 22-member League's support.


US President Barack Obama warned on Friday that the world is "tightening the noose" on Kadhafi, but admitted he is concerned the Libyan strongman's forces could thwart rebels battling to oust him.

"The United States will continue to advance our efforts to pressure Kadhafi, to support the Libyan opposition, and to prepare for all contingencies, in close coordination with our international partners," Carney said in his statement.

US posture on a no-fly zone over Libya has been far from unanimous.

Defense Secretary Robert Gates said Saturday that the US military and other allies could impose such a zone but it remains unclear if it would be a "wise" move.

"This is not a question of whether we or our allies can do this. We can do it," Gates told reporters aboard his plane after a visit to Bahrain.

"The question is whether it's a wise thing to do and that's the discussion that's going on at a political level," he said.



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US sanctions cripple Libyan oil exports

© AFP Marco Longari

AFP

NEW YORK (AFP) - US sanctions against Libya are crippling the country's oil exports as market participants fear being accused of financing the regime of leader Moamer Kadhafi, a person familiar with the situation said Tuesday.

"I talk to a lot of guys at some of the banks and a couple of oil companies and they are shut down in terms of Libya, essentially because they can't accept payments," the person told AFP.

"The Treasury Department have told them to shut down," he said. "It can ultimately end up halting all the exports, we are on track for that, because everybody is on board with these sanctions."

The International Energy Agency, the developed countries' watchdog, said Friday that Libya is now exporting between 500,000 and 600,000 barrels of crude oil a day, compared with a daily average of 1.3 million in 2010.

On February 25, US President Barack Obama imposed sanctions on Kadhafi, four members of his family, and Libyan government agencies over a brutal crackdown on anti-regime protesters.


Days later, the US Treasury announced it had frozen at least $32 billion in Libyan assets, calling it the largest blocking under any sanctions program in the country's history.

The sanctions targets include US companies' subsidiaries controlled by Libyan companies, such as US oil groups operating in the country under the control of the Libyan state oil company.

ConocoPhillips halted its exports, while Marathon Oil said it had stopped paying taxes and license fees to the Libyan government.

ExxonMobil, the biggest US oil firm, currently has no activities in Libya. In response to a question about whether it would stop crude oil purchases from Libya, replied in an email: "ExxonMobil is complying with the UN and US sanctions against the government of Libya."

Banks, which typically play an intermediary role in transactions, no longer want to be involved, further tying up the market.

According to The Wall Street Journal, Morgan Stanley, which buys oil in Libya for its clients, no longer does so due to the sanctions.

Contacted by AFP, the Wall Street investment bank declined to comment on the report.

The United Nations Security Council and the European Union have also imposed severe sanctions on the Kadhafi regime, notably freezing the financial assets of some of the top officials.

"Fewer and fewer companies are willing to deal with Libyan state entities such as the National Oil Corp., which at the moment controls Libya's crude and products marketing," said Samuel Ciszuk, a Mideast oil analyst at IHS Global Insight.

"International UN sanctions do not target Libyan crude exports per se, however, the unilateral US sanctions seem more harsh and have led to such an interpretation among some US companies," he said in a client note.

Ciszuk said that generally, international oil companies and traders seemed to be taking a safe approach, "having started to contain their dealings with Libya severely last week, as it was increasingly clear that the country was heading towards a civil war."

"With little, if any, crude now expected out of the North African country, there is little reason to keep relations open, given the potential relational damage from being caught paying money for crude into regime-controlled accounts."

On Saturday, the British newspaper Financial Times reported that despite the US, UN and EU sanctions "hundreds of millions of dollars" from oil exports continue to flow into Gadhafi's regime.

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White House considers tapping oil reserves

© AFP/File Philippe Huguen

AFP

WASHINGTON (AFP) - The United States has not ruled out tapping strategic oil reserves in the face of spiking oil prices, White House chief of staff William Daley said Sunday.

"Well, we're looking at the options. The issue of the reserves is one we're considering," Daley told NBC's "Meet the Press."

"There's a bunch of factors that have to be looked at. And it is just not the price," but also uncertainty stemming from unrest in the oil-rich Middle East and North Africa, he stressed.

Daley said President Barack Obama was "extremely concerned" about the rising price of oil and its impact on the struggling US economy.


The White House economic team has been working with international organizations to devise a coordinated response to oil prices, he said.

Friday's price for light sweet crude hit levels not seen since September 2008, closing at 104.42 dollars.

The price has jumped more than 21 percent over the last two weeks amid regional turmoil and increasing international demand.

On Thursday, Treasury Secretary Timothy Geithner said the reserves, paired with increased capacity around the world, could pump enough oil to limit price shocks.

"There is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil," Geithner told Congress.

"If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption."

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Insurrection and Military Intervention: The US-NATO Attempted Coup d'Etat in Libya?

Muammar Gaddafi/Wiki Commons image

Prof. Michel Chossudovsky
Global Research

The US and NATO are supporting an armed insurrection in Eastern Libya, with a view to justifying a "humanitarian intervention".

This is not a non-violent protest movement as in Egypt and Tunisia. Conditions in Libya are fundamentally different. The armed insurgency in Eastern Libya is directly supported by foreign powers. The insurrection in Benghazi immediately hoisted the red, black and green banner with the crescent and star: the flag of the monarchy of King Idris, which symbolized the rule of the former colonial powers. (See  Manlio Dinucci, Libya-When historical memory is erased, Global Research, Febraury 28, 2011)

US and NATO military advisers and special forces are already on the ground. The operation was planned to coincide with the protest movement in neighbouring Arab countries. Public opinion was led to believe that the protest movement had spread spontaneously from Tunisia and Egypt to Libya.


The Obama administration in consultation with its allies is assisting an armed rebellion, namely an attempted coup d'Etat:

"The Obama administration stands ready to offer "any type of assistance" to Libyans seeking to oust Moammar Gadhafi, Secretary of State Hillary Clinton [February 27]  "we've been reaching out to many different Libyans who are attempting to organize in the east and as the revolution moves westward there as well," Clinton said. "I think it's way too soon to tell how this is going to play out, but we're going to be ready and prepared to offer any kind of assistance that anyone wishes to have from the United States." Efforts are under way to form a provisional government in the eastern part of the country where the rebellion began at midmonth.

The U.S., Clinton said, is threatening more measures against Gadhafi's government, but did not say what they were or when they might be announced. 

The U.S. should "recognize some provisional government that they are trying to set already up..." [McCain] 

Lieberman spoke in similar terms, urging "tangible support, (a) no-fly zone,recognition of the revolutionary government, the citizens' government and support for them with both humanitarian assistance and I would provide them with arms. 

(Clinton: US ready to aid to Libyan opposition - Associated, Press, February 27, 2011, emphasis added)

The Planned Invasion

A military intervention is now contemplated by US NATO forces under a "humanitarian mandate".

--"The United States is moving naval and air forces in the region" to "prepare the full range of options" in the confrontation with Libya: Pentagon spokesperson Col. Dave Lapan of the Marines made this announcement [March 1]. He then said that "It was President Obama who asked the military to prepare for these options," because the situation in Libya is getting worse." ( Manlio Dinucci, Preparing for "Operation Libya": The Pentagon is "Repositioning" its Naval and Air Forces..., Global Research, March 3, 2011, emphasis added)

The real objective of "Operation Libya" is not to establish democracy but to take possession of Libya's oil reserves, destabilize the National Oil Corporation (NOC) and eventually privatize the country's oil industry, namely transfer the control and ownership of Libya's oil wealth into foreign hands. The National Oil Corporation (NOC) is ranked 25 among the world’s Top 100 Oil Companies. (The Energy Intelligence ranks NOC 25 among the world’s Top 100 companies. - Libyaonline.com)

Libya is among the World's largest oil economies with approximately 3.5% of global oil reserves, more than twice those of the US. (for further details see Part II of this article, "Operation Libya" and the Battle for Oil)

The planned invasion of Libya, which is already underway is part of the broader "Battle for Oil".  Close to 80 percent of Libya’s oil reserves are located in the Sirte Gulf basin of Eastern Libya. (See map below)

The strategic assumptions behind "Operation Libya" are reminiscent of previous US-NATO military undertakings in Yugoslavia and Iraq.

In Yugoslavia, US-NATO forces triggered a civil war. The objective was to create political and ethnic divisions, which eventually led to the break up of an entire country. This objective was achieved through the covert funding and training of armed paramilitary armies, first in Bosnia (Bosnian Muslim Army, 1991-95) and subsequently in Kosovo (Kosovo Liberation Army (KLA), 1998-1999). In both Kosovo and Bosnia, media disinformation (including outright lies and fabrications) were used to support US-EU claims that the Belgrade government had committed atrocities, thereby justifying a military intervention on humanitarian grounds.

Ironically, "Operation Yugoslavia" is now on the lips of US foreign policy makers: Senator Lieberman has "likened the situation in Libya to the events in the Balkans in the 1990s when he said the U.S. "intervened to stop a genocide against Bosnians. And the first we did was to provide them the arms to defend themselves. That's what I think we ought to do in Libya." (Clinton: US ready to aid to Libyan opposition - Associated, Press, February 27, 2011, emphasis added)

The strategic scenario would be to push towards the formation and recognition of an interim government of the secessionist province, with a view to eventually breaking up the country.

This option is already underway. The invasion of Libya has already commenced.

"Hundreds of US, British and French military advisers have arrived in Cyrenaica, Libya's eastern breakaway province,... The advisers, including intelligence officers, were dropped from warships and missile boats at the coastal towns of Benghazi and Tobruk" (DEBKAfile, US military advisers in Cyrenaica, February 25, 2011)

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Why is Hillary Not Defending the Rights of Saudis to Protest?

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Oil price shock; you ain't seen nothing yet

Wiki Commons

Jeremy Warner
Telegraph

The most common cause of a spiking oil price is supply shock. We may be seeing just such a phenonenon right now with the effective shut down of Libyan oil. But sometimes it’s excessive demand that does the damage.

Forget the present turbulence, which may or may not be temporary. You don’t have to look far into the future, perhaps as little as a year to 18 months, to see that a major demand challenge is looming which even assuming no further disruption to existing production, will challenge the present supply base to breaking point.

As it is, it’s fair to assume the world is closer to full capacity than producers care to admit. Rewind to the last oil price shock in the summer of 2008, and Saudi Arabia, pumping out oil at the rate of around 9.5 million barrels a day, was having to draw on inventories to meet demand. It’s therefore reasonable to assume that 9.5 million bpd then represented maximum capacity.

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The Pharaoh will Fall, Oil will Climb, and Wall Street will Win

Eric Blair
Activist Post

Yesterday, oil broke through the $100 mark for the first time since 2008 due to the populist uprising in Arab nations, indicating it's well on its way to new heights. Many financial insiders have predicted oil will go to $150 per barrel and beyond this year. But if $100/bbl was not odd enough given the stagnant (at best) economic environment, what could possibly make it jump another 50%?

The dollar won't drop that significantly over the next year, will it? If it does, calls to drop the petro-dollar as the reserve currency will likely turn to reality.  And surely the global economy is not expected to grow fast enough to warrant a 50% jump for the lifeblood of civilization. It seems clear that demand for oil will stay relatively flat, so only a catastrophic supply problem would justify these increases.

Enter the new supply problem.  A stunning wave of populist protests has swept through Egypt who control the ultra-important Suez Canal.  The Egyptian revolution is displaying powerful solidarity in their struggle to oust longtime autocrat Pharaoh, Hosni Mubarak, for corruption and economic suppression. And it's beginning to look as though Mubarak will eventually be forced out and new leadership will be throned to appease the masses.

However, the uprising is expanding, and is likely to spread deeper into the psyche of the eternally oppressed around the world.  The outcome of this tsunami of activism is uncertain, but stormy waves means it is surf's up for Wall Street.  The civil unrest gives them the perfect excuse to justify what can only be described as outright fraud and manipulation of the oil markets.


Bloomberg reported in 2009 that Citigroup, JP Morgan, and other "Traders" were leasing and buying oil tankers, parking them idle in the ocean, while simultaneously driving up oil futures through their brokerages.  In fact, it was actually difficult to get oil when it was cheap because of this hoarding.  Meanwhile, prices jumped from the low $40s to over $70 per barrel is just a few months.  The near doubling of prices in the summer of 2009 caused Senator Bernie Sanders (I-VT) to introduce legislation to crack down on oil speculation.

Sanders claimed that, "Despite the record supply of oil and reduced demand, prices are going up, not down."  And that because the storage of oil in overseas tankers goes unreported to the federal government, the practice has distorted supplies and led to unnecessarily high prices. Reuters reported:

"The last thing people need now is to be ripped off at the gas pump because speculators on Wall Street -- some of the same people who received the largest taxpayer bailout in U.S. history -- are allowed to jack up oil prices through price manipulation and outright fraud," he said (Sanders).

Sanders' legislation directs the Commodity Futures Trading Commission, which oversees futures markets like the New York Mercantile Exchange, "to stop sudden or unreasonable fluctuations or unwarranted changes in prices."

At the time, the Commissioner of the CFTC, Bart Chilton, agreed with Sanders, "I wholeheartedly agree with you that the time to act on these issues is now, and the CFTC should aggressively utilize all available authorities . . . to address these pressing issues."  Although the House overwhelmingly passed a similar bill in 2008, nothing has been done to date -- except of course that the price of oil has gone up 150% since 2009 lows.  Once again, the banks are benefiting from the misery of the masses.

In a recent interview, potential presidential candidate and iconic businessman Donald Trump said if the situation in Arab nations becomes catastrophic enough to break up OPEC's control of oil, he thinks the price would go down due to more open competition. Barring that, he predicts at least $150/bbl like many other analysts.  However, he was wrong to claim that OPEC sets the price of oil, as they just set output levels.  Trump's pals, the Wall Street manipulators, are who actually determines the price -- and he knows that.  Therefore, a break-up of OPEC is only likely to fuel further speculation.

Consequently, banks don't care about finding a quick resolution to the chaos in the Middle East, so long as they can find a way to profit from it. Yet, you can bet that whoever ends up running these unsettled nations will likely be a shill for the establishment like Egypt's protest leader and Globalist puppet, ElBaradei.

The situation in Egypt proves that there are forces at work far greater than governments; greater than genuine fundamentals for oil; and powerful enough to co-opt an unprecedented solidarity movement of a region -- they're called Banksters.

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