Wednesday, June 02, 2004

$100 Barrels of Oil

The Guardian's Terry Macalister has an article about potential sabotage of the oil industry in Saudi Arabia.

Selected quote:

"I cannot think of any more logical target for terrorists. It [Ras Tanura] is the nerve centre for the Saudi oil trade but also for global exports. If you can blow up the Pentagon in broad daylight, then it cannot be impossible to fly a plane into Ras Tanura - and then you are talking $100 [per barrel] oil," he says.

Saudi Arabia is the linchpin for world crude supplies, a key to setting prices and yet sitting on a political tinderbox due to internal dissent and having trouble securing itself against terrorism.

The repressive desert kingdom is the birthplace of Osama bin Laden, provided 15 out of the 19 attackers on 9/11 and its future problems could ultimately make petrol too expensive for us to take our cars out of the garage.

Not only is Ras Tanura or the refining centre of Abqaiq dangerously exposed to being knocked out of action by militants, but Mr Gheit also believes regime change in Saudi to a more hostile Islamic government is as inevitable as it was in Iran a quarter of a century ago. "It's only a matter of time," he claims.

But this is no headline-grabbing polemicist. The Egyptian-born American is employed by investment house Oppenheimer & Co to provide sober assessments of future oil supply and demand to investors sitting on billions of dollars worth of Wall Street financial funds.

* * *

Not everyone is willing to even consider the "nightmare scenario." Gerald Butt, an editor with the Middle East Economic Survey (MEES) newsletter, is dismissive of suggestions that the country is in a politically fragile state. "The royal family is very large and very influential. It will stand together to face a common threat and sees al-Qaida as a security issue and not a political one," he says.

As for the threat to oil installations, the MEES editor believes they are well guarded, pushing terrorists to attack softer targets such as compounds of western workers.

In Beirut, the Saudi oil minister, Ali al-Naimi, assured the meeting of Opec last night that oil facilities in the kingdom were "very secure". He said: "The paranoia about terrorism in the world threatening all the oil establishments in the world, that's not true."

Back over the Atlantic, Mr Gheit remains convinced that there is a real and continuing threat which would cripple the world economy. He was in the past accused of being irresponsible by critics who said doom mongers had been predicting regime change in Saudi for 20 years, but the current situation frightens economists and consumers alike...

The situation defintely bears watching. As the June 30th date for the US "withdrawal" from Iraq draws closer, things in the Middle East are likely to become even more interesting.

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