The Earthquake

Posted in Iran , United States | 14-Feb-07 | Author: Hichem Karoui

There are some people who still do not exclude military action against Tehran. In fact, the American Administration prepares the ground for such action by sending a message to the Gulf States and their oil clients suggesting that there would be an imminent risk of disruption to oil supplies if Iran retaliates to air strikes against its nuclear establishments.

Such action would raise the price of oil to more than US$100 a barrel, a price that could severely damage the American economy itself. However, observers see that the damage would be even more severe to the Asian countries. That’s why they oppose a war on Iran.

In this context, some facts have to be noted; the hydrocarbon sources in the Gulf area are in the hands of state-owned companies, not multinational corporations. Also, America’s reliance on the Gulf oil is relatively small compared to other countries.

The USA imports only 60% of its oil consumption, of which only 20%comes from the Gulf. Therefore, it can be said that the Gulf contributes to providing 12% of the American demand for oil. Europe, however, relies on the Gulf oil for 30%, while Japan, South Korea and Taiwan import all their oil needs, 75% of which come from the Gulf. India imports 75% of its needs, 80% of which come from the Gulf, whilst China imports 35% of its needs, 80% of which from the Gulf. Demand for energy in China and India is expected to rise by 8-10% a year.

Accordingly, it seems that these countries’ move to buy oil from other places is very unlikely. It has to be noted that neither India nor China can bear a strong interruption in oil supplies. This is to be added to the fact that a possible war, as said earlier, would inevitably result in the increase of oil prices to more than US$100 a barrel, which would greatly damage the economies of importing countries.

China may have big amounts of foreign currency reserves, enabling it to support such a potential shock. As for India, its trade balance is already suffering from woes as a result of the increase of oil prices to US$60 a barrel. Its budget deficit prevents it from subsidising imported oil to ease the burden on citizens and companies. So how would the situation be if prices go up to US$100 or more?

The economic growth of India, China and several other countries strongly depends on transportation and oil-consuming sectors. Hence, if the USA seeks to put the whole of Asia, together with part of Europe, in the devil’s hands, it could achieve that by attacking Iran. Then, disturbance may spread out, and the earthquake would affect countries previously thought to be far from the ‘hot’ region of the Middle East.

Translated from Arabic by Al Arab staff.

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