By Mathew Maavak
The recent rhetorical drawdown between the United States and Iran was not coincidental. There are too many factors militating against a possible prosecution of war against Tehran.
All the hype over bunker-busting B61-11 tactical nuclear options, "imminent" Security Council resolutions, "sanctions," tough talks and further tough talks have turned out to be whimpers before other gathering storms.
It's time for the 2006 Atlantic hurricane season, and a chivalrously named Alberto is making his debut off the coast of Florida, threatening to bring heavy rain along the state over the next few days. Climatologists do not expect this one to whirl into a full-blown hurricane, though by last count it's just 4mph short of qualifying for one.
The season, though, is still young. There will be more Latinos swirling across the Atlantic in an alphabetical progression. Why do we tend to correlate destructive hurricanes with Latinos? Maybe, Venezuelan President Hugo Chavez flits into the mind.
The one called Katrina last year managed to devastate oil platforms off the Mexican Gulf so thoroughly that some rigs still haven't been restored to full capacity. That translates to bad news for crude oil prices in the coming months. Iranian President Mahmoud Ahmadinejad may not like having a Carlos or a Dolores hurling him out of the headlines but there is nothing neither he, nor anyone else, can do about it.
This is the period for consolidation and diplomatic pussyfooting until Zeta twirls her magic at the end of the year.
With the global crude oil buffer currently standing at 2 million barrels per day -- at least by OPEC's super reliable count -- no U.S. administration, however hawkish, would dare unsettle the delicate balance of chaos in the Middle East.
It's not just the Latinos our planet has to reckon with. Less sultry figures at central banks worldwide are raising their national interest rates to sustain the global economy under controlled conditions. This is the necessary Hobson's Choice between an inflation and a stagflation. By raising interests rates, respective currencies will be contained within a margin called "value for money" -- something consumers will be feeling in the coming days when they fork out more from a thinning wallet to service their loans. The choices reel off in minutiae; either a new handbag or a filled up tank at $3 plus per gallon.
This will be felt worldwide and there will be a realignment in raw power and macroeconomics.
Net exporters like Korea will feel the pinch, and the appreciating won will be pitted against the yuan in the battle of exports. And those exports can only be fuelled by oil.
It is astonishing that the general punditry is suggesting a primrose path paved with $40 slicks in the near- to mid-term. The variables we face under the current, controlled economic ecology are just mind-boggling. A Santa Anna reincarnated in waves would ripple into tiny oil Alamos across the United States.
The good news for Washington though is that it still has a petrodollar M3 leverage to buy marked up crudes off the global market. No other nation has that privilege. And that's one reason why central banks have to raise their interest rates and retain spare change for petrodollars, no matter what their population thinks or feels.
Expect a crude oil bandwidth of $80-$90 by any reasonable standards once a major hurricane hits the U.S. Gulf Coast.
That is unless excess production capacity has been discovered somehow, somewhere by an Aladdin's Lamp.
Published in the Korea Herald on June 14, 2006
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