Sunday, November 12, 2017

Pipeline Explosion Blamed On Iran: 'Terrorist Act' Leading To Further Escalation In The Region






There was something odd about Friday's night's explosion of an oil pipeline belonging to Bahrain's state-run oil company BAPCO, which local authorities initially said was the result of an accident: as we said, the giant fireball had all the hallmarks of either sabotage or a terrorist event, the only question is whether it was real or staged, and who would ultimately be blamed for it.   

We didn't have long to wait for the answer: on Saturday Bahrain government claimed the blast was a "terorrist act" directed by Iran.
In a statement on Twitter, the Bahrain Ministry of Interior said that "evidence gathered by the inspection team confirms that this was an intentional act undertaken by terrorists intending to undermine the security of the Kingdom" with Bahrain's interior minister, Sheikh Rashid bin Abdullah Al Khalifa, adding that the blast was "the latest example of a terrorist act performed by terrorists in direct contact with & under instruction from, Iran."
Bahrain's Foreign Minister Khalid bin Ahmed Al Khalifa later tweeted that the explosion had targeted a pipeline running between the island nation and neighboring Saudi Arabia, which provides financial and security support to the kingdom.
"This is a dangerous Iranian escalation aimed at terrorizing citizens and damaging the world's oil industry," the minister tweeted.

In a carefully orchestrated escalation, one largely staged for public consumption purposes, also on Saturday Saudi Arabia said it was suspending pumping oil to Bahrain following the pipeline blast. The Saudi energy minister also said it had increased security precautions at all facilities following the Bahrain blast. Which, for the cynics out there, means a "pipeline explosion" in Saudi Arabia, one which will also be blamed on Iran-guided terrorists, is likely imminent. 
While Iran had no immediate comment Saturday, it has long denied being behind Bahrain's militant groups.
The explosion damaged cars and nearby buildings, forcing firefighters to evacuate those close to the flames in Buri, just outside of the capital, Manama. Authorities later extinguished the blaze on the pipeline belonging to the state-run Bahrain Petroleum Co. While no one was injured in the explosion late Friday night near the Shiite village of Buri and no militant group immediately claimed the blast, Bahrain's reaction which was the latest to scapegoat Iran for the plethora of problems to hit the Gulf region, opened a new front in the low-level insurgency plaguing Bahrain since its 2011 Arab Spring protests.

Saudi Arabia - which itself is facing a dire financial situation - would not have given Bahrain billions with no strings attached. And as may be the case, one of the conditions appears to have been to blame any "imminent terrorist attacks" on Iran. That's precisely what happened overnight. As to whether this will be the tipping point that launches what now appears to be inevitable war between Iran/Lebanon and Saudi Arabia and the Gulf Cooperation Council - in addition to Israel - we'll just have to wait and see...









If The Saudi Arabia Situation Doesn't Worry You, You're Not Paying Attention



While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.
A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It’s upending many decades of established strategic relationships among the world's superpowers and, in particular, is throwing the Middle East into turmoil.

So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.
The main elements currently in play are these:
  • A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
  • Huge changes in domestic policy and strategy 
  • A shift away from the US in all respects (politically, financially and militarily)
  • Deepening ties to China
  • A surprising turn towards Russia (economically and militarily)
  • Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)

Taken together, this is tectonic change happening at blazing speed.

That it's receiving too little attention in the US press given the implications, is a tip off as to just how big a deal this is -- as we're all familiar by now with how the greater the actual relevance and importance of a development, the less press coverage it receives. This is not a direct conspiracy; it's just what happens when your press becomes an organ of the state and other powerful interests. Like a dog trained with daily rewards and punishments, after a while the press needs no further instruction on the house rules.

So given Yemen, Syria, and its recent domestic purges, Saudi Arabia is in turmoil. It's in a far weaker position than it was a short while ago.
This leaves the US in a far weaker regional position, too, at precisely the time when China and Russia are increasing their own presence (which we’ll get to next).
But first we have to discuss what might happen if a civil war were to engulf Saudi Arabia.  The price of oil would undoubtedly spike. In turn, that would cripple the weaker countries, companies and households around the world that simply cannot afford a higher oil price. And there's a lot of them.
Financial markets would destabilize as long-suppressed volatility would explode higher, creating horrific losses across the board.  That very few investors are mentally or financially prepared for such carnage is a massive understatement.
So..if you were Saudi Arabia, in need of helpful allies after being bogged down in an unwinnable war in Yemen, just defeated in a proxy war in Syria, and your longtime 'ally', the US, is busy pumping as much of its own oil as it can, what would you do?


Pivot To China

Given its situation, is it really any surprise that King Salman and his son have decided to pivot to China?  In need of a new partner that would align better with their current and future interests, China is the obvious first choice.
So in March 2017, only a very short while after Obama's failed visit, a large and well-prepared KSA entourage accompanied King Salman to Beijing and inked tens of billions in new business deals:


Saudi Arabia’s King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world’s largest oil exporter looks to cement ties with the world’s second-largest economy.

This was a very big deal in terms of Middle East geopolitics.  It shook up many decades of established power, resulting in a shift away from dependence on America. 
The Saudis arrived in China with such a huge crowd in tow that a reported 150 cooks had been brought along to just to feed everyone in the Saudi visitation party.   


The scope and size of these business deals are eye catching, but the real clincher is King Salman's public statement expressing hope China will play "an even greater role in Middle East affairs."
That, right there, is the sound of the geopolitical axis-tilting. That public statement tells us everything we need to know about the sort of change the Salman dynasty intends to pursue. 
So it should have surprised no one to hear that, in August this year, another $70 billion of new deals were announced between China and KSA. The fanfare extolled that Saudi-Sino relations had entered a new era, with “the agreements covering investment, trade, energy, postal service, communications, and media.”


This is a very rapid pace for such large deals.  If KSA and China were dating, they’d be talking about moving in together already. They're clearly at the selecting furniture and carpet samples stage.


But as mentioned, the power grab underway in KSA by Mohammed bin Salman is unfolding in real-time. Developments are happening hourly -- while writing this, the very high-profile Prince Bandar bin Sultan (recent head of Saudi Intelligence and former longtime ambassador to the US) has been arrested.
The trajectory of events is headed in a direction that may well end the arrangement that has served as the axis around which geopolitics has spun for the past 40 years. The Saudis want new partners, and are courting China hard. 
China, for reasons we discuss in Part 2 of this report, has an existential need to supplant America as Saudi Arabia's most vital oil customer.
And both Saudi Arabia and China are inking an increasing number of strategic oil deals with Russia. Why? We get into that in Part 2, too -- but suffice it to say, in the fast-shifting world of KSA foreign policy, it's China and Russia 'in', US 'out'.
Maybe not all the way out, but the US clearly has lost a lot of ground with KSA over the past few years.  My analysis is that by funding an insane amount of shale oil development, at a loss, and at any cost (such as to our biggest Mideast ally) the US has time and again displayed that our ‘friendship’ does not run very deep.  In a world where loyalty counts, the US has proved a disloyal partner. Can China position itself to be perceived of as a better mate? When it comes to business, I believe the answer is ‘yes.’

















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