Webloggin » Small World, Big Problems

Terror. Oil. Nukes. Dictators. It’s a small world these days. I mean really small. And we are all in it together.

It’s like following a game of connect the dots. You can’t talk about Iraq without also talking about her neighbors, Iran and Syria. That in turn brings the conversation to Israel, which includes the Palestinians (and Hamas), … which of course leads to Lebanon (Hezbollah).
You can’t leave Iran without including their connection to Venezuela and her neighbors, and of course their nuclear program. North Korea, oh my. Hamas and Hezbollah, terrorist organizations, bring al-Qaeda to the conversation. Naturally we think of Saudi Arabia, Pakistan, Afghanistan, and now Somalia, Kenya, the Islamic Courts Union (ICU), Ethiopian and her neighbors.

Throw in some Indonesia and her neighbors. Russia is rapidly declining, taking away freedoms, killing their detractors and along with China working against the US in the United Nations. Today China conducted an anti-satellite weapons test and Russia sells arms and technology to Iran.

The European Union has it’s own problems, and the United Nations is full of financial corruption and pedophiles. That brings us to the United States of America. We are all connected.

What comes to mind next? Oil. That’s right, … that evil black stuff with a high price Oil well that everybody needs. Today oil prices were below $50.00 a barrel. Could it be that “… a result of a geopolitical picture that’s not as bad as it looks?” asks Resource Investor.

So now that the oil price is drifting substantially lower, yet the geopolitical situation in the Middle East is as bad as ever, what has changed? Basically, the market has adjusted to the risks, and without any supply shocks, or even near supply shocks, to keep traders on their toes, quite a bit of the fear factor has fallen out of the oil price. [snip]

Indeed, it is Iran that traders will be watching, as even a minor incident, say for discussion’s sake a skirmish between U.S. and Iranian forces on the Iraq-Iran border, would have the potential to get oil traders jumpy once again.